California is Out of Cash and Out of Time

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Debunking the Myths of California’s Budget Crisis –

State offices throughout the state were closed yesterday as the state endured another furlough Friday.  The July 1 deadline came and went last week with no agreement between the Governor and the legislature.  The Governor could have saved the state and taxpayers nearly three billion dollars had he simply accepted a partial solution last week.  But instead he held out for the entire 23 billion dollars in spending cuts and when that did not materialize, he vetoed the legislature’s effort and so now instead of having a 23 billion dollar deficit we have a 26 billion dollar deficit.

Ten days have passed since that point, the state is out of cash, had the Governor simply taken the partial solution, at least we would be solvent at this point and would have enough cash to pay our bills.  Instead people are not being paid with IOUs.  The average person probably has not felt this yet, but that will be coming.  The Governor is now talking about a fourth furlough day or another 5% paycut for state employees (which is functionally the same thing) and state employees are talking strike.

There are a couple of pretty interesting myths that have been kind of floating around during the economic talks.  The first is that taxes in California are causing wealthy people to leave the state and the second is that the deficit is being driven by out of control spending as opposed to the economy downturn which has taken a huge hit from revenues.  Both of these myths have played a huge role in terms of the discussions that have occurred around budget talks.

The Myth of Taxation Causing an Exodus of Wealthy Californians

Addressing the first myth yesterday was the Public Policy Institute of California (PPIC).  The latest PPIC survey finds that while richer households are leaving California, poorer households are leaving a much higher rate and the rate of departure decreases rather than increases with income.

“When we compare households that left the state with those that arrived from 2004 to 2007, those in the bottom fifth (with annual incomes of about $22,000 and less) are most likely to leave: 1.73 of the poorest households leave for every one that arrives.  This ratio declines as income rises— so that among the top fifth (with annual incomes of about $110,000 and up), only 1.16 households leave for each one arriving. Among the highest-income households, with annual incomes above $200,000, only 1.09 leave the state for every arrival.”

In total, households in the poorest fifth are twice as likely to leave than those in the riches fifth. Indeed, the poorest group is also 50% more likely to migrate TO California from other states. Thus there seems to be a tendency toward greater mobility among lower-income households.

The report suggests that while California does have a higher top marginal tax rate 9.3% plus an additional 1% for millionaires, proximity rather than tax rates seems to explain which states California come from and move to.

“California does have high income taxes: a top marginal tax rate of 9.3%, plus an additional 1% for millionaires. Three states with no personal income taxes—Nevada, Texas, and Washington—are among the top five destinations for the highest-income fifth of California households. However, these three states are also among the top five destinations for the fifth of California house-holds, who face lower income tax rates in California than wealthier households do.”

As the study points out, “California’s progressive income tax means that lower-income households in California actually face tax rates that are similar to those of many states and well below those of others.” And yet, California loses far fewer high-income people to states without income taxes than it does low income people. “This looks like a puzzle: the poor have less reason than richer households do to move to states without income taxes.”

The real explanation is that it is not high income taxes that are chasing away Californians.

“This looks like a puzzle: the poor have less reason than richer households do to move to states without income taxes.”

They conclude that the reason the poor are leaving is not because of taxes but because of cost of living.

“States without income taxes are cheaper than California in other ways—housing costs, for example—that matter to all types of households, not only to those with the highest incomes. In other words, California does lose people to lower-tax states—but not just because of income taxes.”

The Myth of a Spending Driven Deficit

Admit it, you have heard the myth that the problem with California’s budget problems are based on the explosion of spending.  The myth can be summed up as follows:

“California’s problem is mainly on the spending side. If we stuck to a budget increase of inflation plus population growth over the last 10 years, we would probably be in fairly decent shape.”

Even on the surface that does not make sense given the enormity of the economic downturn that has simply sapped the state of revenues.  We did not suddenly increase spending by $60 billion in the last two years.  So even on the surface that claim does not make a whole lot of sense.

However, in the Legislative Analysts Office’s (LAO) analysis of the previous budget for 2008-09, they determined that since 1998-99 spending in the general fund and state special funds had rising to $128.8 billion from $72.6 billion, or 77%.

