In a Remarkable Show of Bi Partisanship... GE Pays No Tax on 14 Billion Profit.

[dougskiles]

Callifornia doesnt have a choice because it is unable to raise real estate taxes to spread the costs more democratically.  A big backwards thank you to the Reagan Era.

Does that mean you agree with Florida not having an income tax?

[dougskiles]

Callifornia doesnt have a choice because it is unable to raise real estate taxes to spread the costs more democratically.  A big backwards thank you to the Reagan Era.

Does that mean you agree with Florida not having an income tax?

How do you make that connection?  

The obvious answer to be drawn from the original article is that the best model is a diversified source of revenue, so that as one source is doing badly, another source will make up for the difference.

What I agree with is the idea of responsible stewardship of state finances.

Most of the time Florida spends about as much as it raises, which is responsible.  If not having an income tax works for Florida, then bully for not having an income tax.

What California and Texas have done, clearly are not working for them.

Seemed like an obvious connection to me, but I am a little sunburned and just finished off a beer so perhaps my neural connections aren't 100% right now.

In regards to having one source pick up the slack when other sources aren't doing well, what source would that be?  Income taxes and real estate taxes probably are on a similar cycle.  Perhaps having a more robust corporate tax would fill that gap.

The best strategy in my opinion is to not spend all of your money during the good times and assume that you will need it down the road.

[Dog Walker]

On the other hand, the US does have just about the highest corporate tax rate in the world which is a major incentive for corporations to shift profits to lower tax countries.  We would probably collect more money from corporate taxes if we matched the lower rates of the Europeans.

Of course that would put 900+ corporate tax attorneys at GE out of work.   

[NotNow]

While we are on the subject of taxes, here is an article from the other end of the political spectrum, the Wall Street Journal:

The Price of Taxing the Rich
http://online.wsj.com/article/SB10001424052748704604704576220491592684626.html?mod=WSJ_hpp_RIGHTTopCarousel_1

Nearly half of California's income taxes before the recession came from the top 1% of earners: households that took in more than $490,000 a year. High earners, it turns out, have especially volatile incomes—their earnings fell by more than twice as much as the rest of the population's during the recession. When they crashed, they took California's finances down with them.

Mr. Williams, a former economic forecaster for the state, spent more than a decade warning state leaders about California's over-dependence on the rich. "We created a revenue cliff," he said. "We built a large part of our government on the state's most unstable income group."

Callifornia doesnt have a choice because it is unable to raise real estate taxes to spread the costs more democratically.  A big backwards thank you to the Reagan Era.

Proposition 13 passed in 1978.  Reagan was succeded by Jerry Brown in 1974.

[BridgeTroll]

An awesome display of bipartisanship!  What about GE?

[BridgeTroll]

http://www.cbsnews.com/8301-503544_162-20047212-503544.html

March 25, 2011 3:00 PM

In January, President Obama named General Electric CEO Jeffrey Immelt to head the President's Council on Jobs and Competitiveness, an economic advisory board focused on job creation.

White House defends embrace of G.E. CEO despite report company didn't owe taxes in 2010
Posted by Brian Montopoli In his State of the Union address that same month, meanwhile, he called for the closure of corporate tax loopholes in conjunction with a lowering of the corporate tax rate, which stands at 35 percent.

"Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries," he said. "Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense. It has to change."

Mr. Obama's choice of Immelt came under scrutiny Friday in the wake of a front-page story in the New York Times reporting that despite $14.2 billion in worldwide profits - including more than $5 billion from U.S. operations - GE did not owe taxes in 2010.

In fact, the story said, G.E. claimed a tax benefit of $3.2 billion.

At his press briefing Friday afternoon, White House press secretary Jay Carney was asked to square Mr. Obama's call for corporate tax reform with his embrace of Immelt. Asked if the story bothered the president, Carney responded that "he is bothered by what I think you're getting at, which is that Americans, I'm sure, who read that story or heard about it are wondering, you know -- you know, how this could be."

Carney went on to make the case for corporate tax reform, noting that companies pay "armies of tax lawyers to understand how it works and to take advantage of the various loopholes that exist."

He stressed, however, that he was "not addressing this specific company because I don't know independently about that." (According to the Times, "G.E.'s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world's best tax law firm.")

Carney was asked why, if the president wants corporate tax reform, he appointed "to the head of the Competitiveness and Jobs Council a person who is now the poster child for abusing the system to get out of paying taxes."

"The jobs and competitiveness council is designed for just that," Carney responded. "And he has brought together a lot of voices on that. And he wants to hear the opinions of every member of that council. And we have said, with regard to questions about other members who have been appointed, that the president obviously doesn't want a council of people who agree with him on every issue; he wants to hear diversity of opinion."

