Richard Rider's Open Salon Blog

San Diego Tax Fighters June 2012 Ballot Recommedations

Thu, 24 May 2012 15:05:20 -0400

June 2012 Ballot Voter Recommendations

Contact: Richard Rider, Chairman
Phone: 858-530-3027
Revised 20 May, 2012

LOCAL PROPOSITIONS (with “!” for extra importance or emphasis)

Proposition A – City of San Diego Fair & Open Competition Ordinance. Amends Municipal Code: YES!!

Proposition B – City of San Diego Comprehensive Pension Reform Initiative. Amends City Charter: YES!!!

Proposition C – City of Chula Vista Charter Amendment. Limit Authority, Compensation and Establish Term Limits for Elected City Attorney. Establish Office of Legislative Counsel: NO

Proposition D – City of El Cajon Charter Adoption. Change from General Law to Charter City: YES!

Proposition E – City of Oceanside phase out of mobile home park rent control. YES!

Proposition F – City of Oceanside Charter Amendment. Numbered Council Seats: YES!

Proposition G – Mt. Empire Unified School District $30.8 million School Bond Measure: NO

Proposition H – Alpine Union School District $12 million School Bond Measure: NO!

STATE PROPOSITIONS

Proposition 28 – Limits on Legislator’s Terms in Office. Initiative Constitutional Amendment.: NO POSITION

Proposition 29 – Imposes Additional Tax on Cigarettes for Cancer Research. Initiative Statute.: NO!

CANDIDATES

SAN DIEGO

Mayor Carl DeMaio

City Council

District 1 Ray Ellis
District 7 Scott Sherman
District 5 Mark Kersey

STATE SENATE
District 39 — George Plescia

STATE ASSEMBLY
District 77 — Dustin Steiner

SAN DIEGO COMMUNITY COLLEGE
District B Scott Hasson

SAN DIEGO UNIFIED SCHOOL DISTRICT
District A Mark Powell

OCEANSIDE
Mayor Jerry Kern

Breaking Bad: CA vs. the Other States Rev. 5/15/12

Thu, 17 May 2012 16:05:14 -0400

Top of Form

Bottom of Form

Breaking Bad: California vs. the Other States

by Richard Rider, Chairman, San Diego Tax Fighters

Version 1.811 Revised: 3 May, 2012

Updated version online at: http://open.salon.com/blog/Richard_Rider

Phone: 858-530-3027

Facebook blog page: www.Facebook.com/Richard.Rider

Here’s a depressing but documented comparison of California taxes and economic climate with the rest of the states. The news is breaking bad, and getting worse (twice a month, I update crucial data on this fact sheet):

REVISED: California has the 2^nd worst state income tax in the nation. 9.3% tax bracket starts at $48,029 for people filing as individuals. 10.3% tax starts at $1,000,000. Governor Brown is putting on the ballot a prop to change the “millionaires’ tax” to 13.3%, starting at $500,000 – including capital gains. If approved, CA will be by far #1 in income tax rates. We will be 21% higher than the 2^nd highest state (Hawaii), 34% higher than the third highest state (Oregon), and a heck of a lot higher than all the rest – including seven states with zero income tax.

http://www.taxfoundation.org/files/bp59_es.pdf

Highest state sales tax rate in the nation. 7.25% (as of 1 July, 2011 – does not include local sales taxes).

http://www.taxfoundation.org/files/bp60.pdf Table #15

California corporate income tax rate (8.84%) is the highest west of the Mississippi (our economic competitors) except for Alaska.

http://www.taxfoundation.org/files/bp59.pdf Table #8 – we are 8^th highest nationwide.

CA has the 2^nd highest gas tax (averaging 67.0 cents/gallon) in the nation (January, 2012). National average is 48.8 cents. http://www.api.org/statistics/fueltaxes/ (also CA has the nation’s highest diesel tax – 75.9 cents/gallon. Nat’l average 54.0 cents)

California is ranked 14^th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states. But CA property taxes per owner-occupied home were the 10^th highest in the nation in 2009.

http://www.taxfoundation.org/taxdata/show/251.html and http://www.taxfoundation.org/taxdata/show/1913.html

CA has now instituted the highest “cap and trade” tax in the nation – indeed, the ONLY such U.S. tax. One study estimates the annual cost at $3,857 per household by 2020. Even proponents concede that it will have zero impact on global warming.
http://tinyurl.com/WSJ-CA-cap-and-trade

California’s 2012 “Tax Freedom Day” (the day the average taxpayer stops working for government and starts working for himself) is the 11^th worst date in the nation – up from 28^th worst in 1994, but down from 4^th worst in 2009. CA “improved” primarily because of our state’s soaring unemployment rate – the new tax dodge!

