Breaking Bad: California vs. the Other States
by Richard Rider – Chairman, San Diego Tax Fighters
Version 3.09 Revised: 16 April, 2019
Online version at: www.TinyURL.com/CA-vs-other-states
Email: RRider92131@GMail.com Phone: 858-530-3027
Here’s a depressing but documented comparison of California taxes and economic climate with the rest of the states. The news is not good (at least once a month, I update crucial data on this fact sheet):
Prior to Prop 30 passing in Nov. 2012, CA already had the 3rd worst state income tax rate in the nation. Our 9.3% tax bracket started at under $50,000 for people filing as individuals. 10.3% started at $1 million. Now our “millionaires’ tax” rate is 13.3% – including capital gains (CA total CG rate now the 2nd highest in the world!). 10+% taxes now start at $250K. CA now has by far the nation’s highest state income tax rate.
We are 34% higher than 2nd place Oregon, and a heck of a lot higher than all the rest – including 7 states with zero state income tax – and two states (NH and TN) that tax only dividends and interest income (not capital gains). NOTE: TN tax totally phases out by 2022.
CA is so bad, we also have the nation’s 2nd highest state income tax bracket. AND the 3rd. AND the 5th. AND the 8th!
http://taxfoundation.org/sites/taxfoundation.org/files/docs/ff2013.pdf Table #12
CA has the highest state sales tax rate in the nation. 7.25% (does not include local sales taxes). 9th highest state with the average local sales tax included (8.56% on 1 January, 2019 – up from 8.25% in 2017). https://taxfoundation.org/sales-tax-rates-2019/
CA corporate income tax rate (8.84%) is the highest west of Iowa except for Alaska (our economic competitors). Overall CA has the 7th highest corporate tax rate in nation. And it’s 8.84% from the first dollar of profit made. https://taxfoundation.org/state-corporate-rates-brackets-2019/
CA has the nation’s 2nd highest “gas pump” tax at 72.76 cents/gallon (March, 2019). Add in the unique 10-12 cent CA “cap and trade” tax per gallon, and CA is the worst – 6 to 8 cents more than PA. National average is 52.18 cents. Yet CA has the 9th worst highways (41 states are better).
http://www.api.org/oil-and-natural-gas/consumer-information/motor-fuel-taxes/gasoline-tax (CA easily has the nation’s highest total diesel tax)
California in 2015 ranked 14th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states. But the 2014 average CA single-family residence (SFR) property tax is the 8th highest state in the nation. Indeed, the median CA homeowner property tax bill is 93% higher than the average for the other 49 states.
Average 2012 CA impact fee for single-family residence was $31,100, 90% higher than next worst state. 265% higher than jurisdictions that levy such fees (many governments east of the Sierras do not). For apartments, fee averaged $18,800, 290% above average outside state. The fee is part of the purchase price, so buyer pays an annual property tax on the fee!
CA has now instituted highest “cap and trade” tax in the nation – indeed, the ONLY such U.S. tax. Even proponents concede that it will have zero impact on global warming. The tax especially increases the cost of electricity, gasoline and manufacturing. http://tinyurl.com/WSJ-CA-cap-and-trade
California has a nasty anti-small business $800 minimum corporate income tax, even if no profit is earned, and even for many nonprofits. Next highest state is Rhode Island at $500 (only for “C” corporations). 3rd is Delaware at $175. Most states are at zero. http://tinyurl.com/CA-800-tax
Based just on GDP, CA, by far the most populous state, ranks as the 5th largest economy in the world. But adjusted for population and cost of living, CA prosperity ranks lower than all but 13 U.S. states. http://riderrants.blogspot.com/2016/07/updated-2015-figures-ca-per-capita-gdp.html
California’s 2019 “business tax climate” ranks 2nd worst in the nation – behind anchor-clanker New Jersey – a decline from 3rd worst last year. In addition, CA has a lock on the worst rank in the 2017 Small Business Tax Index – 8% worse than the 2nd worst business state (New Jersey).
The American Tort Reform Foundation in 2019 ranks CA the “worst state judicial hellhole” in U.S. – worse than 2018 “winner:” Florida. The U.S. Chamber of Commerce ranked CA a bit better – “only” the 4th worst state in 2017 (unfortunately, sliding from 7th worst in 2008).
CA driving tickets are incredibly high. Red-light camera ticket $500. Next highest state is $250. Most are around $100. http://reason.org/blog/show/red-light-cameras-and-the-enigmatic
CA has the 2nd highest/worst state workers’ compensation rates in 2018. More important factor than a state’s corporate income tax. 169% of median state rate. Yet we pay low benefits — much goes to lawyers.
The Tax Foundation “Tax Freedom Day” study ranks CA as the 12th worst taxed state in 2019. But many new CA state and local taxes proposed this year. More important, the huge CA state income tax is the most progressive of all states, hammering the upper fourth of the populace. The top 1% pay 50% of all CA state income taxes. A CA person’s Tax Freedom Day varies dramatically.
CA unemployment rate (February, 2019) is 4.2%. Yet we are still worse than all but 11 states. National unemployment rate is 3.8%. The CA unemployment rate is 12.1% higher than the average of the other 49 states.
