July 2016 Update: Here’s a documented comparison of California taxes and economic climate with the rest of the states. The news is bad, and getting worse. But it doesn’t have to be this way! The state and local government policies that created an unaffordable California can be reversed.
PERSONAL INCOME TAX: Prior to Prop 30 passing in Nov. 2012, CA already had the 3rd worst state income tax rate in the nation. Our 9.3% tax bracket started at under $50,000 for people filing as individuals. 10.3% started at $1 million. Now our “millionaires’ tax” rate is 13.3% – including capital gains (CA total CG rate now the 2nd highest in the world!). 10+% taxes now start at $250K. CA now has by far the nation’s highest state income tax rate. We are 34% higher than 2nd place Oregon, and a heck of a lot higher than all the rest – including 7 states with zero state income tax – and 2 more that tax only dividends and interest income. CA is so bad, we also have the 2nd highest state income tax bracket. AND the 3rd. AND the 4th! http://taxfoundation.org/sites/taxfoundation.org/files/docs/ff2013.pdf Ref. Table #12 http://tinyurl.com/CA-income-tax-graph and http://tinyurl.com/CA-2nd-CG
SALES TAX: CA has the highest state sales tax rate in the nation. 7.5% (does not include local sales taxes). Two 2015 bills sought a combined $10 billion++ CA state and local sales tax increase (failed to pass that year).
GAS TAX: CA has the nation’s 4th highest “gas pump” tax at 58.0 cents/gallon (June, 2016). But add in the unique 10-12 cent CA “cap and trade” cost per gallon, and CA is #1 (about the same as Pennsylvania). National average is 48.0 cents. Yet CA has the 6th worst highways.
http://www.api.org/oil-and-natural-gas/consumer-information/motor-fuel-taxes/gasoline-tax (CA has nation’s 3rd highest total diesel tax) http://reason.org/news/show/21st-annual-highway-report
PROPERTY TAX: California in 2015 ranked 14th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states. But the 2014 average CA single-family residence (SFR) property tax is the 8th highest state in the nation. Indeed, the median CA homeowner property tax bill is 93% higher than the average for the other 49 states.
“IMPACT FEES” ON HOME SALES: Average 2012 CA impact fee for single-family residence was $31,100, 90% higher than next worst state. 265% higher than jurisdictions that levy such fees (many governments east of the Sierras do not). For apartments, fee averaged $18,800, 290% above average outside state. The fee is part of the purchase price, so buyer pays an annual property tax on the fee!
“CAP AND TRADE” TAX: CA has now instituted the highest “cap and trade” tax in the nation – indeed, the ONLY such U.S. tax. Even proponents concede that it will have zero impact on global warming.
SMALL BUSINESS TAX: California has a nasty anti-small business $800 minimum corporate income tax, even if no profit is earned, and even for many nonprofits. Next highest state is Rhode Island at $500 (only for “C” corporations). 3rd is Delaware at $175. Most states are at zero.
Based just on GDP, CA ranks as the 6th largest economy in the world. But adjusted for population and cost of living, CA ranks lower than all but 13 U.S. States.
CORPORATE INCOME TAX: CA 2016 corporate income tax rate (8.84%) is the highest west of Iowa (our economic competitors) except for Alaska.
http://www.taxfoundation.org/sites/taxfoundation.org/files/docs/CITmap.png Ref. Table #15 – we have the 8th highest rate in the nation.
BUSINESS TAX CLIMATE: California’s 2015 “business tax climate” ranks 3rd worst in the nation – behind New York and anchor-clanker New Jersey. In addition, CA has a lock on the worst rank in the Small Business Tax Index – a whopping 8.3% worse than 2nd worst state.
LEGAL ENVIRONMENT: The American Tort Reform Foundation in 2015 again ranks CA the “worst state judicial hellhole” in U.S. – the most anti-business. The U.S. Chamber of Commerce ranks CA a bit better – “only” the 4th worst state in 2015 (unfortunately, sliding from 7th worst in 2008).
FINES AND FEES: CA driving tickets are incredibly high. Red-light camera ticket $490. Next highest state is $250. Most are around $100.
CA needlessly licenses more occupations than any state – 177. Second worst state is Connecticut at 155. The average state is 92. But CA is “only” the 2nd worst licensing state for low income occupations.
CA has the highest/worst state workers’ compensation rates in 2014, up from 3rd in 2012. CA rates 21.3% higher than 2nd highest state, 88% higher than median state. Yet we pay low benefits — much goes to lawyers.
OVERALL TAXES: Tax Foundation study ranks CA as tied for the 7th worst taxed state in 2016. But the CA taxes are the most progressive of all states, hammering the upper third of the populace. The top 1% pay 50% of all CA state income taxes.
UNEMPLOYMENT: CA unemployment rate is improving, but we are still ranked 34th (May, 2016) – 5.2%. National unemployment rate 4.7%. Nat’l rate not including CA is 4.6%, making the CA unemployment rate 13.0% higher than the average of the other 49 states. NOTE: We were at 4.8% in Nov, 2006 – vs. national 4.6%.
Using the lagging but arguably more accurate U-6 measure of unemployment (includes involuntary part-time workers), CA is tied for 3rd worst – 12.0% vs. national 10.1%. National U-6 not including CA is 9.9%, making CA’s U-6 21.2% higher than the average of the other 49 states.