http://taxfoundation.org/taxfreedomday

UPDATE: CA has the 3^rd highest state unemployment rate. (March, 2012) – 11.0%. National unemployment rate 8.2%. National unemployment rate not including CA is only 7.8%, making the CA unemployment rate 40.7% higher than the average of the other 49 states.

http://www.bls.gov/web/laus/laumstrk.htm

CA needlessly licenses more occupations than any state – 177. Second worst state is Connecticut at 155. The average for the states is 92.

http://cssrc.us/publications.aspx?id=7707

California’s 2012 Business Tax Climate ranks 3^rd worst in the nation – behind New Jersey and New York state.

http://www.taxfoundation.org/research/show/22658.html

For the 2007-08 school year, the Los Angeles Unified School District spent $29,780 per student. The district also has the country’s second lowest graduation rate of 40.6%.

http://www.calwatchdog.com/2010/08/20/lausd-spends-30k-per-student/

CA public school teachers the highest paid in the nation. CA students rank 48^th in math achievement, 49^th in reading.

http://www.lao.ca.gov/reports/2011/calfacts/calfacts_010511.aspx page 36

1 in 5 in Los Angeles County receiving public aid.

http://www.latimes.com/news/local/la-me-welfare22-2009feb22,0,4377048.story

California has 12% of the nation’s population, but 36% of the country’s TANF (“Temporary” Assistance for Needy Families) welfare recipients – more than the next 7 states combined. Unlike other states, this “temporary” assistance becomes much more permanent in CA.

http://weblog.signonsandiego.com/weblogs/afb/archives/034662.html

California prison guards highest paid in the nation.

http://www.caltax.org/caltaxletter/2008/101708_fraud1.htm

For every dollar California pays to D.C., we get back 78 cents. We rank 7^th worst.

http://www.taxfoundation.org/research/show/266.html

California is the worst ranked state for tax administration – another anti-business factor.

http://www.sacbee.com/static/weblogs/capitolalertlatest/2010/03/cal-rated-worst.html

California now has the 2^nd lowest bond rating of any state – Basket case Illinois just beat us out for the lowest spot. We didn’t improve our rating – Illinois just got worse.

http://www.calwhine.com/great-news-california-no-longer-has-worst-credit-rating/1554/

California has the 6^th highest (worst) state per capita debt. Not counted is local government debt. http://www.huffingtonpost.com/2011/10/24/states-debt-combined-may-exceed-4-trillion_n_1029162.html

The American Tort Reform Association ranks CA the worst state “judicial hellhole” – extremely anti-business.

http://tinyurl.com/CA-worst-judicial-state

CA tickets are incredibly high. Red-light camera ticket $480. Next highest state is $250. Most are around $100.

http://reason.org/blog/show/red-light-cameras-and-the-enigmatic

California is tied with 3 other states (Hawaii, Texas[!] and Florida) for having by far the least competitive property & casualty insurance markets. http://heartland.org/policy-documents/heartland-institute-releases-new-property-casualty-insurance-report-card

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 Oregon at $150. A few others under $100, with most at zero. http://tinyurl.com/CA-800-tax

UPDATE: America’s top 650 CEO’s rank California “the worst state in which to do business” for the 8^th straight year (May, 2012). http://chiefexecutive.net/best-worst-states-for-business-2012 (It’s worth reading the short article, and especially the part about California.)

California, a destitute state, still gives away college education at fire sale prices. Our community college tuition is the lowest in the nation. How low? Nationwide, the average community college tuition is about three times higher than California CC’s. http://www.hecb.wa.gov/research/issues/documents/TuitionandFees2009-10Report-Final.pdf Chart 5 on page 8

This ridiculously low tuition devalues education to students – resulting in a 30+% drop rate for class completion. In addition, 2/3 of California CC students pay no net tuition at all – either filling out a simple unverified “hardship” form that exempts them from any tuition payment, or receiving grants and tax credits for their full tuition.

http://tinyurl.com/ygqz9ls

On top of that, California offers thousands of absolutely free adult continuing education classes – a sop to the upper middle class. In San Diego, over 1,400 classes for everything from baking pastries to ballroom dancing are offered totally at taxpayer expense.

http://www.sdce.edu

Protests about increased UC student fees too often ignore one crucial point -- all poor and many middle class students don't pay the “fees” (our state’s euphemism for tuition). There are no fees for California families with under $80K income. Moreover, Pell Grants and federal tuition tax credits covered the total 2009-10 fee increases for nearly 3/4 of all undergraduates with household incomes below $180K.