Now let’s freeze the frame right there.  Because we see a $56 billion increase over the last ten years.  That is somewhat less than the actual budget deficit.  So if we had completely frozen all spending increases, we’d be a lot better shape than we would be now, but obviously we would still have a deficit and it would not have kept up with inflation and population growth.

During this time the state’s population grew roughly 15% to 38 million while the inflation grew by 50%.  Understand that the state does not use CPI as their inflation index but rather it measures inflation using a federal index of state and local purchases as it relates to the types of services and goods typically purchased by state and local governments.  That makes sense because states do not purchase bread and hamburgers but rather things like healthcare and heavy equipment.

The bottom line here is that the budget’s growth, according to the LAO, exceeded population growth and inflation by just .2% per year.  Thus the budget growth roughly approximates inflation and population growth over the last decade.

I am not suggesting that we not cut spending and find ways to save money even during better economic times, those who read this site on a regular basis know that’s not true.  But spending is not the boogie man for California.

The Illegal Immigrant Factor

I will throw in a third myth for good measure, and that is that the problems with California’s budget can be fixed by solving the illegal immigrant problem.  I stumbled upon a George Skelton column from back in November for this one.  Skelton, a columnist for the LA Times, breaks out his estimate for the costs of illegal immigration.  He comes to the number $5 billion.  Not an insignificant number but not the cause of the budget shortfall either. 

Add them all up and the state spends well over $5 billion a year on illegal immigrants and their families.

Of course, illegal immigrants do pay state taxes. But no way do they pay enough to replenish what they’re drawing in services. Their main revenue contribution would be the sales tax, but they can’t afford to be big consumers, and food and prescription drugs are exempt.

How does he arrive at that number?

He starts with an estimate of 2.8 million living in California according to the PPIC study, which represents the last year with a good estimate.  That’s about 8% of the California population.

There are 19,000 illegal immigrants in the prisons, 11% of all inmates, that costs $970 million, but the feds cover $111 million of that reducing the number to $859 million.

For schools:

“If you figure that the children of illegal immigrants attending K-12 schools approximates the proportion of illegal immigrants in the population, the bill currently comes to roughly $4 billion.”

For social services:

“Illegal immigrants aren’t entitled to welfare, called CalWORKs. But their citizen children are. Roughly 190,000 kids are receiving welfare checks that pass through their parents. The cost: about $500 million, according to the nonpartisan Legislative Analyst’s Office.”

For health care:

“The state is spending $775 million on Medi-Cal healthcare for illegal immigrants, according to the legislative analyst. Of that, $642 million goes into direct benefits. Practically all the rest is paid to counties to administer the program. The feds generally match the state dollar-for-dollar on mandatory programs.

So-called emergency services are the biggest state cost: $536 million. Prenatal care is $59 million. Not counted in the overall total is the cost of baby delivery — $108 million — because the newborns aren’t illegal immigrants.”

Again, $5 billion is not an insignificant amount of money, but it’s not causing the budget problem.  The problem here is what is the solution at the state level?  We argued this point repeatedly with the county cutting of services to illegal immigrants–you may save money on the front end, but you might pay more on the back end.  Do we really want the children of illegal immigrants to be running around uneducated?  The courts have basically had their say on this point anyway when they threw out Proposition 187 back in 1995.

Conclusion

Addressing these three issues I think demonstrates at least to me that the problem right now is an economic problem.  That economic problem is exacerbated by the structural problem that California facing in Governance.  Quite simply the two-thirds requirement makes California ungovernable in two ways.  First you cannot pass legislation in the hyperpartisan climate we have.  Second, there is no accountability in this state.  It is fundamentally the fault of both parties because it requires both parties to agree to a budget.  Thus Democrats can credibly point the finger at Republicans and Republicans can credibly point the finger at Democrats.

The voters do not have a clear culprit.  It takes some faith to accept this, but if we had a majority vote system, then if the Democrats controlled the Government and the Democrats could not fix the problems they would receive the blame.  Incidentally this is what happened in 2006 at the federal level.  Republicans controlled both houses of the legislature and the Presidency in 2006.  The public did not like the direction and over the course of two elections voted them out.  In 2009, Democrats now control both.  If the Democrats fail to fix the problems, they could very well be voted out in the future. 

