Madeline Schnapp, at TrimTabs Investment Research sent me a quick note regarding that plunge a few days ago.
Posted on 03/16/2012 8:41:56 AM PDT by Kaslin
California Tax Revenue Plunges
Inquiring minds have noticed a huge plunge in California Tax Revenue for the month of February compared to February 2011.
The numbers below represent a 22.55% plunge in spite of the fact that this February was a leap year adding a day to the calendar.
Madeline Schnapp, at TrimTabs Investment Research sent me a quick note regarding that plunge a few days ago.
Madeline writes...
Hello Mish
I came across this little tidbit from the February report from the Comptroller's office of the State of CA.
In Feb 2012 income tax receipts are down $328 million y-o-y, or 16.5%. Ouch!
What about retail sales taxes? CA had a "temporary" sales tax hike of one cent that expired last July. Adjust the data to reflect that change, it looks like sales taxes in February are $400 million y-o-y +/-, a decline of about 12.4%. Double ouch!
That doesn't sound like robust growth to me.
Something About the Economy Doesn't Add Up
In Piecing Together the Jobs-Picture Puzzle, Jon Hilsenrath at The Wall Street Journal wonders "How can an economy that is growing so slowly produce such big declines in unemployment?"
Something about the U.S. economy isn't adding up.
At 8.3%, the unemployment rate has fallen 0.7 percentage point from a year earlier and is down 1.7 percentage points from a peak of 10% in October 2009. Many other measures of the job market are improving. Companies have expanded payrolls by more than 200,000 a month for the past three months, according to Labor Department data. And the number of people filing claims for government unemployment benefits has fallen.
Yet the economy is barely growing. Many economists in the past few weeks have again reduced their estimates of growth. The economy by many estimates is on track to grow at an annual rate of less than 2% in the first three months of 2012. The economy expanded just 1.7% last year. And since the final months of 2009, when unemployment peaked, the economy has expanded at a pretty paltry 2.5% annual rate.
How can an economy that is growing so slowly produce such big declines in unemployment?
Trimtabs thinks the problem lies in the heavily massaged BLS employment data and the highly suspect BEA personal income data.
That said, withholding tax data is also messy and not a perfect measure either, but no matter what I do with the data, I can't get to 200,000+ jobs unless a huge percentage of the workforce is suddenly working for McDonalds
Best,
Madeline Schnapp
Director, Macroeconomic Research
TrimTabs Investment ResearchMany Explanations for the Unemployment Puzzle
There are many explanations for the "miracle drop" in unemployment.
U.S. unemployment, as measured by Gallup without seasonal adjustment, increased to 9.1% in February from 8.6% in January and 8.5% in December.
The 0.5-percentage-point increase in February compared with January is the largest such month-to-month change Gallup has recorded in its not-seasonally adjusted measure since December 2010, when the rate rose 0.8 points to 9.6% from 8.8% in November. So, is the BLS carefully massaging the data, or are their seasonal adjustments simply that far out of line with reality, tax collections, and common sense?
Businesses Exit California in Droves
Madeline and I are not the only ones who noticed the plunge in California. Chriss W. Street on Beitbart discusses the California Exodus behind the drop. Street has the reason: Businesses fed up with high taxes have fled the state.
California politicians seem delusional in their continued delusion that high taxes have not savaged the State’s economy. Each month’s disappointment is written off as due to some one-time event.
The more likely reason tax collections continue falling is that businesses and successful people are leaving California for the better tax rates available in more pro-business states.
Derisively referred to as “Taxifornia” by the independent Pacific Research Institute, California wins the booby prize for the highest personal income taxes in the nation and higher sales tax rates than all but four other states. Though Californians benefit from Proposition 13 restrictions on how much their property tax can increase in one year, the state still has the worst state tax burden in the U.S.
Spectrum Locations Consultants recorded 254 California companies moved some or all of their work and jobs out of state in 2011, 26% more than in 2010 and five times as many as in 2009. According SLC President, Joe Vranich: the “top ten reasons companies are leaving California: 1) Poor rankings in surveys 2) More adversarial toward business 3) Uncontrollable public spending 4) Unfriendly business climate 5) Provable savings elsewhere 6) Most expensive business locations 7) Unfriendly legal environment for business 8) Worst regulatory burden 9) Severe tax treatment 10) Unprecedented energy costs.
