California taxing itself to death

pmbug

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Inquiring minds have noticed a huge plunge in California Tax Revenue for the month of February compared to February 2011.

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That is a 22.55% plunge in spite of the fact that this February was a leap year adding a day to the calendar.
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... Street has the reason: Businesses fed up with high taxes have fled the state.

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Spectrum Locations Consultants recorded 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. According SLC President, Joe Vranich: the “top ten reasons companies are leaving California: 1) Poor rankings in surveys 2) More adversarial toward business 3) Uncontrollable public spending 4) Unfriendly business climate 5) Provable savings elsewhere 6) Most expensive business locations 7) Unfriendly legal environment for business 8) Worst regulatory burden 9) Severe tax treatment 10) Unprecedented energy costs.

Vranich considers California the worst state in the nation to locate a business and Los Angeles is considered the worst city to start a business. Leaving Los Angeles for another surrounding county can save businesses 20% of costs. Leaving the state for Texas can save up to 40% of costs. This probably explains why California lost 120,000 jobs last year and Texas gained 130,000 jobs.
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More: http://globaleconomicanalysis.blogspot.com/2012/03/california-tax-revenues-plunge.html

Everyone in the blogosphere seems to keep their focus on FedGov, but individual states like Cali as well as the larger municipalities are going to be drivers of greater and greater stress on the system as they require more bailouts.
 

DCFusor

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Yep - all this kind of attempt to keep a massive spending apparatus inflated "works until it doesn't" and here we are. At least in the case of CA, you can leave.

Wonder how US debt/GDP would look if we added in all this kind of thing at state and local levels?
 

swissaustrian

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Meredith Whitney Turns Muni Call Into Book
http://blogs.wsj.com/deals/2012/02/22/meredith-whitney-turns-muni-call-into-book-not-novel/

Eventually, she will be vindicated. Just like Peter Schiff was vindicated in 2008.

the publisher's statement on the deal:
“Since late 2008, dozens of American school districts, agencies, towns and cities have been taken under state control due to their inability to manage their own finances and pay their debts,” Portfolio said in its statement explaining the book’s premise. “According to Whitney, the evidence points to a mounting fiscal crisis in America’s towns and states that will drive a political and economic wedge between the haves and have-nots.”
Read more: http://www.businessinsider.com/meredith-whitney-book-deal-2012-2#ixzz1pI9baz9C
 
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ancona

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Illinois and New Jersey are in the "business unfriendly" list as well. Companies are leaving all three states for friendlier locales at a record pace.
 

DSAbug

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Illinois and New Jersey are in the "business unfriendly" list as well. Companies are leaving all three states for friendlier locales at a record pace.
I left Oregon for Texas this past year. They were starting a tax on businesses that have a revenue over 250k a year and made it retroactive. Imagine your state DOUBLING the sales tax and making it retroactive to the previous business year. The only difference is that Oregon didn't have a sales tax and now lots of low margin businesses are about to fold. My brother in law's company was forced to shut down because of this single law passing and in the process put 75 people out of work. :clap:

So he moved down to Texas and got a job inside of 2 weeks while all his former coworkers struggle to find anything. It's sad because not everyone just so happens to have family moving out of the state at the same time and is able to start over somewhere else.
 

DCFusor

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You know, it's funny how differently the private and public sectors think. Almost as if they were different species.

I recall my own government engineer days. We were under pressure to "produce", but that was toys for the DOD, and there was no pressure (risk?) that they wouldn't be "taken up by the market" at all. We used to look over at our private sector counterparts, and think they had less pressure, and wow, looka them salaries and bennies they get.

Well, I made the move. The pressure on private sector might not be as obvious from the outside, and yes, the money for *winners* is pretty good, but...through absolutely no fault of your own - the consequences for failure are really there for you personally even if you're working for a TBTF (I never did). You can produce perfectly good stuff - even the best - but as has been pointed out here, if the demand isn't there, or the other guy has better marketing, your better mousetrap doesn't fly.

Going out on your own, starting and running a show, as I did - it's just more of that.
Herding squirrels for a living, marketing, "the buck stops here" except it doesn't - it goes to everyone else involved first - it's pretty demanding.

Now, those who think of themselves as all our bosses and managers - government, think we've got it so fat, and that they are so good at what they do, that when everyone else is actually tightening to the point of pain, all they gotta do is skim a little more off the top - after all, all the productivity that came from our hard work and risk taking is "their show" - don't they provide the "atmosphere" and the "playing field" for us ingrates?

They really don't understand the true situation, and how much of the fall is completely their fault - like children, anything good is to their credit, anything bad must somehow be someone else's fault. What a mistake we've made not putting what amounts to term limits on bureaucrats! We'd all be tons better off if they knew how it really is out here on the ground, no guaranteed bennies, no easy retirement, no guarantee of no pink slip tomorrow, ever, and perhaps come to realize that quite a lot of what's wrong is actually due to government malfeasance and drag on the real world that is productive (or at least makes the attempt).