That’s the way it is suppose to work, but doesn’t in California.  Why?  Whose fault is the problem right now?  Democrats control the legislature but do not have the votes to pass a budget without Republican help and a signature by the Governor.  So whose fault is it?  Depends on what party you are.  We need to change that if we want to address the broader problems.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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23 Comments

  1. Greg Kuperberg

    [i]Second, there is no accountability in this state.[/i]

    You were going pretty well in your analysis until you got to this point. Right here you are almost (but maybe not quite) taking the discussion back to personal blame.

    No, there is no real shortage of accountability in California. State politicians are held to account all the time in this state, [b]to the wrong things[/b]. That is why this crisis has been so confusing to so many. Every relevant state proposition is an instrument of accountability. But too much accountability in too many directions is self-defeating. That is the real problem.

    Proposition 1 in 1933, which causes the 2/3 budget rule, is one of the worst culprits, but not the only one. The idea then was to make the legislature accountable to taxpayers. Proposition 98 is another major culprit. It makes the legislature more accountable to K12 students — but not to solvency. Prop 13, again, made cities and the legislature more accountable to property owners — but not to solvency. Finally Proposition 1F this year made politicians more accountable to solvency — but not really, because at this point, that’s impossible.

    I am not a great fan of politicians. But we need to get away from the idea that politicians as a group are bad people who haven’t been held to account. The real problem is misdirected accountability, and more of it will certainly make things worse.

  2. My View

    I don’t necessarily agree with your analysis DPD, thoughtful as it is. Here’s why. In the Davis Enterprise, there was an article recently about cost cutting measures that were taking place in the prison system. Condiments were being eliminated for prison food, and other no-brainer cost savings measures. The results were healthier eating for prisoners. My question is why wasn’t this being done all along? UCD has recently been going on a building binge, as well as salary hikes to upper management – as it hikes student fees. In other words, there is huge gov’t waste that needs to be trimmed. I have always said this, but have been pooh-poohed by many on this blog, including you, DPD. Trust me, there is huge waste in gov’t that needs to be trimmed.

    However, now is not the time to “trim the fat” w wholesale layoffs. We need to keep people employed if at all possible. Otherwise current layoffs will trigger another round of layoffs in the future in a vicious cycle. But there are ways to trim the fat, as the prison system is doing. One of the problems is there is no incentive built into the system to trim the fat. Dept. heads are encouraged to spend every last penny they are allotted, or receive less the next year. What really needs to happen is employees need to receive a percentage of any savings that are realized by their efficiency.

    As far as blame, what I see is an irresponsible Democratic legislature at both the federal and state level deflecting blame away from themselves, and directing it at Republicans, who virtually have no power to do much of anything. However, I see the Republicans just sitting back and allowing the Democrats immolate at the expense of the country. As I have said before, both parties need to get their act together, and do what is best for the country and state. One thing they need to encourage, through leadership, is fiscal responsibility by trimming fat – and that includes bloated public employee salaries/benefits at the upper end.

    I would not be in favor of a simple majority vote for a budget – which would result in even more spending than we have now. There would be no balance. However, a 60% majority might be worth trying, but I’m not sure that would solve the problem. I just do not see legislators understanding that budgeting in a fiscally responsible manner means we have to actually budget responsibly – it cannot continue to be business as usual. We cannot keep shoveling condiments and desserts 7 days a week to prisoners, we cannot keep building at UCD, we cannot keep giving huge salary/benefit increases to public employees at unsustainable levels.

    However, there is a federal component to all this. Let us not forget that it is the federal Banking Committee, that insisted banks loan to low income folks who could not possibly repay loans, and ARMs encouraged by Alan Greenspan that largely got us into this mess in the first place. We need serious reform at the federal level, which I don’t see happening either.

  3. inkblot

    Some good points, but you don’t accurate describe what happened in the case on Prop 187.

    It was thrown out by a biased Federal judge. No surprise.
    The appeal was then deliberately undermined by the CA attorney general who neglected his duties to argue for it. Prop 187 was thrown out in an agreement between CA and the appeals court. It was never seriously argued for in court by the state.

    It’s another reason why many of us who follow these things got cynical about state government.

  4. David M. Greenwald

    My View: I was not arguing that there isn’t waste in the system–there is no doubt that there is. My point addressed the growth in spending, a separated but not unrelated issue.