"In the end, the decisions that are made about which policy to pursue on corporate tax reform will be the president's decision and his policy," he added.

Carney said later that Mr. Obama continues to have faith in Immelt to run the council.

Overall, the Times notes, the share of U.S. taxes paid by corporations has fallen from 30 percent of federal revenue in the 1950s to 6.6 percent in 2009.

[NotNow]

Is it possible that there is a little more to the California story than the editorial piece quoted by StephenDare!?  See the facts below (sans a cute little story):


http://www.sen.ca.gov/budget/budgethistory.pdf

Year Billions
1990-91 51.4
1991-92 55.7
1992-93 57.0
1993-94 52.1
1994-95 57.5
1995-96 56.8
1996-97 61.5
1997-98 67.2
1998-99 71.9
1999-00 81.3
2000-01 99.4
2001-02 103.3
2002-03 98.9
2003-04 98.9
2004-05 105.3
2005-06 117.3
2006-07 131.4

Full history with bill numbers and the like at above link.

"California's state spending has ballooned in the last decade at a rate much higher than the rate of inflation and rate of population growth in the state. According to Tom Campbell, California's finance director in 2004-2005, if the 1999-2000 budget of former California governor Gray Davis had been increased over the next decade by a factor representing the inflation rate and California's population growth in that time, California would now be experiencing a budget surplus, rather than a deficit even with the recent revenue decline due to the state's economic recession.<6> Instead, California has had a 50% spending increase over the past five years.<7> "

http://sunshinereview.org/index.php/California_state_bu...

[NotNow]

It means that California's fiscal problems are not 100% attributable to "not enough taxes".  A pretty good explanation of California's taxation system can be found here:

http://www.mikemcmahon.info/CATaxesOct2007.pdf

Of course, I am always interested in hearing the theories of others. 

[FayeforCure]

You would think they would not want to eliminate the middle class.. who gonna pay taxes then? The poor can only pay so much , and the Rich aint havin it

Hence our much touted budget deficit. It's not an issue of government over-spending ( although I admit there might still be waste in particular in the DOD), it's primarily an issue of lack of government revenue.

The unemployed can't pay taxes and corporation won't pay taxes, and there are so many loopholes for the ultra-rich that they only pay an average of 16% in taxes per household.

As a DEMAND side economist, I know that destroying the middle-calss is like shooting yourself in the foot. The ultra-rich can only consume so much ( they are already at their limit), but without consumer demand from a strong middle class, we will have completely destroyed the basis of our economy since 70% of our GDP originates from consumer spending.

[Dog Walker]

How much ahead of population growth and inflation did California's spending run?  I think that is the critical number to look at not just the % increase.

[NotNow]

As most of us know, taxation or income is only one half of the equation.  Spending is the other half.  Even if a state is the highest taxing state in the union, if it spends more money than it takes in then there is a deficit.  StephenDare! and I agree on at least one thing...states should be fiscally responsible with the funds that they confiscate from their citizens.  Personally, I like the fact that there are fifty different state governments all doing things their own way.  That is what the founding fathers designed.  Each state tailors it's government to its own citizens and their needs.  There will be "high tax" states and "low tax" states.  And those rolls will change over time.  The important thing is that states match their spending to their income.  The current multiple state fiscal problems are largely due to the economic downturn and will recover as does the economy, but illustrate the risks that many states are taking in selected forms of revenue and budgeting.  

Of course, all of this is just the speculation of a guy in Jacksonville.  

Rates of taxation by the states can be found here:

http://retirementliving.com/RLtaxes.html

[NotNow]

Faye,

I would argue your first point.   The federal budget in the mid 90's was about $1.4 Trillion dollars.  In 2010 it was about $3.5 Trillion dollars.  That is growth WELL beyond the rate of inflation.  It is my belief that we do indeed have a spending problem.

I do agree with your second point.

A pretty cool little pdf produced by the Clinton administration:


http://www.gpoaccess.gov/usbudget/fy96/pdf/bud96g.pdf

[Timkin]

"we" meaning the Government? or "we" the people ?

[FayeforCure]

Is it possible that there is a little more to the California story than the editorial piece quoted by StephenDare!?  See the facts below (sans a cute little story):


http://www.sen.ca.gov/budget/budgethistory.pdf

Year Billions
1990-91 51.4
1991-92 55.7
1992-93 57.0
1993-94 52.1
1994-95 57.5
1995-96 56.8
1996-97 61.5
1997-98 67.2
1998-99 71.9
1999-00 81.3
2000-01 99.4
2001-02 103.3
2002-03 98.9
2003-04 98.9
2004-05 105.3
2005-06 117.3
2006-07 131.4

Full history with bill numbers and the like at above link.

