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Thread: UPDATE: DESPITE TAX INCREASE, CALIFORNIA STATE REVENUES IN FREEFALL

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    Super Moderator Newmexican's Avatar
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    UPDATE: DESPITE TAX INCREASE, CALIFORNIA STATE REVENUES IN FREEFALL


    DESPITE TAX INCREASE, CALIFORNIA STATE REVENUES IN FREEFALL



    by CHRISS W. STREET 8 Dec 2012

    California State Controller John Chiang has announced that total state revenue for the month of November 2012 fell $806.8 million, or 10.8%, below budget.

    Democrats thought they could hammer “the rich” by convincing voters to pass Proposition 30 to create the highest state income tax in the nation. But it now appears that high income earners have already “voted with their feet” by moving themselves and their businesses out of state, resulting in over $1 billion shortfall in corporate and income taxes last month and the beginning of a new financial crisis.

    Passage of Proposition 30 set off euphoria and expectations of higher spending for public employees. The California Teachers’ Association (CTA) trumpeted: "California students and working families won a clear victory today as voters clearly demonstrated their willingness to invest in our public schools and colleges and also rejected a deceptive ballot measure aimed at silencing educators, other workers and their unions.”

    State bureaucrats immediately ramped up deficit spending far beyond the state's $6 billion annual tax increase, with the Departments of Health Services and Developmental Services increasing this month’s spending by over $1 billion versus last year. The lower tax collection and higher spending drove the State’s deficit after the tax increase to $2.7 billion for the first 5 months of this fiscal year. State Controller John Chiang reported:

    November's disappointing revenues stand in stark contrast to recent news that California is leading the nation in job growth, has significantly improved its cash liquidity to pay bills, and even long-distressed home values are starting to inch upward... This serves as a sobering reminder that, while the economy is expanding, it is doing so at a slow and uneven pace that will require the State to exercise care and discipline in how its fiscal affairs are managed in the coming year.

    The improved “cash liquidity” Chiang referred to turns out to be $24.9 billion of debt.

    During the election campaign, Governor Jerry Brown and his pro-tax coalition had the California Board of Equalization request a report from the Stanford Center on Poverty and Inequality, which claimed to have looked at state tax records and found no risk of the super-rich leaving. Based on their access to California state income tax records from 1992 to 2009, the researchers concluded that millionaire migration is a myth by anti-tax advocates and “other factors, such as personal and business contacts, seem to weigh more heavily in deciding where to live.”

    The study’s authors, Stanford's Cristobal Young, an assistant professor of sociology, and Princeton's Charles Varner, a doctoral candidate in sociology, expounded that the temporary nature of high earnings may help explain why the additional taxes didn't cause a noticeable flight of millionaires. Top income tax payers seem to fall into and out of the millionaire income bracket as their income rises and falls across the million-dollar mark from year to year.

    Personal connections weigh more heavily than tax rates in deciding where to live, and “people are tied to states for different reasons,” Young said. “They don't want to take their kids out of school; they want to stay connected with friends, with families… with business contacts. People crowd together, from Silicon Valley to New York City, because of the returns associated with collaboration.” The findings dispel the “market metaphor,” in which states advertise low tax rates in a competition to woo high-income individuals. "This is a poor representation of how people decide where to live.”

    Young added that looking at the tax flight issue only scratches the surface of state financial woes. “People need to think about the depth of California's budget problems,” he said. “I think there's much, much bigger things to worry about than this issue of tax flight because it's really hard to find any evidence of it… I hope people hear, listen to and absorb what the evidence says on this issue," Young insisted.

    Following the tax increase victory, Reuters published an article titled “Super-rich flight from California? Not so fast.” Authors Jim Christie and Peter Henderson attempted to reassure readers there was very little risk that wealthy Californians would depart for income tax-free Nevada, Washington, and Texas. Although some Silicon Valley business owners had expressed interest in a move after California's top rate was raised by 29% to 13.3%, they wrote, “business groups from the Beverly Hills Chamber of Commerce to the tech industry policy group TechNet backed the tax, and the state Chamber of Commerce took no position.”

    As panic spreads that goosing taxes on the rich may have created enough “tax flight” that the California will actually collect less taxes, there was welcome news that a business had committed to opening in the State. Executives of the 99 Cents Only Stores Inc. proclaimed they would be opening a new location in Beverly Hills on formerly posh Rodeo Drive.

    Despite Tax Increase, California State Revenues in Freefall

    Last edited by Newmexican; 12-09-2012 at 12:43 PM.
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    Senior Member JohnDoe2's Avatar
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    California revenue lags due to Facebook, corporate refunds

    California missed its November revenue target by $806.8 million, or 10.8 percent, after a bad projection about tax proceeds from Facebook insiders and an unexpectedly high amount of corporate refunds, the State Controller's Office said Friday.

    State budget writers assumed that Facebook insiders would sell a large batch of stock in November at $35 per share, resulting in a tax windfall for the state. But those insiders executed their transactions a month early, state officials say, resulting in more money than expected in October but far less in November. Not only that, but until late November, Facebook shares had been trading below $25 per share.

    Those factors contributed to California missing its November personal income tax target by $842.5 million, or 19.0 percent. By comparison, the state exceeded its October target by $378.4 million.


    California also paid out an unexpectedly large number of business tax refunds, contributing to a $187.8 million loss in corporate tax revenues for the month. Sales taxes were $99 million above expectations.