    Inblot: “It was thrown out by a biased Federal judge.” That’s certainly your view. You claim I don’t accurately describe what happened, I described briefly that it was thrown out by the courts which is accurate. You certainly have appeals opportunities, I just don’t buy that fundamentally immigration is a state issue rather than a federal issue. Regardless, my main objection here was not to re-argue Prop 187 but assess immigration’s impact on the budget.

  5. wdf

    My View:

    I think I remember another cost cutting measure being having beans more often instead of meat. That jumped out as a no-brainer for cheap and healthy.

    David:

    I’m looking at today’s (Saturday’s) headlining Sac Bee article, “Mortgage defaults spread”, which ties in with some issues you raise.

    [url]http://www.sacbee.com/topstories/story/2017811.html[/url]

    It focuses on the Sacramento area, and points out that furloughs are starting to squeeze previously reliable loan-paying state government workers. It suggests a kind of downward economic spiral.

  6. JayTee

    I don’t begin to understand the ins and outs of the state’s budget problems, but the governor’s plan to force state workers to take four furlough days really concerns me. Four days is very close to an entire work week. That’s a huge portion of someone’s salary to lose – almost 25%. It seems to me that will put many more people into foreclosure – people who up until now have been able to meet their financial obligations. My question is “how could this possibly be beneficial to the state?” They may ultimately be able to balance the budget, but at what cost?

  7. rick entrikin

    SO, what is the solution? I’ve read all above comments regarding democrats & republicans, and agree we have a serious problem. But I still haven’t seen a viable proposal to save us from this mess.

    Although I’m a liberal progressive (but fiscally conservative), I haven’t seen a single proposal that would dig us out of this economic hole.

    Maybe you solved the problem with your comments but, if so, I missed it. In my opinion, we are facing a fork in the road and will not solve this dilemma unless we reduce expenses or raise taxes. So, what do you prefer?

    Personally, I’m about taxed to the limit & have to shop for bargain, sale prices just to make ends meet. So, what is your solution for long-term, tax-paying California residents?

    I look forward to reading your “solution.”

  8. My View

    “It focuses on the Sacramento area, and points out that furloughs are starting to squeeze previously reliable loan-paying state government workers. It suggests a kind of downward economic spiral.”

    Bingo. This is what I repeatedly have warned about – layoffs are detrimental to the economy. Better everyone take a pay cut, than furloughs, but now the cuts are going so deep, it might as well be a layoff. Obama is clueless. CA will not be the only state going through this. Worse is to come, but Omana has no idea what to do.

    The only solution I see, is to cut gov’t waste wherever we can – beans instead of beef for prisoners, for instance. No more fat salary increases for those already making hefty salaries. No more building at UCD. But do you see that happening? No. The UC system just raises student fees to pay for Yodof’s and Katehi’s fat raises, and continues with its new winery and convention center. Some will say “Oh, but private donations are paying for the new winery and convention center”. And are private donations paying for operating the winery and convention center? I very much doubt it. This is the kind of waste that has to be stopped. I think Lois Wolk’s idea of accountable governance is a good start. Mariko’s idea of AB 155 is a disgrace.

  9. Huh 2?

    My View says better paycuts than furloughs… what do you think a furlough is (at least as being done by the State)?
    I can understand someone wanting to see pay cuts vs LAYOFFS, but if My View is advocating a 15% paycut (“permanent”)in salary vs. a 15 % loss in pay due to furloughs, then I have to assume they really want the paycut to be permanent, even into retirement. Furloughs generally don’t result in ‘final year compensation’ being reduced.

  10. reaper

    I agree with the point that my view made. I think the basic tenor of the article is things are not happening or are happening because of the governor. THe fact that the democrats control nearly everything at both the federal and state levels is largely being ignored by the article, simply blaming the governor for all of the mess. The democrats have a responsibility to govern and come up with proposals, and they aren’t doing it. Where are all of the bright ideas from Boxer/feinstein? Where is Mariko Yamada? on another planet? where are the assembly leaders? simply throwing up their hands if they don’t have a 66% supermajority?

  11. My View

    “I agree with the point that my view made. I think the basic tenor of the article is things are not happening or are happening because of the governor. THe fact that the democrats control nearly everything at both the federal and state levels is largely being ignored by the article, simply blaming the governor for all of the mess. The democrats have a responsibility to govern and come up with proposals, and they aren’t doing it. Where are all of the bright ideas from Boxer/feinstein? Where is Mariko Yamada? on another planet? where are the assembly leaders? simply throwing up their hands if they don’t have a 66% supermajority?”

