Breaking Bad: California vs. the Other States
by Richard Rider – Chairman, San Diego Tax Fighters
Version 3.43 Revised: 2 June, 2021
Rider Blog: www.RiderRants.BlogSpot.com
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Here’s a depressing but documented comparison of California taxes and economic climate with the rest of the states. The news is not good (about 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 $1million. 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 21% higher than 2nd place Hawaii, 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: That 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 and
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 (8.68% on 1 January 2021 – up from 8.25% in 2017).
CA corporate income tax rate (8.84%) is the highest west of Iowa (our economic competitors). Overall CA has the 6th highest corporate tax rate in nation. And it’s 8.84% from the first dollar of profit made.
CA has the nation’s highest “gas pump” tax at 81.45 cents/gallon (April 2021). Add in the unique 10-12 cent CA “cap and trade” tax per gallon, and CA total taxes are over 14 cents higher than 2nd place PA. National average is 52.18 cents. Yet CA has the 2nd worst highways in America.
http://www.api.org/oil-and-natural-gas/consumer-information/motor-fuel-taxes/gasoline-tax (CA has the nation’s highest total diesel tax) and https://www.usnews.com/news/best-states/articles/2020-12-04/these-states-have-the-worst-roads-in-america
California in 2020 ranked 14th highest in per capita property taxes (including commercial) – the only major tax rate where we are not in the worst ten states. But the 2018 median CA homeowner tax bill is the 8th highest state in the nation. Indeed, the median CA homeowner property tax bill (not tax rate, but BILL) is 66%% higher than the average for the other 49 states.
The average “impact” fees in CA for building the median single-family residence ($548,000 – May, 2019) varied from 6% ($32,880) to 18% ($98,640) per home, about double the fees charged by the next most expensive state and more than TRIPLE the norm among jurisdictions that levy such fees (many governments east of the Sierras charge little or no fees). The fee is part of the purchase price, so buyers pay 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 virtually zero impact on global warming. The tax especially increases the cost of electricity, gasoline, diesel and manufacturing.
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.
If instead of per capita GDP, we consider the states’ median household income adjusted for the COL, CA ranks a dismal 48th. Only OR and HI are worse.
According to the Tax Foundation, California’s 2020 “business tax climate” ranks 2nd worst in the nation – behind anchor-clanker New Jersey. https://statetaxindex.org
The American Tort Reform Foundation in 2021 ranks CA the “worst state judicial hellhole” in U.S.
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 – 169% of the median state rate. Workers’ comp is usually a more important factor than a state’s corporate income tax. Yet we pay low benefits — much goes to lawyers. https://www.oregon.gov/dcbs/cost/Pages/premium-index-rates.aspx
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 are proposed for 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. Thus a CA person’s Tax Freedom Day varies dramatically.
CA unemployment rate (April, 2021) is 8.3%. Only Hawaii is worse. The national unemployment rate is 6.1%. The CA unemployment rate is 43% higher than the average of the other 49 states.
http://www.bls.gov/web/laus/laumstrk.htm and https://www.bls.gov/news.release/empsit.nr0.htm
CA public school teachers are the 3rd highest paid in the nation – avg $85,892. National avg $65,090. CA teachers earn 38% more than average in other 49 states. CA student tests are score significantly better than only 2 states. https://www.nationsreportcard.gov/profiles/stateprofile and
CA annual per state prisoner cost ($75,560) is easily the highest in the nation – over triple the average cost of the 18 states with the least-costly rates.
California gives away community college education at fire sale prices. Our California CC tuition and fees are the lowest in the nation. How low? Nationwide, the average community college tuition and fees are 2.6 times more than our CA 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! One can opt out by filling out a simple “can’t pay” form.
Complaints about increased UC student fees ignore a key point — all poor and most 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”) 2019 poverty rate (the new census bureau standard adjusted for the COL) is still easily the worst in the nation at 17.2%. We are 45% higher than the average for the other 49 states. https://www.census.gov/content/dam/Census/library/publications/2019/demo/p60-268.pdf Table A-5 on page 28
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 TANF and SSP welfare recipients 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.
Average CA firefighter is paid 77.4% more than paid firefighters in other 49 states. CA cops paid 66.3% more. CA 2017 median household income (including gov’t workers) is only 19.0% above national average.
www.tinyurl.com/CA-ff-and-cop-pay and https://tinyurl.com/ydhuj2j7
In CA there are over 90,000 retired public employees receiving $100,000+ pensions. That number is skyrocketing – up 90+% since 2013. https://riderrants.blogspot.com/2019/11/80000-ca-government-retirees-now-get.html
CA COL is 46.6% higher than the national average (an average that includes CA) in 2020. The 2020 CA COL is 59.3% higher than the TX COL. https://meric.mo.gov/data/cost-living-data-series
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 42.2% more per kWh than the national average. CA commercial rates are 59.9% higher. For industrial use, CA electricity is an astonishing 110.6% higher than the 50 state average – an average which includes CA! (May, 2020).
NOTE: My local utility — 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 17th straight year.
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.
The 2018 median Texas household income ($60,629) is 19.4% less than CA ($75,227). But adjusted for COL, TX median household income is 25.4% more than CA.
Consider California’s “net domestic migration” (migration between states). From 1992 through 2020, California lost a NET 4.6 million people to other states. More people leave each year — in FY 2019, we lost 203,000 net to other states – over 30% higher than the year before. Again, note that these are NET losses. Sadly, our policies are splitting up more and more 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. BTW, retirees are the least expensive group for a state – they don’t go to jail, they don’t commute during rush hour and – most important – they don’t breed!
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 fact sheet as a Word file (this wonky handout) is available free upon request.