It Really IS the Venezuela of North America

Discussion in 'Financial Cents' started by Quigley_Sharps, May 5, 2010.

  1. Quigley_Sharps

    Quigley_Sharps The Badministrator Administrator Founding Member

    <!-- google_ad_section_start -->It Really IS the Venezuela of North America<!-- google_ad_section_end --> <hr style="color: rgb(255, 255, 255); background-color: rgb(255, 255, 255);" size="1"> <!-- / icon and title --> <!-- message --> <!-- google_ad_section_start -->Another huge blow to California's economy yesterday. Makes the thread about "The Venezuela of North America" even more pertinent.

    Plunge in state revenue dashes hopes of an easy budget fix

    Legislators were hoping revenue would continue to exceed projections, forestalling deeper cuts and further tax hikes. But April's total was 30% below what was expected, leaving them with few options.

    May 04, 2010|By Shane Goldmacher, Los Angeles TimesReporting from Sacramento — State tax collections plummeted unexpectedly in April, wiping out months of steady gains that legislators hoped would ease their budget troubles and restore California's economy faster than experts predicted.

    Such hope is now fading fast.

    Revenue for April, the biggest revenue month because it is when most Californians pay their taxes, lagged projections by nearly 30% — roughly $3 billion, according to state officials. The drop was steep enough to erase improvements recorded in each of the four previous months.

    Economists and finance officials are scurrying to analyze the data to determine what caused the April swoon. Some suspect it sprang from new laws that changed the rhythm of tax payments. It could also reflect the growth in unemployed residents eligible for refunds.

    The April collections came almost entirely from personal income taxes. Most corporate and sales taxes have not yet been reported. If they, too, come in below projections, the state's budget problem would grow worse.

    The decline sets Sacramento back as next month's deadline for passing a budget approaches. Lawmakers face a deficit of $18.6 billion — about 20% of general fund spending — with no easy options left for addressing it, as they have already cut state services severely and temporarily raised income, sales and vehicle taxes.

    "One pillar of the budget solution just got destroyed, and there's nothing that can happen between now and June that can get back the $3 billion," said Stephen Levy, director of the Center for Continuing Study of the California Economy.

    The retraction could mean even deeper cuts in government services — schools, healthcare for the poor and services for the elderly. Lawmakers may also be forced to consider more reductions in funds for public universities, as well as tax hikes.

    "It's hard to imagine how we're going to [balance the budget] without doing more severe damage to the economy," said state Sen. Denise Moreno Ducheny (D-San Diego), who chairs the Senate's budget committee.

    For months, the Democrats who dominate the Legislature have hoped they would be able to balance the state's books with the help of an upswing in revenue, delaying any substantial budget cuts.
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  2. