Citizens have been fleeing California due to the anti-business tax climate and high personal income tax rates. While California lost 120,000 jobs last year, Texas gained 130,000, the likely reason being that businesses who move from California to Texas can save up to 40% of the costs of doing business, because of the less burdensome regulation and taxes. “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” suggesting that the climate of doing business in the state continues to worsen. Texas has no state income tax, but the estimated burden on Texans from state and local tax is about 7.9% of income while “California’s 9.3 percent income tax on middle class workers — those who earn more than $48,000 — is higher than what millionaires pay in 47 states.”
Tax revenues in California are down 11% from last year, and the state borrows money to cover the deficit of $21.6 Billion. Already California has the “highest personal income taxes in the nation and higher sales tax rates than all but four other states” but current Governor Jerry Brown’s solution to the deficit is to raise taxes. There will be a $6 Billion tax increase on the ballot to be voted on, which would raise income taxes by 25% in some brackets, and raise the state sales tax. Apparently the Governor does not have a problem asking people to pay more taxes, even while no effort has been undertaken to cut the wasteful spending which contributes to California’s deficit; so why should voters take on more of the burden, when politicians are utterly unwilling to do their part to cut out waste? Until none of our tax dollars are being wasted, there is no justification to raise taxes.
Click here to read an earlier blog entry about why tax cuts are the best way to improve the economy, and why tax cuts can lead to higher tax revenues, as well as tax increases leading to lower tax revenues.
Many reports cite a coming exodus of wealthy from France to more tax friendly nations, as the Socialists in France who now hold the Presidency and control the national assembly vow to raise taxes on rich, including a 75% tax rate on income over 1 million Euros, and increases in lower tax brackets as well. The suggestion that the rich will flee comes mainly from huge increases in French interest of property abroad, as well as French interest in selling property owned in France; especially estates worth a lot of money. England and Switzerland have reported major increases of French interests in expensive estates, and French Realty firms report huge increases in estates sold between April through June of this year, compared to April-June of last year. (Full Article here).