http://www.universityofcalifornia.edu/blueandgold/ and

http://www.universityofcalifornia.edu/news/article/22415

California residential electricity costs an average of 29.2% more than the national average (significantly higher in San Diego and Orange counties). For industrial use, CA electricity is 59.8% higher than the national average (average for 2011).

http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_a.html

‎A 2011 survey of home water bills for the 20 largest U.S. cities found that for 200 gallons a day usage, San Diego was the highest cost. At 400 gal/day, San Diego was third highest.

http://www.circleofblue.org/waternews/wp-content/uploads/2011/05/allstats590.jpg

From 2007 through 2010, 10,763 industrial 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 industrial facilities.

http://podcasts.odiogo.com/city-journal/podcasts-xml.php California Manufacturers and Technology Association podcast

California is now ranked as the 2^nd worst state to retire in. Only basket-case Illinois is worse. We “beat” NY, RI and NJ.

http://www.topretirements.com/blog/great-towns/our-worst-states-to-retire-list.html/

Consider California’s net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The cumulative net annual income lost from this 8 year out-migration comes to about $26 billion. Net departures slowed in 2008 only because people couldn’t sell their homes. But in 2010 the loss resumed -- we lost 154,000 net people to domestic out-migration. Again, note that this is NET loss.

http://www.mdp.state.md.us/msdc/Pop_estimate/Estimate_08/table5.pdf and

http://blogs.sacbee.com/capitolalertlatest/2011/12/californias-population-still-growing-but-much-more-slowly.html and

http://interactive.taxfoundation.org/migration/

These are not welfare kings and queens departing. They are the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods) – and retirees seeking to make their pensions provide more bang for the buck. Too often these departing seniors are retired state and local government employees fleeing the state that provides them with their opulent pensions – in order to avoid the high taxes that these same employees pushed so hard through their unions. And once they move out of California, our state can no longer tax their California-paid pensions.

As taxes rise and jobs disappear, we lose our tax base, continuing California’s state and local fiscal death spiral. This “race to the bottom” must stop NOW.

NOTE: To see the latest version of this “Breaking Bad” column, go to my blog at http://open.salon.com/blog/Richard_Rider, or my more active Facebook www.Facebook.com/Richard.Rider. This fact sheet Word file is available free upon request.

The labor unions’ private sector multi-employer pension bomb

Tue, 15 May 2012 12:05:37 -0400

Below is today’s (5/15/12) lead editorial from the WALL ST JOURNAL. While we concentrate mostly on government pension problems, this worthy piece delves into the PRIVATE defined benefit morass — the “multiple employer”pensions the private sector unions have put in place in a number of industries.

Like public pensions, dishonestly is rife in this sector. Maybe even more so. Consider this excerpt:
———
Labor’s actuarial reading of one SEIU fund for health-care employees finds it 100.4% funded. Credit Suisse’s fair-value reading finds it 49.6% funded—or some $6.8 billion in the hole.
———-

The reason this problem is important to us all is that these pensions are “insured” by the Pension Benefit Guaranty Corporation, a federal agency. When the money runs out to pay these guaranteed pensions (and it surely will), the payout obligation shifts to — you guessed it — us taxpayers.

Sadly, it appears that this eye-opening editorial has a MAJOR error, one that unnecessarily detracts from the fundamental message.

The story asserts that the maximum pension payout covered by PBGC is only $12,800. But according to my understanding of the maximum, confirmed by what I’m reading on the PBGC website, the pension maximum guarantee is $55,841 a year. Another WSJ reader wrote in complaining of the same error.
http://www.pbgc.gov/wr/benefits/guaranteed-benefits/your-guaranteed-pension.html
and
http://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee.html

Actually I wish (and HOPE) that the $12,800 figure is correct. Ultimately this agency’s guarantee is backed by the taxpayers of America — yet another in a myriad of hidden, unreported, unfunded taxpayer liabilities we simply cannot pay off unless perhaps we dramatically debase our currency (further).

——————–

WALL ST JOURNAL

http://online.wsj.com/article/SB10001424052702304203604577393941108053800.html?mod=djemEditorialPage_h#articleTabs%3Darticle

REVIEW & OUTLOOK
May 14, 2012

The Union Pension Bomb
Multi-employer plans look to be in big trouble.

Imagine the panic if investors discovered that many of the nation’s biggest public companies had hidden liabilities so large as to make them worth a fraction of their value. That’s something akin to the shock created by the recent Credit Suisse report on multi-employer pension plans.

In “Crawling Out of the Shadows,” analysts David Zion, Amit Varshney and Nicole Burnap address the big but opaque world of pensions in which companies across an industry pay into a single asset pool. These 1,400 union-run retirement vehicles have long been poorly run and underfunded. (See “The Next Pension Bailout,” August 16, 2010.) But Credit Suisse has dug deeper and found how really big the mess is.

