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Thread: CA State Budget

  1. #1
    AudreyLeigh
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    Default CA State Budget

    New bill to take an extra 10% of our paycheck for the new state buget? WTH is this?! They cant fix their sh*t so they want to take more of our money. For us thats around $400 of our TAKE HOME from my husbands check per month! Were in the process of buying a house, thats a chunk considering we pay support out the wazoo for his daughter from our net income also. If this goes through his gross of $118,000 we currently get $5200 net (after support) and this will dump us down to $4800. This is crap.



    Curoius for input about this...

  2. #2
    God/dess Deogol's Avatar
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    Default Re: CA State Budget

    Quote Originally Posted by AudreyLeigh View Post
    New bill to take an extra 10% of our paycheck for the new state buget? WTH is this?! They cant fix their sh*t so they want to take more of our money. For us thats around $400 of our TAKE HOME from my husbands check per month! Were in the process of buying a house, thats a chunk considering we pay support out the wazoo for his daughter from our net income also. If this goes through his gross of $118,000 we currently get $5200 net (after support) and this will dump us down to $4800. This is crap.



    Curoius for input about this...
    Taxes and COL chased me out of that state a long time ago. Found out there was nicer living OUTSIDE of California too.

  3. #3
    Banned Melonie's Avatar
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    Default Re: CA State Budget

    I've been posting periodic threads about California economic / tax policies, but I usually put them in the Member's area due to an unavoidable political content. But since this thread is already underway I'll respond as factually as I can in Dollar Den with a minimum of political commentary.

    California has some unique ideas about taxing corporations ... specifically a state tax on WORLD income. California also has one of the most expensive 'mandated' cost of doing business, which includes everything from higher environmental compliance costs to higher minimum wage to higher workmen's comp and unemployment insurance costs. In a nutshell, California is one of the least 'business friendly' states in the USA. And not surprisingly, an increasing number of companies are (best case) not expanding, (middle case) outsourcing or relocating part of their workloads, or (worst case) locking their doors. As a result California has lost a significant amount of business tax revenue.

    California also has one of the highest individual income tax rates in the country. This by itself has provided motivations for upper middle class Californians to run for the Nevada state line. Other upper middle class Californians have wound up being 'victims' of relocation or outsourcing. As a result California has lost a significant amount of individual income tax revenue.

    California has always had very generous social welfare spending policies ... which exceeded tax revenues on an annual basis for the past several years. To bridge the budget gap, California would create new bonds out of thin air, sell them, take the money from the proceeds and spend it immediately, and pay interest to the bondholders (who were typically uber-rich Californians seeking a tax free income source, or institutional auction rate bond buyers, etc.). But as California's pile of bonds kept growing taller and taller, the state's credit rating began to slide. As a result, California now has difficulty finding willing buyers for yet more new bonds at any sort of 'reasonable' interest rate. Also as a result, the rising percentage of annual tax revenues necessary to pay the interest payments on thie growing mountain of bond debt diverts state tax revenue away from 'normal' budget items.

    Several months ago, Gov. Schwarzenegger tried to explain the extent of California's budget problem to state legislators, and sought across the board cuts in state spending. As the months have gone by, none of the legislators has been willing to actually spend significantly less money this year than last year on any California gov't program. At the same time, layoffs and additional immigration of very low income residents have increased state spending on social welfare programs. Arguably, state legislators are unwilling to agree to meaningful spending cuts because more than 50% of their constituents are now people who would be directly affected by those cuts ... i.e. very low income residents, civil service workers (teachers, cops, firemen, govt contractors), the very rich (who would earn less tax free interest if the state didn't need to sell as many new bonds).

    So the state has now decided to attempt to balance its budget via large state income tax increases on a 'minority' of its registered voters, namely middle class people like yourself and your husband.

  4. #4
    AudreyLeigh
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    Default Re: CA State Budget

    Thanks Mel. This is so frustrating. All theyre going to do is drive MORE people AWAY and earn less. But they dont care - as long as the rich keep getting richer screw everyone else.

  5. #5
    God/dess anomar's Avatar
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    Default Re: CA State Budget

    I vote recall...

    Man, CA is such an effed up state (grew up in San Fernando Valley / Westside).

    Being the, what, 5th largest economy in the world and trying to also be part of the federal system... too bad they can't secede.

  6. #6
    God/dess Deogol's Avatar
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    Default Re: CA State Budget

    Quote Originally Posted by anomar View Post
    I vote recall...

    Man, CA is such an effed up state (grew up in San Fernando Valley / Westside).

    Being the, what, 5th largest economy in the world and trying to also be part of the federal system... too bad they can't secede.
    Yea. California has been doing so great these last few years. We are lucky to have them.

    (Deogol, an ex-Californian.)

