Prop 30 - Will it have unintended consequences?

[zoosermom]

<p>Even if the shortfall isn’t huge it could be problematic because, as you say, budgeting is done based on expectations. I understand that the Facebook IPO was expected to draw a certain figure in state taxes and did not reach that level, causing budgetary difficulties.</p>

[TatinG]

<p>Google “California out migration”. Californians are moving out due to high unemployment and high cost of living.</p>

[Beliavsky]

<p>

@texaspg

So my question goes back to whether enough people change their location in the top 1% by some point that the expected revenues are no where close to the expectation.

</p>

<p>I suggest reading [California’s</a> Laffer Curve: Playing with Fire, David Henderson | EconLog | Library of Economics and Liberty](<a href=“http://econlog.econlib.org/archives/2012/11/californias_laf.html]California’s”>California's Laffer Curve: Playing with Fire - Econlib) and the comments to Henderson’s post.</p>

[polarscribe]

<p>

@lerkin

I should have been more precise: I was referring to income tax.

The point of Prop. 30 is that it was a package deal - a combination of a regressive sales tax increase that disproportionately impacts low- and middle-income residents along with a progressive income tax increase that disproportionately impacts high-income residents.</p>

<p>I agree that simply hiking the income tax alone would have been unfair. Similarly, hiking only the sales tax would have been unfair. Together, the two increases represent a relatively fair way of balancing the burden of increased taxation.</p>

[Bay]

<p>Californians are moving out, due to lack of jobs, overpopulation and taxes, and is running out of kids to help pay for its burgeoning pension liabilities.</p>

<p>[Civic</a> Report 71 | The Great California Exodus: A Closer Look](<a href=“http://www.manhattan-institute.org/html/cr_71.htm#.UQAwO45dXFI]Civic”>http://www.manhattan-institute.org/html/cr_71.htm#.UQAwO45dXFI)</p>

<p>[Is</a> California’s Economic Future Threatened By Birth Dearth? - Investors.com](<a href=“http://news.investors.com/ibd-editorials/011513-640692-california-birth-dearth-threatens-economic-future.htm?p=full]Is”>http://news.investors.com/ibd-editorials/011513-640692-california-birth-dearth-threatens-economic-future.htm?p=full)</p>

<p>Hopefully, this can be turned around; CA can be a beautiful place to live.</p>

[Hunt]

<p>If you’re a professional golfer, there are plenty of places you can move to with lower state income tax. The question is how many other high earners in California have similar options. I’ve gotta say, the difference between 13% and 0% state income tax is a lot when you’ve got income in the millions.</p>

[zoosermom]

<p>And from the perspective of the state, is taking X% less and calling it good better than taking zero %.</p>

[TatinG]

<p>I think a lot of those with multi million incomes have that option. The Hollywood crowd, the Internet millionaires. My own neighbor decided it was more economical to commute to his business here from halfway across the country than live here.</p>

[argbargy]

<p>re: California’s “balanced” budget</p>

<p>

The voters should tell their public officials that the time for accounting gimmicks and unrealistic expectations is gone. California just “closed its budget gap” by employing rosy predictions and accounting gimmicks, which actually demonstrate that the state is in the red to the tune of $10 billion.

[Jessica</a> Levinson: California’s Newly “Balanced” Budget Is a Farce](<a href=“HuffPost - Breaking News, U.S. and World News | HuffPost”>California's Newly "Balanced" Budget Is a Farce | HuffPost Latest News)</p>

[polarscribe]

<p>Erm, you might want to check the date on that article, argbargy:</p>

<p>Posted: October 9, 2010 01:56 PM</p>

[cptofthehouse]

<p>I have no idea what percentage of high income folks will leave the state, or change their residencey due to this. If those who drew up the projections did it properly some fall out should have been taken into account, but it might be more than expected. What is the increase in sales tax now? I thought it was pretty high already there.</p>

[texaspg]

<p>Thanks for the link beliavsky. The analogy of 1 in 10 moving from the top bracket was interesting. </p>

<p>Are there any economic research groups that track before and after numbers, using the expected revenues vs actual after an year or two?</p>

[cartera45]

<p>There are clearly lots and lots of people who don’t care to move to a state just because of its tax perks. There is not enough money in the world to entice me to live in Florida. I could do my job anywhere in the country and I choose to live in a state in which the majority of its residents feel the way I feel about issues that are much more important to me than money and taxes. I’m pretty sure there are multi-millionaires who feel the same way.</p>

[Bay]

<p>I don’t think it is all that easy to avoid CA income taxes when you need to do business here. Whatever income you earn in the state, is taxed by the state. Owning a residence in another state doesn’t make you a non-resident, if you spend at least 6 months of the year here, and if you do, they tax everything you make, regardless of where it was earned.</p>

[Hunt]

<p>

I don’t think it is all that easy to avoid CA income taxes when you need to do business here. Whatever income you earn in the state, is taxed by the state. Owning a residence in another state doesn’t make you a non-resident, if you spend at least 6 months of the year here, and if you do, they tax everything you make, regardless of where it was earned.

