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FlashReport Weblog on California Politics

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Katy Grimes

Politicians Lie About Their Love For the Middle Class

Destroy the middle class in America, and Socialism takes over – economic growth is killed, people turn on each other, free speech is attacked, the government grows and becomes more tyrannical, and individuals are not treated equally under the law.And, subsidies grow as it becomes more “profitable” not to work, and trade effort for leisure.

Are we there?

Corporations and special interest groups fund politicians in return for favorable treatment by government, which leads to regulations on the rest of small businesses and working society.

The Obama administration has imposed at… Read More

Katy Grimes

Government Manipulations Create Unemployment Purgatory

Nearly every news outlet in California has been gleefully reporting that the state economy is bouncing back. While recent newsreports show unemployment has slightly dropped, the facts show otherwise — particularly telling is how the Legislature is so focused on increasing the minimum wage, rather than improving the business climate.

Unemployment in the state, and across the country, is worse than is being reported. And, it is far more complicated than a slight economic uptick, or slight “drop” in unemployment.

We’re creating jobs at a slower pace now than at the same time last year. And with the supposed drop in unemployment, the underemployed and those “no longer in the labor force” are issues rarely reported. There is no coincidence between dropping… Read More

BOE Member George Runner

Success of Budget Hinges on Taxpayer Decisions

The Legislature should be commended for approving an on-time budget and exercising some measure of restraint.

However, the success of this budget hinges on the decisions of a very small number of overtaxed Californians, their continued presence in California and their success in the stock market.

According to the Franchise Tax Board, the highest one percent of income earners will pay more than $2 billion less in 2013 than 2012. That’s not surprising. A recent survey found 75 percent of affluent Californians are planning actions to reduce their tax liabilities—and a quarter are considering moving out-of-state.

It’s troubling that the volatile personal income tax accounts for 63 percent of budget revenue. Just one percent of California taxpayers now provide nearly half of all income tax payments the state receives.

You can’t tax your way to prosperity. To create true budget stability, California must attract jobs and investment to our state rather than drive them away.… Read More

BOE Member George Runner

Sales Tax Revenue on Track

It’s too early to know for sure, but so far sales tax revenue this year appears to be largely on track to meet the state’s budget needs.

The latest general fund sales and use tax revenue numbers show that from July through September the State Board of Equalization received $4.64 billion in revenue. That’s just two and a half percent shy of the Department of Finance’s budget projection of $4.76 billion.

Of course, I can’t help but think that if more Californians had jobs, these revenue numbers would be even stronger.

The latest numbers do not reflect the recent spike in gas prices. And those high fuel prices have the potential to create a tax windfall for state and local government.

Earlier this year I proposed legislation capping rising fuel taxes. Unfortunately, it failed to gain traction in the Legislature.

We don’t know yet how much revenue will come in this month. But we do know one thing for sure: Californians will pay plenty in tax.… Read More

BOE Member George Runner

July Sales Tax Revenues Didn’t Plummet

Contrary to what you may have heard, the sky is not falling in California—at least not as it pertains to sales tax revenue. I’m pleased to report that sales and use tax revenues are doing just fine.

On August 13, the State Controller reported that sales and use tax general fund revenues for the month of July were down $295 million, 33.5% below expectations.

However, BOE actually received $1.527 billion in July, $17 million more than the Department of Finance budget projection.

The competing revenue numbers are the result of payment timing combined with differing accounting methods. As required by statute, the Controller looks at “money in the bank,” which does not include pending deposits. BOE numbers, as well as those used for state budget estimates, reflect “money in the door,” which includes all payments—including those received but not yet deposited.

BOE received more than $900 million in sales tax revenue in the final days of July. These dollars were not included in the Controller’s report because they had not yet been deposited into state coffers.

Retail sales tax… Read More

BOE Member George Runner

Sales Tax Hike Would Cost 23,000 Jobs

Today I released a dynamic analysis by the Board of Equalization showing that the Governor’s proposed sales tax increase will cost California jobs.

According to the analysis, a higher sales tax rate will take money out of the pockets of working Californians, destroying more than 23,000 jobs and $267 million in business investment.

These projected job losses are equivalent to every worker in a medium-sized California city like Glendora or West Sacramento losing their jobs.

When considering tax increases, policymakers often rely on static analyses that ignore behavioral changes by consumers and business owners. A dynamic analysis estimates the likely behavioral changes that could result from a higher tax rate.

The BOE analysis projects that nearly all of the proposed sales tax increase would be passed along to consumers. The state would receive $222 million less in revenues than projected by a static analysis, an 8% loss in potential revenue.

Since July of last year, lower tax rates have enabled Californians to keep more of their hard-earned dollars, and our economy is… Read More

BOE Member George Runner

Amazon Compromise Both Good and Bad

I’m glad the Governor signed compromise legislation today to help get some California affiliates back to work and bring thousands of Amazon.com distribution jobs to California. That’s very good news.

Unfortunately, this legislation is by no means a cure-all. It does nothing to solve the long-term problems created by the Legislature’s botched efforts to compel out-of-state retailers to serve as California’s tax collectors.

Absent a federal solution, which is highly unlikely in such a short time frame given all of the competing interests, we’ll be right back in the same mess in a year. The State of California will again be killing California jobs, driving away investment and inviting costly litigation.

Let me be clear: this compromise legislation, while welcome, provides only a short-term delay to a bad law that will never produce the revenues, nor the level-playing field, its proponents imagine.… Read More

BOE Member George Runner

Why I Support the Amazon Deal

AB 155, as proposed to be amended, will retroactively repeal the “Amazon Tax” for a year or longer, allowing time for impacted parties to seek a federal solution to the dispute.

This is far from a perfect plan, but politics is the art of compromise. It’s a good thing when competing interests are able to come together on a contentious issue.

The deal provides at least a one year reprieve for affiliate businesses whose livelihoods have been disrupted by the dispute. It allows time for impacted parties to seek a federal solution to this issue. Congress has always been the right venue for this conversation.

However, I’m disappointed that this deal provides no certainty for thousands of affiliates who partner with out-of-state online retailers other than Amazon. The uncertainty will discourage these companies from creating new jobs and investing in our state.

Furthermore, the Legislature refused to include a pathway to immediately bring Amazon jobs to California. I’ll be working with Amazon and legislators to find a way to expedite their presence in order to bring thousands of new jobs to our state as soon as possible.

Throughout the year… Read More

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