Can Californian’s say, please tax me? This is the not-so-new plan for the state’s $15-20 billion budget deficit woes. The Golden State’s Governor, Jerry Brown, is crossing his fingers that voters will agree to a sales and income tax hike to solve budget deficit problems.
What the governor doesn’t highlight is the hidden $7 billion increase in its yearly spending expenditures.
One might ask how the Gov. Brown intends to cover his tracks, increase taxes of course.
One liberal-leaning group is riding behind the Kim Kardashian’s success story and asking the reality television star if she can pay more in taxes. A video ad produced by the Courage Campaign targets the "Keeping Up with the Kardashians" star by comparing the millionaire’s (Kim earned a reported $12 million last year) tax rate to someone earning $47,000 a year. The ad failed to acknowledge that the reality star paid at least 10 percent of her earnings to Uncle Sam in Sacramento, her bill landed somewhere near the $1.2 million mark while the “unnamed” worker paid $3,000. Voters should be questioning which of the two paid their “fair share?”
In the meantime, California residents will be asked to increase their own taxes in order to cover the “out of control” pension funds promised to public-sector union employees, duplicative state agencies, the largest prison population, Medicaid/Medicare and other “free” services for the illegal population that reside in California.
Currently, California is facing monumental billion dollar budget shortfalls and Governor Brown is banking on residents to increase taxes to narrow the budget gap. In June of this year, state legislators voted on a supposed-balance budget, but underestimating expenditures has left a $12.8 billion hole for the state.
The biggest cut Governor Brown proposes is the state’s welfare and child care programs. These entitlement programs will see $1.4 billion less money next year if state legislators agree to the governor’s cuts and reduce spending to the poor.
“I do not see us taking cut action between now and the May (budget revision)," said Democrat Senate President Pro Tem Darrell Steinberg. "We've done enough damage on the cuts side. And the cash situation is pretty good. And it isn't like February of 2009 when we were close to heading over the cliff. I just don't see the need to make cuts."
In an effort to stave off budget cuts, Democrats are hoping residents will elect to increase the state sales tax by half-a-cent for the next four years. The tax measure would also levy a 1 percent income tax on income earners who make $250,000, 1.5 percent on income over $300,000 and a 2 percent income tax on those earning more than $500,000. Effectively the state income tax would increase from 10.3 percent to 12.3 percent making California the most expensive state to live. Governor Brown anticipates the increase will raise $7 billion, still shy of the $13 billion budget deficit.
California tax crusader, Richard Rider of San Diego Tax Fighters points out the hard reality for Golden State residents. “If passed, California will advance from the third highest income tax state to numero uno. Any sane rich person HAS to be thinking of moving out of the state.”
Minor cuts await
Californians will also find the Governor has decided to save money by eliminating 3,000 jobs from the Department of Corrections and Rehabilitation Departments. The democratic-run state will shift some of the prison population to the counties and reduce prison sentences.
“The state of California is a very generous, compassionate political jurisdiction,” Brown explained. “When we have to cut spending, that spendingis going to come from programs that aredoing a lot of good.It’snot nice. Wedon’t likeit. But the economy and tax statutes of California make just so much money available.”
Brown has also proposed that 39 state agencies are axed. Some of the agencies on the chopping block include the California Volunteer Agency, California Emergency Management Agency, Managed Risk Medical Insurance Board, Rehabilitation Appeals Board and Department of Boating and Wateways.
A scathing report released by Stanford University provided scary details for the Golden State’s promised pension programs. Californians have promised approximately $500 billion, something the “millionaire’s tax” would not cover. (The new tax would raise around $6.9 billion, but that would help block cuts to K-12 education).
However, even if the state successfully abolishes agencies, raises taxes and cuts education departments, California will still operate in the red due to the pension fund promises.
Something else Governor Brown doesn’t address is California’s overly-burdensome regulations (AB32 is California's own cap & trade law) and it's these taxes that are driving businesses to other business-friendly states.
Without new revenue streams from businesses, the Golden State is at risk of further austerity measures which could cripple any prospects of a bright future.
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