California’s Self-Inflicted Wounds

California is likely to seek an emergency federal loan of up to $7 billion due to revenue shortfalls. Tax receipts in September 2008 were more than $800 million below state projections, leaving a potential for a multi-billion dollar budget shortfall. The reason is pretty obvious. According to the Tax Foundation, California already ranks 48th in state business tax climates. Yet, in the last budget cycle, the Democrats in Sacramento wanted to increase taxes even higher than they already are

People respond to incentives. If businesses face a lousy tax climate year after year, eventually they decide to expand elsewhere or even to relocate. Sacramento needs to figure that out.

Posted on Wednesday, October 08 2008 | Permalink

Ohio and Michigan have had bad economies for a decade, and both cut spending to match revenue. Duh.

Both are also phasing in tax reforms.

Maybe Lotus-land west should consider the same, but then what happens to law professor pay checks?

Stay tuned.

Posted by  on  10/08  at  04:52 PM

This is why the California G.O.P. has got to be the single dumbest state party out there.

Unlike the rest of the country, the issue that matter to Californians play pretty well to the G.O.P.  State incomes taxes are too high and the climate for business is poor.  Nearly everyone would concede those points.  The state Democratic party pretty clearly needs opposition from a strong pro-business opponent.

Instead, we have near constant idiocy from the Republicans. 

Honestly, the Recall was an embarrassment.  It was a total circus and burned up political capital.  What has all that energy devoted to electing Arnold gotten the California business community?  Nothing.

The same can be said for Proposition 8.  It might motivate Rick Warren’s flock, but that is not going to improve the business climate.  Much the same could be said of Prop. 187, which was not even enacted.  No matter how one might feel about the immigration issue, it is hard to contend that it was not a tremendous waste of time and energy.

When was the last time the California G.O.P. actually proposed a set of smart, pro-growth initiatives?  It must’ve been when Reagan was Governor, because I cannot remember. 

Instead, we have a state G.O.P. that defines itself by railing against Infra-Structure projects (like the Centerline), Hollywood liberals and the people that cut our grass.  It is suicidal.

Posted by  on  10/08  at  07:13 PM

Sorry Prof, but you have this one wrong.  The state needs the money not because of poor receipts but because they always need money this time of year for cash flow purposes.  The credit markets have dried up and the Governor is asking the Feds to consider a loan to the state to tide them over since they can’t borrow it anywhere else.

Posted by  on  10/08  at  08:06 PM
Commenting is not available in this weblog entry.

Next entry: SOX and the Bailout

Previous entry: Snarky Crack of the Day

Introduction


Recent Punditry Entries


Hot Topics on Food & Wine

Hot Topics on Law & Business


Punditry RSS Feed

Flickr

Archives

My Books



Blogroll