    Exactly my point! Pointing fingers is useless at this point. We need solid ideas on how to get out of this economic mess, besides taxing citizens to death, or laying off workers. Both will be counterproductive.

  12. skeptic

    “We need solid ideas on how to get out of this economic mess, besides taxing citizens to death, or laying off workers. “

    Great thinking, My View! Now what would those ideas be? Surely you have something clever in mind. You know, the state is already taking care of a good amount of waste by cutting positions and laying offer workers.

    How about passing a proposition eliminating all previous propositions?

    Maybe we could sell tickets so tourists could watch the disaster unfold in person?

  13. Frankly

    [quote]And yet, California loses far fewer high-income people to states without income taxes than it does low income people.”[/quote]
    In California, the highest expense items for the producer class (those that own businesses and provide jobs) are taxes and fees imposed by their government (both state and local). Also, the regulatory environment in California is the most burdensome of any state other than New York. This too has a real cost associated to it as businesses must hire staff and legal support to navigate the requirements. To just look at income tax is disingenuous and ignores the real reasons business are vacating this state in droves.

    California State and local government has developed an elitist attitude that it is a privilege to own and operate a business in this state. Progressives have over-milked these “high wealth” people (and the middle class) like a cow that can produce perpetually increasing quantities of milk. Now they have taken to beating the cow to force out more milk. These are not happy cows.

    Today it is apparent that California has fully leveraged our good weather and no amount of sunshine or beatings will motivate businesses to stay or relocate here. We need to understand that we are in competition with other states for businesses that provide jobs, and we are losing.

    [quote]Understand that the state does not use CPI as their inflation index but rather it measures inflation using a federal index of state and local purchases as it relates to the types of services and goods typically purchased by state and local governments.[/quote]
    So, we reset the inflation factor of government spending by the past spending practices of the government? The importance of an inflation factor is to compare the subset to the superset, is it not? What value is provided to the people supposedly served by government to have the performance of its government only measured against itself? Based on this logic, we would assign a different CPI to any group based on any measurable purchasing trend.

    It seems some people will accept any explanation as long as it is supporttive of their worldview.

    [quote]Again, $5 billion is not an insignificant amount of money, but it’s not causing the budget problem[/quote]
    It amazes me that we keep reading arguments from those sympathetic to illegal immigrants that $5 billion is okay because our deficit is about 5-6 times that amount. That is like saying it is okay to purchase a new luxury car because it is only one-fifth the cost of the defaulted home mortgage.

    $5 billion is a significant cause of the budget deficit. It is part of an aggregate of causes that all point to over spending.

  14. Frankly

    [quote]In California, the highest expense items for the producer class (those that own businesses and provide jobs) are taxes and fees imposed by their government (both state and local).[/quote]
    Correction: Other than wages and non-mandated benefits paid to employees.

  15. My View

    “Great thinking, My View! Now what would those ideas be? Surely you have something clever in mind.”

