As California’s Economy Collapses, This presents a preview of what will happen in other states and eventually in the Federal Government if Barack Obama’s out of control spending does not stop.
As you have been reading, California is on the brink of financial collapse. The Democrats are more concerned in giving away social benefits than making California business friendly, opening up businesses, and creating jobs. The greater population will not need free or reduced government, social benefits if new businesses are created, existing businesses are kept from closing, and current businesses are allowed to expand with new job creations. Not only will people not need government social benefits, the tax revenues will dramatically increase with the decrease in unemployment.
Lack of jobs, Businesses forced to leave the state because of strict EPA rules and regulations, enormous income, corporate, sales, and DMV Taxes are just creating a business vacuum in this state. So now Measure R kicks in today 7/1/09. This couldn’t have come at a worse time. Governor Arnold Schwarzenegger has tried time and time again to stop the runaway businesses, but he is a good Republican Governor that is being made to look bad by incompetent, inept, disconnected Democrats that are running this state into the ground by spending money that does not exist. Wow does this sound familiar? Well they say. “As California goes so does the rest of the nation. There is only one difference. The State of California Can’t Print Worthless Money Like Washington DC Can !!!!
California’s desperation along with other states are willing to destroy on line or “E-commerce” businesses by requiring Amazon and other E-Commerce businesses to collect state sales tax on items sold by California companies that are shipped outside of the state of California. This is an enormous expense and a huge burden to companies like Amazon.com, Barns and Noble etc. Again further eroding the business climate in the State of California.
Here is the breakdown for sales tax in California:
From the LA Times 7/1/09
Here is a quote from that article:
“Officials for the Los Angeles County Metropolitan Transportation Authority said that the worst recession since World War II would probably reduce the revenue collected under Measure R from about $40 billion to roughly $38.2 billion during the next 30 years.”
So this is saying that Los Angeles County is stuck with this looser tax from “Measure R” that the Democrats sold to the public for 30 years. If you are not from California then I’ll explain how this works.
The people in California do not like to have taxes forced on us so we get to vote on whether we pay taxes on certain projects or not. I voted against Measure R because it would be money wasted as usual. Los Angles does need light rail improvements and expansions to reduce freeway traffic. However if the light rail project becomes a pork barrel project and only goes to the areas in Los Angeles County where the politicians want it to go rather than where it NEEDS to go, it will be a complete waste of money.
Next item is that the County of Los Angeles is also in poor economic state. I can’t prove this fact to be true, but I would speculate that this last tax increase will end up in the “General Fund” and will not be applied to transportation projects for some years to come until the economy improves.
Yes, there are some very good intentions in Measure R. Let’s face it auto/truck traffic is horrible in Los Angeles and everyone wants it to improve. But will people use it enough to pay for it?
My point here is that the Democrats have just destroyed the economy here in Los Angeles and California. People are loosing jobs, businesses are closing. People with money are leaving the state to move to states that have no income tax like Nevada.
The state of California has reached a point of no return. The State of California has a budget deficit of 24.3 billion dollars. These are the points of no return:
1. The Democrats are forcing businesses to close with high sales, income and businesses taxes. This problem is exacerbated by heavy EPA rules and regulations to even open a business here in California.
2. As jobs are lost, the tax base shrinks as there are less people to pay sales tax (people cut back on buying things), Income tax withholding from checks decreases, people drive less paying less in local gasoline taxes.
3. The democrats think the only way to balance the budget is by punishing the people that are still lucky enough to have jobs with even more taxes across the board. The budget will never be balanced with this approach.
4. The Democrats have created a “State of Entitlement.” A state where people can receive public assistace for everything from free education, section 8 housing (http://www.hud.gov/local/index.cfm?state=ca&topic=renting) to free health care at County Hospitals.
5. California has one of if not the largest population of undocumented immigrants from all over the world. By law these people are not allowed to get Social Security Numbers so they are usually paid in cash and pay no income taxes at all. If they do pay income taxes it is usually with a fraudulent Social Security number.
6. The EPA requirements for everything from Exhaust Emissions, handling of industrial chemicals to building material content have a crippling effect on profitability, growth, employee hiring and just keeping the business doors open. I am concerned about the environment just like anyone else, but the government has to much control over these laws that are overkill.
7. Finally the fact that there are just to many people in this state is the major contribution to air, water and ground pollution.
So what can be done?
1. The state has to become 100% more business friendly.
2. Reduce Income taxes so people will have money to go out and spend and build the economy.
3. Reduce Corporate taxes and make it profitable to open and run a business in the state of California.
4. Reduce (not eliminate) the number of “Entitlement Programs.” These are free or low cost programs for people that do not have the incentive to get a job (any job.)
5. Decrease education fees in public colleges so more people can attend thus increasing the cash flow for maintaining the education venues. Administer some kind of tax reward or benefit to new graduates for the first 2 years as they start in their new careers.
6. This is the tough one. Make sure that undocumented immigrants from all over the world not just Mexico are not eligible for any state benefits including non emergency medical care, education, welfare, and child welfare.
7. Very, very heavy fines for employers that hire undocumented immigrants.
8. A minimum of a 10 year corporate tax incentive for any company that has been in existence more than 5 years in another state or country to move to or open another facility in California. Why 10 years? It is an incentive for the companies to stay in California and create jobs here.
9. There has to be legislation that will limit the power of the SEIU (http://www.seiu.org/splash/) I believe in good wages for talented people. But this Union is very corrupt and rewards incompetent people with high wages. Originally being from Chicago, I grew up with corrupt Democratic “Pay to Play.” The SEIU payed Barack Obama $60.7 Million dollars to play. This is a common corrupt Union/Politician relationship.
10. This is the most important of all of these ideas. Create a minimal corporate tax bracket for companies with 100 or less employees. We all know that the most important element in any successful economy is “Small Business.”
The only way this will ever happen is if the Democrats are voted out of office and the State of California is run by Republicans and Libertarians. Both of these parties understand the importance of small business.
As I have said before time and time again. As long as the Democrats can keep people uneducated, unemployed, poor and desperate they will always have a voter base.