Vranich considers California the worst state in the nation to locate a business and Los Angeles is considered the worst city to start a business. Leaving Los Angeles for another surrounding county can save businesses 20% of costs. Leaving the state for Texas can save up to 40% of costs. This probably explains why California lost 120,000 jobs last year and Texas gained 130,000 jobs.
California Governor Jerry Brown’s answer to the State’s failing economy and crumbling tax revenue is to place a $6 billion tax increase initiative on the ballot to support K-12 public schools. He promises to only “temporarily” raise personal income rates by 25% on any of the rich folk who haven’t already left.Taxed to Death
If Brown continues to suck up to the public unions responsible for the mess California is in, expect still more businesses to leave, expect the unemployment rate to rise, and expect a continued plunge in revenue.
I’ll go out on a limb: Could a potential federal bailout of California become a presidential campaign issue?
Just looking at North Korea and Cuba, no, they will still believe no matter how bad it gets. Fortunately those in Kalpornia can still escape
Do you think Obama, Reid and Pelosi care if the rest of the country wants to bail them or not??
Like the metaphor in your post, and your tagline.
Basically the reporting and statistics agencies have become subordinate to the politicians....which raises the question as to why We the People should continue to pay the agency employee salaries..since they no longer work for us.
No, but would they have the votes? The remaining Dems saw what happened to their fellow conspirators last time.
And that figure reflects the $370 I paid In February on my 9 year old pickup ! Seems like many people are taking vehicles off the road, as too expensive to operate. California has so screwed itself. I marvel at how far we have fallen on a weekly basis. Sigh.
They can escape until this same crap happens at the federal level. The benefit of local control is being lost every day that O’Dumby controls the government and the repubs bow down to the one who bows to the middle east. Once we lose local control completely we will have no place to escape to. Then we all will be skinned by the dems, and the weak kneed worthless repubs.
“California will be our Greece....”
Naah...think Detroit...growed up good to the state level.
The GOP establishment will want to bail out Kalipornia too
I see no rational reason for the drop off in Vehical tax revenue to that extent other than some error in the numbers.
even more creatively, at what point do you think Governor Moonbeam and the insane state legislature will schedule a vote to withhold Federal tax remittences from DC?
And that figure reflects the $370 I paid In February on my 9 year old pickup ! Seems like many people are taking vehicles off the road, as too expensive to operate. California has so screwed itself. I marvel at how far we have fallen on a weekly basis. Sigh.
I don’t think it’s just ‘taking them off the road’ because of the expense as you experience....The change is 102,386 to 2,573! .....that’s much much more than just taking it off the road. It is taking it out of the state! That, and probably every illegal in the whole damned state finding out where to buy fake registration stickers and/or plates.
I’m on board, you thoughts mirror my own.
I was just in San Francisco this past week and only saw one Prius. Gee, I expected everyone to be driving Volts.
There’s some beautiful countryside..but some very stupid people who allowed this to happen. Let the Hollywodd 1%’ers bail them out.
Hey, but we are drinking more in Cali, I can attest to that.
Many American corporations are currently in a “Eat your own stock” mode of drawing down everything and anything they can. Less inventory, fewer employees, less risk. They are hunkering down in the hopes of weathering the Øbozo storm.
If he is reelected expect to see failures and bankruptcies explode exponentially.
Romney will back a bailout I think, just like the way he “saved” the Olympics will large infusions of federal cash.
“Californians are counting on a bailout”
The 0bama regime would only consider helping CA if it were a swing state. It`s forever locked in the basement of the democrat plantation, and its 55 EVs are guaranteed, so there`s no incentive for 0bama to ride in to the rescue.
Actually there is some of that in your correct statement too. I have had three trailer license plates stolen off trailers over the last few years. I assume people use them on their vehicles showing the current year sticker in place to avoid being pulled over. But there HAS to be some number mistake in that graph . . . i can't imagine a fall-off of that magnitude in registration fees. Yikes !
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