Among the findings: Multi-employer plans in the U.S. are underfunded by some $369 billion. An estimated $43 billion of that off-balance-sheet liability belongs to the 44 S&P 500 companies that are exposed to multi-employer plans. The other 88% of the $369 billion is borne by small, mid-cap or private firms that may be even less prepared to cover the obligations. The report says Safeway’s $6.9 billion in liabilities amount to 76% of the company’s market cap, for example.

All of this ought to be especially embarrassing to Washington, which requires annual filings to the Department of Labor on multi-employer plans and measures their financial health. But Labor uses an “actuarial” reading of the numbers, which envisions an average (and hefty) 7.5% rate of return on investments, smoothed over five years. Even under that generous view, about 500 plans—or 37%—are less than 80% funded and thus considered financially troubled.

Credit Suisse applies a more realistic “fair value” reading—which uses a lower rate of return and current liabilities. By that standard, only 4% of multi-employer plans are healthy and many are exposed as accounting scams. One example: Labor’s actuarial reading of one SEIU fund for health-care employees finds it 100.4% funded. Credit Suisse’s fair-value reading finds it 49.6% funded—or some $6.8 billion in the hole. [RIDER'S EMPHASIS]

. . .

Go to the link for the full, riveting editorial.
http://online.wsj.com/article/SB10001424052702304203604577393941108053800.html?mod=djemEditorialPage_h#articleTabs%3Darticle

Facebook co-founder quits U.S. to avoid capital gains tax

Sun, 13 May 2012 11:05:55 -0400

I have written before about the Facebook IPO and the hoped-for CA tax windfall. I suggest that the projected state capital gains windfall is overblown, as many of the new millionaires and billionaires will move out of the state to avoid our November 13.3% millionaires' tax (which includes capital gains) -- or otherwise maneuver to avoid the tax (charitable remainder trusts are one superb option).

As I often say, "people are reluctant to leave a country, but they WILL leave a state."

But here's an interesting story about wealthy people who ARE willing to leave a country -- THIS country. It highlights one of the billionaire Facebook moguls who is renouncing his U.S. citizenship before the Facebook IPO goes through.

I doubt that any country has a higher capital gains tax than the 2013 proposed combined federal and California capital gains levy, which next year could exceed 40%, with no adjustment for inflation. BTW, if you consider the double taxation of our corporate income tax on dividends, next year we'll approach a 60% combined rate in CA, matched only by the crazy Italians -- where tax evasion is an honored national pastime.
http://images.politico.com/global/2012/02/120208_asidividend.html

CAUTION: Don't get too excited about leaving American to avoid our musrooming tax burden. This citizenship change does not work well for most wealthy Americans, as our country is one of the very few that charges an oppressive "exit tax." Normally one associates such confiscatory taxes with banana republics and communist countries, but this tax grab is happening in the good old U.S. of A.

http://www.bloomberg.com/news/2012-05-11/facebook-co-founder-saverin-gives-up-u-s-citizenship-before-ipo.html

BLOOMBERG

Facebook Co-Founder Saverin Gives Up U.S. Citizenship Before IPO

(go to link for the full story)

OBAMA'S ED POLICIES WILL WREAK HAVOC ON CALIFORNIA EDUCATION

Sat, 12 May 2012 13:05:28 -0400

OBAMA'S ED POLICIES WILL WREAK HAVOC ON CALIFORNIA EDUCATION

Flashreport | May 11, 2012

In an op-ed featured in Flashreport, Lance Izumi discussed what will happen to California's educational system now that it has agreed to replace its own rigorous state student-learning standards with the comparatively less difficult national standards supported by the Obama administration. Will courses and curriculum change? How will testing of students be affected? Will the effort to reform teacher evaluation be derailed? So far, the answers to these questions are not promising.

The Obama administration required states to adopt the national "Common Core" standards as a condition for competing for federal "Race to the Top" grants and for receiving waivers from penalties for failing to comply with the student-achievement requirements of the No Child Left Behind law.

According to Mr. Izumi, "California joined the rush for federal dollars and is now saddled with national standards that a University of Pennsylvania study says are mediocre at best. The fallout from California's Faustian bargain is now becoming clear."

First, traditional courses will be eliminated. The California Teachers Association (CTA) is telling its union members that new courses with vague labels like Integrated Math I, II and III will replace algebra and geometry. Further, as Washington Post education writer Jay Matthews has noted, "There will be many changes in other subjects that schools will have to adjust to."

The national standards will need new curricula aligned with those standards. Although the Obama administration argues that it is not pushing a national curriculum, a report authored by former top lawyers at the U.S. Department of Education points out the logical absurdity of the administration's claim.

Read More...