While they champion "small business", which really is what makes most things go, they must mostly be thinking of a mom and pop retail shop. They have been utterly bought by big business, and are more familiar with it as it's more like what they do - take by force or monopoly power, and try to "extract" as much as possible off everyone else. Look at the IP laws that effectively prevent innovation by small outfits such as mine was - and even force software to be closed, as there's no way to write a few lines of code without violating some guy's IP these days, so you have to keep even obvious stuff a secret. Yeah, that's good for innovation and producing disruptive technology.

They don't seem to get it - in a world where people can relocate, the fish swim away from predators to where the food is more abundant anyway. To the extent they do get that - they are trying to put up nets to prevent it, not realizing that this dooms them.

It's as true in government that if there's no penalty for failure, there is no real success either as it is for private enterprise. But at least in some cases we have bankruptcy and reorganization in private land. When a government actually goes bankrupt, as some are declaring (and most are preventing via force) - it's not the same thing at all - their CEO doesn't get fired in disgrace, they don't have to sell all their assets, they don't have to come up with a real re-org plan...and they have power, at least for awhile, to simply demand more money from those who are now broke, due at least in large part to their own incompetence in regulation.

Time to quote a little Asimov, in the form of a Salvor Hardin aphorism:

"Violence is the last refuge of the incompetent."

Extra points if you realize that this one has multiple meanings - read the story, what it seems to mean on the surface isn't what he meant at all.
 

DSAbug

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I had considered moving to Texas. Unfortunately, the cost of doing so would have been prohibitive. Instead, I downsized (got rid of employees) and am in the process of cutting overhead by half or more by moving out of the high tax/high government meddling area.
Well.. I work from home and the cost of moving pays for itself inside of 1 year. If my business actually grows, the savings will be exponential.
 

DoChenRollingBearing

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@ DC Fusor

Very nicely put.

And the ONLY one of the small businesses that I have helped start has survived and thrived.

Here in Peru. Who´d have thought that twenty-one years ago?
 

DCFusor

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Yup, I'm pretty good at this, and I'm 2 for 4 - lots better than the average but still only a .500 average Governments forget that part, since it's not part of reality for them - until perhaps now. I could say 2/5, but the current one hasn't marinated enough yet to see if it's gonna fly or not - product is selling some, anyway, so it might be 3/5 in the end.

At least its not a pure gamble - yes, it's a roll of the dice in some says, but I get to make the dice...
 

mmerlinn

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Well.. I work from home and the cost of moving pays for itself inside of 1 year. If my business actually grows, the savings will be exponential.
My business depends upon a physical stock of goods, most of which have not been made for decades. Replacing the stock in less than at least 30 years is impossible, so stock must be moved or I starve before I get enough stock on hand to make enough sales to survive on. So, scrapping the stock and starting over is not an option. Since my costs are so high here, I am constantly strapped for cash flow, so I don't have the wherewithal to move 2200 miles.

So, the next best thing is to move 200 miles to a relatively low tax, low meddling area, which I started doing last year. Projected moving costs are relatively low, probably less than 10 grand over a period of 2 years. I will recover the cost of moving in less than one year. More importantly, I will be in a low population area when the SHTF, relatively immune from the carnage that will occur in the large cities when all of the support systems stop working.

When done moving I expect to either be working out of my home, or working nearby in an inexpensive building. Either way, it will cut my fixed overhead by about 75% and will also exponentially increase the savings over time. Variable overhead will probably remain the same as I have no intention of hiring employees and expanding.

Sales of stock items should not be noticeably affected at all as most customers only care whether I have the item or not. Only downside is that it will cost me an extra 10% to move my scrap, though that may be offset by being able to pay lower prices for that scrap.

**********

Wacker Siltronics, a German firm with a manufacturing facility in Portland, Oregon laid off 75 people today. They have offered some of those workers jobs in their German plant in Germany. The reason for the layoffs picked up by the media is that the chips they were making are no longer in demand.

The real reason appears that even though they have cut water usage by 25%, the Portland City Water Bureau is charging them 400% more for water. Not sure how accurate that is, but I do know that Portland has a very high water cost, EVEN THOUGH IT IS THE ONLY MAJOR METROPOLITAN AREA IN THE U.S. THAT DOES NOT TREAT ITS DRINKING WATER.
 
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Shelby-villian

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Since we are printing to infinity anyway, why not set the corporate tax to zero and make up the difference with some more funny money? Then we would have a competitive market for manufacturing and also devalue our currency to make our manufactured goods cheaper on the world market. Kill two birds with one (imaginary) stone. ;)
 

rblong2us

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Since we are printing to infinity anyway, why not set the corporate tax to zero and make up the difference with some more funny money? Then we would have a competitive market for manufacturing and also devalue our currency to make our manufactured goods cheaper on the world market. Kill two birds with one (imaginary) stone. ;)
Yeah, I have also pondered this

Think the answer lies in the posts above ....

the 'controllers' truly believe that the private sector is raking it in, so obviously can afford to make up the shortfall created by them buying votes.....
 
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