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    Default Re: CA State Budget

    R wants to go to school and live in CA (or Hawaii, but that's a longer shot)

  8. #8
    AudreyLeigh
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    Default Re: CA State Budget

    Hawaii is more expensive than CA when it comes to rent/food/gas. Its super duper expensive. I know. I lived there and not for very long!

  9. #9
    Bianca O'Blivion
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    Default Re: CA State Budget

    I miss CA and don't know how some of my relatives survive there.

    The State Senate needs to CLEAN FUCKING HOUSE!!!!!!!! Everything is ass-backwards in regards to tax spending.

    I miss my home but I cannot return until things change.

  10. #10
    AudreyLeigh
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    Default Re: CA State Budget

    Today on the news some lady went "We dont want to have the bill vetod. If it happens we'll approve the bill anyway". Stupid fat cow. I wanted to slap her.

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    Default Re: CA State Budget

    can't wait til grad school. hoping to GTFO.

  12. #12
    Banned Melonie's Avatar
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    Default Re: CA State Budget

    I vote recall...
    you'd lose

    Today on the news some lady went "We dont want to have the bill vetod. If it happens we'll approve the bill anyway".
    unfortunately, she's probably right. When state representatives are elected by a majority of district voters that consists of social welfare benefit recipients who don't want their benefits cut, low income workers who don't want a cut in their state subsidies for rent and utilities, teachers / cops / firemen / sanitation workers that don't want their CSEA union pay raises rescinded, 'uber-rich' residents who don't want to see their tax free municipal bond interest rates cut, and employees of private sector companies that don't want to lose their gov't contracts, the LAST thing they will propose is an actual cut in government spending levels.

  13. #13
    Yekhefah
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    Default Re: CA State Budget

    Thank you, thank you, thank you Lord that I got the fuck out.

  14. #14
    AudreyLeigh
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    Default Re: CA State Budget

    My husband mentioned moving to Seattle. WTH is in Seattle? Doesnt it rain there? What sucks so bad is we just got ready to find a house to buy. If we lose this much more income that is not gonna happen...

  15. #15
    Banned Melonie's Avatar
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    Default Re: CA State Budget

    ^^^ circling back to the topic of economics, consider this. If California does not make the decision to actually cut gov't spending, and if California's 'credit rating' is downgraded to the point where they really can't borrow more money at 'reasonable' interest rates, the state must find a way to come up with something like 20 billion dollars per year in additional tax revenues to bridge the gap. And this amount will grow with every additional illegal alien or low skill low income person that moves into California, with every automatic union pay rate increase, with every additional retirement of a California public service worker, and with every additional layoff of a skilled high income person.

    At the same time the state must come up with an extra 20 billion in shortfall, the number of higher income 'middle class' Californians who are still 'available' to pay for that shortfall will be declining. Some will leave the state by choice, and others will leave the state because their employer (or some portion of their employer's workforce) will leave the state. Thus the extra 20 billion must be collected from an ever shrinking pool of Californians who earn enough to actually pay state income tax, meaning that the number of tax dollars that must be individually extracted from remaining middle class Californians will increase as well.

    This situation has the potential to quickly snowball towards a mass exodus of California businesses because the available 'discretionary spending' dollars of every middle class Californian will be immediately reduced by the amount of the state income tax increase. Fewer discretionary dollars to spend means lower business levels / profits - a simple economic fact. But this in turn will cost the state yet more lost dollars in state tax revenue, both from lost business tax and from lost income tax revenues of former employees. And this will of course further increase the number of tax dollars that must be individually extracted from remaining middle class Californians.

  16. #16
    God/dess Deogol's Avatar
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    Default Re: CA State Budget

    Its a bit like Detroit. Detroit has taxes up the wazu. The communities around Detroit do not. Guess which has mowed lawns and fresh pavement?

  17. #17
    God/dess Deogol's Avatar
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    Default Re: CA State Budget

    New info on revised budget plan:



    He said the budget relied on accounting gimmicks to close a $15.2 billion deficit -- such as collecting an extra 10 percent of workers' income tax in advance and repaying it later -- that could lead to an even larger deficit next year.

    The four legislative leaders said they had agreed to remove that provision in their latest deal.


    ...

    It would require those who pay estimated taxes, including corporations and wealthier Californians, to pay a greater percentage of their annual taxes in the first two quarters of the year, a move that would generate $2.3 billion for this fiscal year. But the state would lower their tax payments in the last two quarters, artificially inflating state revenues.

    New millionaires would have to pony up their taxes earlier and the state would borrow nearly $1 billion from special funds intended for other uses, such as transportation projects and reducing smog.


    I like how the writer automatically helped people assume anyone making estimated tax payments is "wealthy."

  18. #18
    AudreyLeigh
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    Default Re: CA State Budget

    Yea! I just saw that on the news and was going to post it. Thank GOSH.

    As per the "wealthy". Yea, Im with ya.