    "November's disappointing revenues stand in stark contrast to recent news that California is leading the nation in job growth, has significantly improved its cash liquidity to pay bills, and even long-distressed home values are starting to inch upward," Controller John Chiang said in a statement. "This serves as a sobering reminder that, while the economy is expanding, it is doing so at a slow and uneven pace that will require the state to exercise care and discipline in how its fiscal affairs are managed in the coming year."

    For the first five months of the fiscal year, the state has taken in $802.4 million less in revenues than expected, equal to 2.6 percent. The State Controller's Office also says the state has spent $2.1 billion more than expected.

    State revenues and expenditures fluctuate throughout the fiscal year due to timing of payments and program spending. The bulk of additional 2012 tax revenue from just-approved Proposition 30, for instance, is not expected until April.

    The nonpartisan Legislative Analyst's Office has projected a $1.9 billion deficit between now and June 2014.

    Last edited by JohnDoe2; 12-08-2012 at 01:24 PM.
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    Administrator Jean's Avatar
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    ...there was welcome news that a business had committed to opening in the State. Executives of the 99 Cents Only Stores Inc. proclaimed they would be opening a new location in Beverly Hills on formerly posh Rodeo Drive.
    Is this for real? Funny, sort of.
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    Senior Member JohnDoe2's Avatar
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    Quote Originally Posted by Jean View Post
    Is this for real? Funny, sort of.
    It's a joke. And funny.

    This "article"is from one of those sites that lets anyone make up anything and post it on the site and pretend it's news. Some of them even get paid, but not many.
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    Administrator Jean's Avatar
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    Quote Originally Posted by JohnDoe2 View Post
    It's a joke. And funny.

    This "article"is from one of those sites that lets anyone make up anything and post it on the site and pretend it's news. Some of them even get paid, but not many.
    Hey, but it may happen apparently.

    October 13, 2012

    Dollar Store Seeks to Rub Elbows on Rodeo Drive - ABC News
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    Senior Member JohnDoe2's Avatar
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    It's actually going to be a $99. only store.
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    Administrator Jean's Avatar
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    Quote Originally Posted by JohnDoe2 View Post
    It's actually going to be a $99. only store.
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    Super Moderator Newmexican's Avatar
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    Quote Originally Posted by JohnDoe2 View Post
    It's a joke. And funny.

    This "article"is from one of those sites that lets anyone make up anything and post it on the site and pretend it's news. Some of them even get paid, but not many.

    This is on Breitbart, not usually a fringe site.

    DESPITE TAX INCREASE, CALIFORNIA STATE REVENUES IN FREEFALL
    Despite Tax Increase, California State Revenues in Freefall



    99 CENT STORE MOVING TO RITZY RODEO DRIVE



    by WILLIAM BIGELOW 18 Oct 2012

    Now even the well-to-do residents of Beverly Hills are feeling the economic pinch. The proof is that the glitziest avenue, Rodeo Drive, may soon be graced by the presence of a 99 Cents Only Store, and some residents aren’t unhappy about it.

    Rodeo Drive is famous for stores such as Versace, Armani, Chanel and Tiffany & Co.

    But the 99 Cents Only Stores chain has announced that it’s looking for space among the tony outlets. Eric Schiffer, the chain’s CEO, said,

    We think our store will do well. Our highest amounts of sales are happening in our branch on Wilshire Boulevard. We know for a fact a lot of customers there are coming from Beverly Hills. This store will be here to stay. The major reason for its success will be the challenging economy which came as the final impetus to open the store. We’ve had many success stories that are similar to this scenario. After we opened our store in West Hollywood on West Lincoln Boulevard, a Whole Foods came right next to us. As soon as it did, our business went up dramatically.

    Beverly Hills resident Ann Garry, who has lived in the ritzy burg since 1977, was excited:

    Oh my God! How will it work in the middle of all the fancy-shmantsy? If there’s a 99 Cent Only Store on Rodeo Drive, I will definitely shop there. I wouldn’t dream of shopping on Rodeo Drive. Instead of just looking at the windows I can now shop there.

    But Mikael Choukroun, manager of 208 Rodeo restaurant located on the Rodeo Drive, wasn’t happy:

    Hearing news of The 99 Cents Store opening is very disappointing. I worked for 20 years at Les Champs Elysees [in Paris] and I have seen what such stores have done to it. After McDonalds and similar places opened many of the high-end brands left Les Champs Elysees and it’s now full of cheap stores. I can see this happening to Rodeo Drive if they start opening such stores.

    Schiffer feels that he’s doing the other stores a favor:

    We’re hoping to find a landlord who will understand that with opening such a store we will increase traffic on Rodeo Drive, which has been slow due to the bad economy. By putting our news release out on Tuesday we hope to attract the interest of landlords and perhaps cut the middle-man process, and by that, cut some extra costs. Shops on Rodeo make most of their sales from tourists. When tourists get their basic needs from our store, as opposed to paying a lot more for the same items at their hotels, they will have saved enough to shop on Rodeo.

    99 Cent Store Moving to Ritzy Rodeo Drive

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    Senior Member JohnDoe2's Avatar
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    99 Cent Store Moving to Ritzy Rodeo Drive

    AND WE THINK THAT'S FUNNY.
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  10. #10
    Super Moderator Newmexican's Avatar
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    Quote Originally Posted by JohnDoe2 View Post
    99 Cent Store Moving to Ritzy Rodeo Drive

    AND WE THINK THAT'S FUNNY.
    VERY FUNNY!
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