    You wanted suggestions, so here goes –
    1) ENCOURAGE BUSINESS to come here, not discourage it. If you tax and regulate business to death, those that are here will not stay, those that are searching for a home base will not come here. We need more business in cities and in this state.
    2) For the moment, it is better to KEEP EVERYONE EMPLOYED than it is to lay off people. So FURLOUGH public employees, have them take PAY CUTS if necessary, but keep as many people employed as possible. This will take leadership of unprecedented proportion, to go up against the intransigent unions, but it must be done. Obama is clueless on this point. So is our City Council majority.
    3) Start CUTTING OUT OBVIOUS WASTE that will not result in laying off people. The prison system has begun doing just that. Prisoners only get dessert one day a week, rather than seven. Why wasn’t that cost cutting measure being done long ago? There is rampant waste like this going on in every department in every city and state. Why? Because there is no incentive to save. Start giving workers a percentage of what they save, instead of giving an incentive to spend every last dime.
    4) Work very hard to DECREASE THE RIDICULOUS AND UNSUSTAINABLE SALARIES AND BENEFITS OF PUBLIC EMPLOYEES. Threaten bankruptcy if necessary. Vallejo did it, and so can Davis and the state. Vote against AB 155, or any legislation remotely like it. Support Lois Wolk’s idea of performance based governance.
    5) We need to institute real BANKING REFORM. We cannot continue to allow banks to collect huge profits on Adjustable Rate Mortgages that are out of control, while these same banks soak the taxpayer by taking bailout funding, giving big fat bonuses to their own upper management.
    6) UNIVERSITY SYSTEMS AND PUBLIC SCHOOLS HAVE TO STOP THE IDIOTIC BUILDING CYCLES they are on – funding with “facilities” funding. The bottom line is that for every facility built, it takes “operating” funds to run it. Operating funds we don’t have.
    7) STOP BUYING JUNK FROM CHINA, and rather buy American instead. The Chinese are dumping toxic goods on us, stuff we would not allow our own manufacturers to sell here. This is such a double standard and absolutely ridiculous. For those of you worried about China owning a lot of our debt, it is an asset only as good as our economic health. If the U.S. economy goes down the toilet, so does China’s ability to collect on our debt. China is dependent on our economic health.
    8) ENCOURAGE MORE QUALIFIED PEOPLE TO RUN FOR OFFICE. Stop looking the other way at malfeasance in public office. We have a City Council majority who are clearly beholden to the firefighters, and need to be taken out (the legal way – vote them out of office). We have an incoming UCD Chancellor who sees nothing wrong w aiding and abetting a shadow admissions system that favors the children of the wealthy and well connected.

    I’ll stop there for the moment, but I could go on…

  16. go back to mexico

    Illegal immigrants can come here and get welfare for their kids. They not only get calworks, they get free child care, medi-cal, and education. They also get free medical for themselves. Sorry they are taking more than they bring in and republicans love them because they provide cheap labor, take jobs from Californians and get social services at the same time because they work UNDER THE TABLE. The only taxes they might pay is in the form of sales tax, if they actually buy much over here. Lots of money is sent back to Mexico, it’s a no brainer, if you can cross the border en masse and get free money and services, they’re going to do it, and they are doing it. They also live in subsidized housing en masse and are taking over the entire social service welfare system. Now they are demanding that they get unemployment benefits and in state tuition, yet at the same time, we can’t even take care of our own citizens or give in state status to American citizens. They are taking toooooo much and not giving back. They are taking over local and state governments. They don’t bother to learn english cause they don’t have to. 5 billion is alot of money, and we must first take care of American citizens and California legal residents before we give to other nations. Take care of Americans first, then take care of the rest of the world. If we can’t even provide services to Americans then why should we provide it to illegal immigrants. And oh yes, on Sotomayor, latinos working in local and state governments routinely discriminate against blacks and whites. They are hypocrits that demand rights for themselves but don’t give it to others. They are taking over. Bottom line. Sorry doesn’t sound popular, but it’s true. If you want to continue to advocate that we screw ourselves over just so we don’t sound racist, then you’re an idiot!!

  17. corporations can go too.

    ps. corporations need to get the hell out of California. THey keep threatening us with leaving acting like they are doing us a favor by hiring cheap government subsidized ILLEGAL immigrant labor. Please mr. corporation. DON’T DO US ANY FAVORS!!! You just want to buy another 10 million dollar yacht and keep wages low. Just remember mr. corporation, if we don’t have any money, we CAN’T BUY YOUR CHEAP MASS PRODUCED CRAP!!!!

  18. ???

    So what is the best known statistical trend for illegal immigration? is it going up or down? Thought I heard a news item that actually determined that illegal immigration was going down.

  19. earoberts

    To go back to mexico: I understand your points – but just remember that if we don’t take advantage of Mexico’s cheap under the table labor, you are going to pay treble or quadruple the price for produce. A tomato will cost $4 or $5 each, if picked by an American laborer!

    Yet I largely agree w your point we need to take care of our own citizens first. It is truly a dilemma, and not one that there is a good answer for. We probably need an honest to gosh guest worker program, that puts all this shadow enonomy above board.

    To corporations can go too: If business leaves CA, there goes business tax revenue, and less money to pay for all those services you enjoy. Business is not inherently evil. It is what makes this country operate. Think about it – our national economy thrives on two things 1) Christmas, where stores make 50% of their profit; 2) defense spending.

    By the way, the “cheap crap” you talk about comes from China!