"California's state spending has ballooned in the last decade at a rate much higher than the rate of inflation and rate of population growth in the state. According to Tom Campbell, California's finance director in 2004-2005, if the 1999-2000 budget of former California governor Gray Davis had been increased over the next decade by a factor representing the inflation rate and California's population growth in that time, California would now be experiencing a budget surplus, rather than a deficit even with the recent revenue decline due to the state's economic recession.<6> Instead, California has had a 50% spending increase over the past five years.<7> "

http://sunshinereview.org/index.php/California_state_bu...

Hmmm, why again was Gray Davis recalled if the CA budget was decent back then? I guess the conservatives crazies took over CA.

Looking back at 2003: The Gray Davis recall
By Rick Orlov, Staff Writer
Posted: 12/27/2009 01:04:18 AM PST

This story originally ran on Dec. 31, 2003


Almost from the moment former Gov. Gray Davis was elected to his second term in November 2002 by a surprisingly close margin, the talk began.

Recall talk.

It was no different than discussions that had involved 30 of his predecessors over the years - with opponents talking about organizing a drive to seek to recall him for his policies.

And, there was no reason to believe it would go any further than being the dream of, this time, a small group of Republicans unhappy with the prospect of another four years of Davis.

"I'd been involved in a couple of these things and I didn't think it would go anywhere," political consultant Sal Russo said.

"In the '70s, with Jerry Brown, who a lot more people were upset with, there was talk of a recall, but it went nowhere because even Republicans believed a recall had to be for an extraordinary reason and no one felt they had that with Gray."

Then, in mid-December, Russo heard anti-tax advocate Ted Costa talking about recall on talk radio - and he heard the public response.

"Even then, I have to say I was skeptical," Russo said. "Then, some Democrats called me and invited me to lunch. They said they thought Davis could be recalled. I told them if it wasn't ideological it stood a chance. They encouraged me to go ahead, even though they couldn't be publicly identified."

From that meeting, events snowballed.

Costa took out papers for the recall and Russo coordinated his efforts, with one part of the campaign being run out of San Diego by former Republican Assemblyman Howard Kaloogian.

"We were able to bring together the Internet and talk radio and tap into a sentiment unlike anything we had seen before," Russo said. "There was a lot of anger toward Davis and people were looking for something."

Signature collection was running even better than Russo had hoped - with requests coming in daily from throughout the state and people downloading the petition from the group's Internet page.

At that time, the recall was being given a lukewarm reception by Republican Party officials and office-holders. There was a mixed message from the White House, which believed President George W. Bush stood a better chance in California in 2004 with a weakened Democratic governor than a Republican grappling with state budget problems.

But, the drive had grabbed public attention.

With debate over the Iraqi invasion ebbing, talk radio seized on the recall with a vengeance - with daily debates fueling public sentiment.

Then, Rep Darrell Issa, R-Vista, entered the picture.

"We really didn't need him to qualify for the ballot, but he did help us get it done by July 4," Russo said.

What Issa did give the campaign was a legitimate, credible political voice that forced other GOP officials to come out in favor of the recall. And he bankrolled a substantial portion of the petition campaign.

After the signatures were submitted on July 4 and subsequently certified, the election took a whole new direction.

There were 135 candidates who filed to run to replace Davis, but as it turned out, only one would matter - actor Arnold Schwarzenegger.

"Arnold gave this worldwide attention, no question about it," Russo said. "But, the best thing that helped the recall was when (Lt. Gov. Cruz) Bustamante got in the race.

"When Bustamante got in, he destroyed the arguments Davis had (about the recall being a partisan effort) and he came up with a flawed strategy of asking people to oppose the recall, yet vote for him. What Arnold did do was elevate interest and bring out the casual voter we probably wouldn't have got otherwise," Russo said.

By the time the campaign was in the final weeks, Russo said he became convinced it was a juggernaut that could not be stopped.

"I'm not sure why it came together the way it did," Russo said. "Part of it was Gray Davis. Part of it was Arnold Schwarzenegger. Part of it was the timing.

"There is this 12-year-itch theory of California politics where the people rise up against the establishment. You had that in 1966 with Ronald Reagan, in 1978 with Proposition 13 and 1990 with term limits. And now, this."

http://www.dailynews.com/decade/ci_14044030

Remember: Taxes are the price you pay to live and do business in a civilized society!

Corporate tax rates in Europe promote business:
http://en.wikipedia.org/wiki/Tax_rates_of_Europe

[NotNow]

How much ahead of population growth and inflation did California's spending run?  I think that is the critical number to look at not just the % increase.

California's population in 2000 was about 34,000,000.  In 2010 it was about 37,000,000.  As near as I can tell, inflation ran about 15% between 2000 and 2005.  It has been much less since then.