EDUCATION: CA public school teachers the 3rd highest paid in the nation. CA students rank 48th in math achievement, 49th in reading.
http://www.lao.ca.gov/reports/2011/calfacts/calfacts_010511.aspx (page 36) http://www.nea.org/assets/docs/NEA_Rankings_And_Estimates-2015-03-11a.pdf
California, a destitute state, still gives away community college education at fire sale prices. Our CC tuition and fees are the lowest in the nation. How low? Nationwide, the average community college tuition and fees are more than double our California CC’s.
This ridiculously low tuition devalues education to students – often resulting in a 25+% drop rate for class completion. In addition, because of grants and tax credits, up to 2/3 of California CC students pay no net tuition at all!
Complaints about increased UC student fees too often ignore key point — all poor and many middle class CA students don’t pay the UC “fees” (our state’s euphemism for tuition). There are no fees for most California families with under $80K income. 55% of all undergraduate CA UC students pay zero tuition, and another 14% pay only partial tuition.
WELFARE AND POVERTY: 1 in 5 in Los Angeles County receiving public aid. http://www.latimes.com/news/local/la-me-welfare22-2009feb22,0,4377048.story
California’s real poverty rate (the new census bureau standard adjusted for COL) is easily the worst in the nation at 23.4%. We are 57.3% higher than the average for the other 49 states (up from 48.8% higher last year). Indeed, the CA poverty rate is 17.0% higher than 2nd place Nevada.
http://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-251.pdf (page 9)
California has 12% of the nation’s population, but 33% of the country’s TANF (“Temporary” Assistance for Needy Families) welfare recipients – more than the next 7 states combined. Unlike other states, this “temporary” assistance becomes much more permanent in CA.
California ranks 48th worst for credit card debt and 49th worst for percentage of home ownership.
GOVERNMENT INSOLVENCY: California has the 2nd lowest bond rating of any state – Basket case Illinois beat us out for the lowest spot. We didn’t improve our rating – Illinois just got worse.
Average California firefighter paid 60% more than paid firefighters in other 49 states. CA cops paid 56% more. CA 2011 median household income (including gov’t workers) is 13.4% above nat’l avg.
HOUSING COSTS: Of 100 U.S. real estate markets, in 2013 CA contained by far the least affordable middle class housing market (San Francisco). PLUS the 2nd, 3rd, 5th, 6th and 7th. San Diego is #5 (with “middle class” affordable homes averaging 1,056 sq. ft.)
TRANSPORTATION COSTS: CA has 2nd highest annual cost for owning a car – $3,966. $765 higher than the national average.
WATER & ELECTRICITY COSTS: CA residential electricity costs an average of 40.7% more per kWh than the national average. CA commercial rates are 66.5% higher. For industrial use, CA electricity is an astonishing 94.4% higher than the national average (Sept, 2015). The difference is growing between CA and the national average. NOTE: SDG&E is considerably higher.
A 2015 U-T survey of home water bills for the 30 largest U.S. cities found that for 200 gallons a day usage, San Diego has the 3rd highest cost – 73.7% higher than the median city surveyed. At 600 gal/day, San Diego was again 3rd highest – 81.7% higher than the median city.
BUSINESS FLIGHT: In 2012, our supply of California businesses shrunk 5.2%. In ONE year. NOTE: That’s a NET figure – 5.2% fewer businesses in CA in 2012 than were here in 2011. Indeed, in 2012, CA lost businesses at a 67.7% higher rate than the 2nd worst state!
The top U.S. CEO’s surveyed rank California “the worst state in which to do business” for the 12th straight year (May, 2016)
From 2007 through 2010, 10,763 manufacturing facilities were built or expanded across the country — but only 176 of those were in CA. So with roughly 12% of the nation’s population, CA got 1.6% of the built or expanded manufacturing facilities. Stated differently, adjusted for population, the other 49 states averaged 8.4 times more manufacturing growth than did California.
http://www.cmta.net/20110303mfgFacilities07to10.pdf — prepared by California Manufacturers and Technology Association
OUT-MIGRATION: California is now ranked as the worst state to retire in. Easily the lowest percentage of people over age 65. We “beat” ’em all – NY, NJ, etc.
The median Texas household income is 10.9% less than CA. But adjusted for COL, TX median household income is 31.6% more than CA.
Consider California’s net domestic migration (migration between states). From 1992 through mid-2015, California lost a NET 3.9 million people to other states. Net departures slowed in 2008 only because people couldn’t sell their homes. But more people still leave each year — in 2015 we lost 77,219. Again, note that these are NET losses. Sadly, our policies have split up many California families.
It’s likely that it’s not the welfare kings and queens departing. They are primarily the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods) – and retirees seeking to make their nest-eggs provide more bang for the buck.
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Richard Rider is the chairman of San Diego Tax Fighters, a grassroots pro-taxpayer group. Rider successfully sued the county of San Diego (Rider vs. County of San Diego) to force a rollback of an illegal 1/2-cent jails sales tax, a precedent that saved California taxpayers over 14 billion dollars, including $3.5 billion for San Diego taxpayers. He has written ballot arguments against dozens of county and state tax increase initiatives and in 2009 was named the Howard Jarvis Taxpayers Association’s “California Tax Fighter of the Year.” Rider updates this compilation of statistics on California every month; they are updated here quarterly.