  20. Don Shor

    Jeff:
    “In California, the highest expense items for the producer class (those that own businesses and provide jobs) are taxes and fees imposed by their government (both state and local).
    …Correction: Other than wages and non-mandated benefits paid to employees.”

    I don’t know where you get those statistics. Major expenses for most businesses are the cost of goods, payroll, cost of lease or mortgage, payroll taxes, insurance (especially workers comp), and utilities. Corporate taxes are generally pretty low, and accounting practices can be used to minimize them. Government fees are relatively minor. I pay a nursery license fee, a business license fee, and over the years I’ve paid a couple of others (contractors license, etc.).
    The exceptions, regarding taxes, are the businesses which are actually corporations set up by professionals (doctors, lawyers); the tax on those businesses amounts to a personal income tax. They are a surprisingly large percentage of the so-called “small businesses” often cited in these discussions.
    Maybe I’m missing something in your argument, but I don’t think your initial point is correct.

  21. corporations can go too.

    illegal immigration is not going down fast enough. they come over here, back and forth, get free medical services, free food stamps, free child care, they have kids here, send the money back to mexico. illegal immigration and the abuse of the social welfare system by illegal immigrants have got to stop!!! I don’t care if they do most of the work for cheap.Right now there are plenty of American citizens who are willing and able to work for minimum wage. If farmers are paying them 5 bux an hour, that’s illegal. The under the table wages are supplemented by welfare. The corporate farmers love illegal immigrants and the social welfare system because they can continue to pay low wages and get away with it without paying much taxes. The farmers, illegal immigrants and corporations are all leaches on the system and are doing little to give back. It’s got to stop. Corporations need to pay their fair share of taxes and stop holding Californians hostage, by threatening to leave. I say get the fusxx out then. But of course they won’t cause ther’s money to be made in California…taxes or no taxes.

  22. earoberts

    “Right now there are plenty of American citizens who are willing and able to work for minimum wage.”

    Yes, but how many Americans are willing to work for BELOW minimum wage?

    “The corporate farmers love illegal immigrants and the social welfare system because they can continue to pay low wages and get away with it without paying much taxes.”

    And so do the public love cheap labor, bc it keeps the cost of produce down. Do you want to pay $5 for a tomato? Can you afford to pay $5 for a tomato?

    “Corporations need to pay their fair share of taxes and stop holding Californians hostage, by threatening to leave.”

    How would you propose keeping business here, if they can get tax breaks elsewhere? CA corporations are free to leave, and if they do, they take jobs and needed tax revenue w them. If big business leaves CA, how do you propose paying for the services you enjoy?

  23. taxes for the poor but not the rich

    How is business doing us a favor if they don’t pay any corporate taxes and use the social welfare system to pay illegal immigrants under minimum wage? I say to them DON’T DO US ANY FAVORS!!!!!
    Big business is not going any where. Corporations and the rich need to pay their fair share just like everyone else so we can restore the services back to the states. After bush came in with his tax cuts, states and counties were left to find the money themselves some how. If you’re fine with paying illegal immmigrants 3 bux an hour and letting them get social services, you are probably a rich cat who doesn’t want to pay a lick of taxes. You’re not doing California any kind of favor. Take your slave mentality and ideology and leave. we don’t want you here. Business won’t be going any where. Right now the poor and middle class are left paying the brunt of taxes. The rich need to pay their fair share. We need to stop entitlements to illegal immigrants because right now, the law of diminishing efficacy has far surpassed it’s goal if you know what I mean. The abuses by illegal immigrants are too big and many to count. Paying American citizens minimum wage to pick tomatoes will not raise the prices of tomatoes to 5 bucks a tomato and this is just a scare tactic that you nasty greedy hypocritical right wing republican redneck farmers do to scare us into bying into your slave ideology.
    Sorry you greedy Christian. I’m not buying it. Also could you please stop using bad irrigation practices to water your tomatoes and stop polluting our water. You people disgust me to no end. Hypocrits. Let me guess,,,, you go to church on sunday and Defame Christ’s name every time.
    You are a hypocrit and parasite and it would do California a world of good if people like you left California. Please leave mr. corporate farmer. You are no longer wanted. good bye. you don’t pay any taxes anyway, so how the hell are you doing any thing for us????

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