This is why a golfer can move, but even a movie star may not be able to avoid taxes by moving.</p>

[argbargy]

<p>zounds! old link</p>

<p>We are pretty sure that 30 wont raise the hoped for $6B because of the migratory effect and the movement of economic activity to the black market. </p>

<p>

Supposedly it would, because, the Capitol assumes, it will generate about $6 billion in extra revenue for 2013-14.</p>

<p>However, much of that money must go to schools under the state constitution’s school finance requirement, Brown has said he wants to spend much of it to reduce the “wall of debt” that the state has erected in recent years and, finally, other revenue is coming in under projections and overall state spending is running over budget.</p>

<p>As a recent report from the Legislature’s budget analyst notes, the state is on track to end the current fiscal year with a nearly $2 billion deficit, even though the current budget assumes $8.5 billion in revenue from Proposition 30.</p>

<p>

Read more here: [Dan</a> Walters: Old California budget issues remain despite new taxes - Dan Walters - The Sacramento Bee](<a href=“http://www.sacbee.com/2012/12/17/5058626/dan-walters-old-california-budget.html#storylink=cpy]Dan”>http://www.sacbee.com/2012/12/17/5058626/dan-walters-old-california-budget.html#storylink=cpy)</p>

[texaspg]

<p>What about companies of California whose employees live in other States, for example Google? I dont believe the employees are paying taxes in California.</p>

[xiggi]

<p>Haha, this should make the Commies from Polarland happy. The journalists are adding a typical eye-catching and sensationalist twist to the issue. None is better than Tiger to get the story some traction.</p>

<p>

Woods Makes Unexpected Admission</p>

<p>The golfer has claimed more than $100 million in winnings – but he moved across the country because of an issue many Americans face.</p>

<p>Tiger Woods Says High State Taxes Drove Him from California to Florida </p>

<p>LA JOLLA, CA – Tiger Woods, speaking Tuesday at the Torrey Pines Golf Club, sympathized with colleague Phil Mickelson, saying he moved out of California in 1996 because of high taxes.</p>

<p>“Well, I moved out of here back in ‘96 for that reason,” Woods said in response to a question from a reporter in advance of the Farmers Insurance Open. “I enjoy Florida, but also I understand what he was, I think, trying to say. I think he’ll probably explain it better and in a little more detail.” </p>

<p>[Tiger</a> Woods Says High State Taxes Drove Him from California to Florida - La Jolla, CA Patch](<a href=“http://lajolla.patch.com/articles/tiger-woods-says-high-state-taxes-drove-him-from-california-to-florida?national=patch&ncid=edlinkuspatc00000006&icid=maing-grid10|htmlws-main-bb|dl6|sec1_lnk3%26pLid%3D260620]Tiger”>http://lajolla.patch.com/articles/tiger-woods-says-high-state-taxes-drove-him-from-california-to-florida?national=patch&ncid=edlinkuspatc00000006&icid=maing-grid10|htmlws-main-bb|dl6|sec1_lnk3%26pLid%3D260620)

</p>

<p>Too bad for the US artists and athletes that they can’t rely on Monaco or Ireland like their European counterparts do.</p>

[CTScoutmom]

<p>Yes, the employees that live in other states do pay California state taxes, unless there is a tax treaty between their state and California.</p>

<p>Further, I don’t know that moving is going to make such a difference for a professional golfer, because as a professional athlete, he has to file taxes in the states where he earns his income. In his case, that would be the states where he attends golf tournaments. He files in each of those states a s non-resident.</p>

<p>Thankfully I have never filed a CA tax return either for myself or a client, so I don’t know how they treat non-California source income, but if they do it like state where I have filed returns, they tax it at their own rate, and then give credit for tax already paid to the other state. If he’s playing golf only is states with no income tax, then he may see significant savings, but otherwise, the savings may not be as much as expected.</p>

[texaspg]

<p>“Yes, the employees that live in other states do pay California state taxes, unless there is a tax treaty between their state and California.”</p>

<p>Are you suggesting that a company like Hewlett Packard with 10s of thousands of employees in other states depends on treaties between California and states like Texas, Colorado, Idaho, massachussetts not to pay California taxes? I am certain that is not the case. I am more curious about the top people in a company like HP where the past CIO made as much as the CEO for a couple of years but chose to live in Austin.</p>