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    Default Re: CA State Budget

    The state is just taking 10% additional of state withholdings. For your hubby that's probably $80 or $90 a month. They haven't raised taxes and he will have less withheld in qtrs 3 and 4. I'm glad Arnold took a stand on this budget. We need to do something other than accounting tricks to deal with our deficit.

  20. #20
    AudreyLeigh
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    Default Re: CA State Budget

    Thanks Ernie. Ok then my news people had it wrong. They said for a 4 person family with $75k of income it would be $400 taken out of their pockets. I was seriously freaking out because were in the process of buying a home and if they took 10% that would be over $700 of our net income a month! (when I did math before I was doing it on our net after the child support) That would mean no house for us. Ive calmed down now. I was thinking - how the hell can they do that? What you are saying makes much more sense. Whew! I feel much better now. Off to house shop!!! Whoot whoot!

  21. #21
    Banned Melonie's Avatar
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    Default Re: CA State Budget

    The state is just taking 10% additional of state withholdings. For your hubby that's probably $80 or $90 a month. They haven't raised taxes and he will have less withheld in qtrs 3 and 4.
    unless of course the state still falls short on revenue despite the accelerated income tax withholding revenues(which it will), and figures that if taxpayers didn't bitch too badly about the new level of tax withholding in the 1st and 2nd quarter that they can get away with the official tax increase to keep withholding levels in the 3rd and 4th quarter at the same higher level !!! Such is the way of back door political economics.

    All you have to do is look at the numbers. None of these accelerated tax collection accounting tricks do anything to address the actual gap between spending and tax revenue levels. All they do is allow California to avoid declaring bankruptcy for three more quarters, in exchange for a guarantee that bankruptcy will have to be declared a year from now when tax revenue collection drops significantly. IMHO there is no way I would 'bet the farm' that a California state income tax increase won't happen after the first of the year.

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    Default Re: CA State Budget

    The accelarated withholding on individuals is not in the new compromise reached earlier today. Our state Republicans are holding their ground on no temporary 1cent sales tax increase and with a supermajority needed for passage, they do have some leverage.
    http://www.sfgate.com/cgi-bin/articl...1KQM.DTL&tsp=1

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    Banned Melonie's Avatar
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    Default Re: CA State Budget

    ^^^ I have been trying to find details of the bill, but all that's out there so far are generalities. The compromise bill supposedly still contains 'accelerated' tax payments, as well as the cancellation of certain tax deductions for California businesses (which in my book constitutes a tax increase). But an increase in California workers' payroll tax withholding was definitely dropped from the bill.

    Again none of this is final until Der Governator signs it ...

    PS yet another tidbit of potential interest to California dancers. This bill also greatly increases the penalties for underpayment of estimated taxes by California businesses (i.e. independent contractors ).

    However, something else bears careful notice. This proposed budget bill appears to address an expected $17 billion dollar gap between state gov't spending and expected state tax revenues by a $7 billion reduction in gov't spending. This STILL leaves a $10 billion revenue gap (which will probably be 'papered over' by the sale of yet more municipal bonds) ... and that assumes that projected California tax revenues don't decline as a result of jobs being lost, declining business profits etc. as well as assuming that projected California social welfare spending doesn't increase.

    Thus this proposed budget bill amounts to 'applying a torniquet to a severe wound', but only tightening it enough to slow the bleeding by 40% ! Sooner or later the other 60% bleeding rate must be addressed ... as well as eventually having to pay back the 'blood bank' for all of the past transfusions (i.e. California bond debt) that have kept the patient 'alive' for this long. And in keeping with my metaphor, it is extremely likely that California will choose to do this by 'sucking more blood' from middle class California taxpayers.

    ~
    Last edited by Melonie; 09-20-2008 at 04:51 AM.

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    Default Re: CA State Budget

    and just in case you thought I was in 'tin foil hat' mode about California businesses preparing to 'jump ship' before it sinks ...





    (snip)"My own sources tell me that DreamWorks informed its owner Paramount within the last 24 hours that it has executed its deal with Reliance. But today Paramount waived certain provisions from the original deal to clear the way for the DreamWorks principals and their employees to join their new company "without delay".

    The DreamWorks principals will have one of India's largest entertainment conglomerates set up its new $1.2 billion film company. Mumbai-based Reliance ADA Group will invest $500 million equity and provide another $700 million in debt through J.P. Morgan Chase toward the new venture, which will produce a slate of about 6 films a year. The deal now means that David Geffen has engineered his most fervent wish: to give Steven Spielberg and his DreamWorks chief exec Stacey Snider enough film financing to produce independently so they can leave an ugly relationship with Paramount behind them."(snip)


    What the new deal means is that California will wind up losing a s#!tload of highly paid movie production jobs, as well as losing state tax revenues from DreamWork's global film profits (i.e. California's controversial taxation of worldwide business activities of any corporation that is based in California !). What this new deal also means is that California's one 'bedrock' industry i.e. movie production has now firmly established a trend of outsourcing and relocation in the same vein as many other industries have previously done.

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