Paying Your 'Fair Share' & the Tiger Woods EffectPosted by Greg Hines, Legislative Director, Tax & Corporate Counsel on Nov. 22, 2008
The state's personal income tax is the largest single revenue source, representing almost 55% of all General Fund revenues. Here's how it breaks down:
The problem is that we have slowly sent signals to businesses and individuals that California will tax success more than any other State. Why would any business leader operating in today’s global marketplace make a decision to expand or invest in California? Ask Intel why they no longer manufacture in the state they were founded, or try to talk to Tiger Woods, the Southern California native golfer, about moving to Florida after turning pro. Simple answers: Less taxes for the former and $9.6 million less taxes for the latter.
Here's where the disconnect really starts. Every change in tax law has some affect on the overall position of the state’s economy. Without a strong economy -- of which high wage manufacturing plays a crucial role -- we can't pay for quality government programs. Moreover, in a weak economy, more citizens need these entitlements. I know, that concept is not exactly groundbreaking news. But it is almost impossible to get the Legislature to acknowledge that in their decision making.
So, as we proceed in these difficult times, we must recognize the consequences of new revenue policies in terms of their short and long term effects on the economy and wealth creators that fund our programs. California has learned the hard way that leading the country with bold programs is visionary, but expensive. For this reason, every tax policy coming out of the State Legislature should come with an answer to the question: Is this policy "fair" to our economy. In other words who will stay and who will go as a result? We owe that to all 34 million of us who need the State's government funded programs.
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