Dan Walters: State must change its tax system

Sacramento Bee ^ | 10/9/9 | Dan Walters

[SmithL]

Someday, some way and somehow, California will overhaul the way it finances services because the current system is unsustainable.

We cannot continue to depend on a few thousand high-income Californians as the core of the state revenue structure. Their taxable incomes are increasingly erratic, and sooner or later, many will flee California's high marginal tax rates to states such as Florida, Nevada or Texas that have no income taxes.

Did Tiger Woods, the first billion-dollar athlete, relocate from California to Florida because of better weather or nicer golf courses? Somehow, one doubts those were his motives. Getting his mail in Florida saves Woods millions of dollars a year.

California gets a quarter of its general fund revenues from fewer than 200,000 wealthy taxpayers whose incomes, tied to capital markets, vary greatly from year to year. That's why California's revenues go up and down like a yo-yo and, in turn, why the state periodically wallows in money, overspends and suffers from huge deficits as tax revenue declines.

It's called "volatility," and it's a fairly recent phenomenon. Once, sales taxes were the state's fiscal backbone. But changes in spending patterns � shifting from taxable goods to untaxed services � and the progressive nature of the income tax dramatically shifted the burden to that tax, which now accounts for well over half of state revenues.

[hosepipe]

Mexifornian politics is driven by commie central.. at Berkely..
and buggared by San Fransicko.. which sucks.. and blows..

[Lurker]

It's called "volatility," and it's a fairly recent phenomenon.

No it isn't Mr. Walters.

[YankeeReb]

NY is in the same boat and they’ve been losing population for years. Here’s a novel idea... cut government spending and cut or eliminate income taxes. Since all those illegals in Calif produce more than they use in taxes this should be easy... at least that’s what pro-shamnesty pols have been telling us.

[camle]

the answer is very simple: SPEND LESS!!!

[Willie Green]

and sooner or later, many will flee California's high marginal tax rates to states such as Florida, Nevada or Texas that have no income taxes.

"Sooner or later?"

I don't have any data on the issue, but it seems to me that the mass Exodus has been going on for a long time now.

[KarlInOhio]

My prediction before reading the whole article is that they want to get rid of Prop 13 so they can jack property taxes through the roof. Then they can reduce other taxes... eventually... maybe .... depending on the braks.

[KarlInOhio]

braks->breaks.

[Glacier Honey]

Yes, but the problem is they move from California and NY to cheaper states but then try to change those states into California and NT.

I live in Colorado and see this happening. Good thing I live in Douglas County where it is still a red county and we are fighting to get our state back and get Tax Ritter out of office

[KarlInOhio]

It looks like I was wrong. They didn't even mention the property tax. Instead they want to replace the business income tax with a business net receipts tax. I don't know what the difference is, but since they expect to get a lot of money from it it looks like a tax increase.

[hosepipe]

Exactly..

Bonk Bonk... "no soup for YOU Mr.Walters.."- Soup Nazi..

[Senator John Blutarski]

KarlInOhio wrote: "It looks like I was wrong. They didn't even mention the property tax. Instead they want to replace the business income tax with a business net receipts tax. I don't know what the difference is, but since they expect to get a lot of money from it it looks like a tax increase." ..... Oooooh, THAT's an interesting bit of wordplay. A tax on "business net receipts"???? From the web - "... a business net receipts tax Businesses would subtract from their gross receipts the costs they pay to other businesses for the purchase of materials and services, then pay a tax of about 4 percent on the difference. They could not subtract the key expenses of payroll or interest payments." I can't imagine a more efficient means of destroying a service based economy. These people are certifiably insane.

[wac3rd]

Repealing Prop. 13, Pelosi’s VAT, illegal alien amnesty, cap and trade, ObamaCare and insane regulations on enery production will make California resemble a Latin-infused USSR.