But using the lagging yet arguably more accurate U-6 measure of unemployment (includes involuntary part-time workers), CA is the 8th worst – 8.8% vs. national 7.7%. National U-6 not including CA is 7.55%, making CA’s U-6 16.6% higher than other states. http://www.bls.gov/lau/stalt.htm
CA public school teachers are the 2nd highest paid in the nation – avg $81,126. CA students rank 46th in math achievement, 42nd in reading.
CA annual per state prisoner cost ($75,560) is easily the highest in the nation – over triple the avg. cost of the 18 states with the least-costly rates.
California, a destitute state, still gives away community college education at fire sale prices. Our CC tuition and fees are the lowest in the nation. How low? Nationwide, the average community college tuition and fees are TRIPLE our California community colleges.
This ridiculously low tuition devalues education to students – often resulting in a 25+% drop rate for class completion. In addition, because of grants and tax credits, up to 2/3 of California CC students pay no net tuition at all! http://tinyurl.com/ygqz9ls
Complaints about increased UC student fees too often ignore a key point — all poor and many middle class CA students don’t pay the UC “fees” (our state’s euphemism for tuition). There are no fees for most California families with under $80K income. 55% of all undergraduate CA UC students pay zero tuition, and another 14% pay only partial tuition. Moreover, CA’s new “Middle Class Scholarship” program provides partial tuition aid for CA public college students of families with income from $80K to $150K.
California’s real (“supplemental”) 2017 poverty rate (the new census bureau standard adjusted for the COL) is still easily the worst in the nation at 19.0%. We are 43.9% higher than the average for the other 49 states. Texas is 14.7%. CA poverty rate is 34.6% higher than Texas.
California has 12% of the nation’s population, but amazingly has over 43% of the entire country’s TANF (“Temporary” Assistance for Needy Families) and SSP welfare recipients. That’s 5.6 TIMES the percentage of welfare recipients in these categories found in the other 49 states!
California ranks 50th worst for people’s debt-to-income ratio, and 49th worst for percentage of home ownership.
California has the 2nd lowest bond rating of any state – Basket case Illinois beat us out for the lowest spot. We didn’t improve our rating – Illinois just got worse.
Average California firefighter paid 60% more than paid firefighters in other 49 states. CA cops paid 56% more. CA 2016 median household income (including gov’t workers) is only 12.8% above national avg. www.tinyurl.com/CA-ff-and-cop-pay
CA COL is 38.7% higher than the national average in 2018. CA COL is 52% higher than TX. https://www.missourieconomy.org/indicators/cost_of_living/
The median CA home costs 2.4 times more than the national median home price. http://tinyurl.com/MedianHomePrice
CA has 2nd highest annual cost for owning a car – $4,112. $370 higher than the other 49 states’ average. http://tinyurl.com/zcame8j
CA residential electricity costs an average of 51.3% more per kWh than the national average. CA commercial rates are 64.6% higher. For industrial use, CA electricity is an astonishing 105.2% higher than the 50 state average – an average which includes CA! (June, 2018).
NOTE: SDG&E/Sempra is considerably higher than the CA average.
A 2015 U-T survey of home water bills for the 30 largest U.S. cities found that for 200 gallons a day usage, San Diego has the 3rd highest cost – 73.7% higher than the median city surveyed. At 600 gal/day, San Diego was again 3rd highest – 81.7% higher than the median city.
The top CEO’s surveyed rank CA “the worst state in which to do business” for the 14th straight year. www.chiefexecutive.net/best-worst-states-business-2018/
From 2007 through 2010, 10,763 manufacturing facilities were built or expanded across the country — but only 176 of those were in CA. So with roughly 12% of the nation’s population, CA got 1.6% of the built or expanded manufacturing facilities. Stated differently, adjusted for population, the other 49 states averaged 8.4 times more manufacturing growth than did California.
http://www.cmta.net/20110303mfgFacilities07to10.pdf – prepared by California Manufacturers and Technology Association
California was recently ranked as the 3rd worst state to retire in by Kiplinger. Easily the lowest percentage of people over age 65. Only NY and NJ are deemed worse. http://www.kiplinger.com/slideshow/retirement/T006-S001-worst-states-for-retirement-2016/index.html
The 2015 median Texas household income is 13.7% less than CA. But adjusted for COL, TX median household income is 32.0% more than CA.
Consider California’s “net domestic migration” (migration between states). From 1992 through mid-2018, California lost a NET 4.2 million people to other states. Net departures slowed in 2008 only because people couldn’t sell their homes. But more people still leave each year — in FY 2016-17, we lost 138,195. Again, note that these are NET losses. Sadly, our policies have split up many California families.
It’s likely that it’s not the welfare kings and queens departing. They are primarily the young, the educated, the productive, the entrepreneurial, the ambitious, the wealthy (such as Tiger Woods) – and retirees seeking to make their nest-eggs provide more bang for the buck.
NOTE: To see more such fact-based disclosures, go to my blog at www.RiderRants.blogspot.com, or my more active Facebook “page” www.Facebook.com/Richard.Rider (“friend” me). The very latest two-page fact sheet Word file (this wonky handout) is available free upon request.