In another interesting article on the Wall Street Journal’s website, the author delves into the idea that California would take over the title of highest tax jurisdiction if Democrat legislators were able to pass their new tax increases. Below is a quote from the opinion piece.
“New York City has long been the highest tax jurisdiction in the United States, but California politicians are proposing to steal that brass tiara. California faces a $15 billion budget deficit and Democrats who rule the state Legislature have proposed closing the gap with a $9.7 billion tax hike on business and ‘the rich.’ There's a movie that describes this idea: Clueless.
The plan would raise the top marginal income tax rate to 12% from 10.3%; that would be the highest in the nation and twice the national average. This plan would also repeal indexing for inflation, which is a sneaky way for politicians to push middle-income Californians into higher tax brackets every year, especially when prices are rising as they are now. The corporate income tax rate would also rise to 9.3% from 8.4%. So in the face of one of the worst real-estate recessions in the state's history, the politicians want to raise taxes on businesses that are still making money.
This latest tax gambit was unveiled, ironically enough, within days of two very large California employers announcing they are saying, in the famous words of Governor Arnold Schwarzenegger, "hasta la vista, baby" to the state. First, the AAA auto club declared it would close its call centers in California, meaning those 900 jobs will move to other states. "It costs more to do business in California," said an AAA press release, in the understatement of the year.
Then, last week, Toyota announced it is canceling plans to build its new Prius hybrid at its plant in the San Francisco Bay area because of the high tax and regulatory costs. Adding to the humiliation is that Toyota will now take this investment and about 1,000 jobs to a more progressive and pro-business state: Mississippi.
There is already a reverse gold rush going on in California and the evidence points powerfully toward high tax rates as a culprit. Census Bureau data show that, from 1996-2005, 1.3 million more Americans left than came to California. And the people who are leaving are disproportionately those with higher incomes: the very targets the Democrats want to tax more.”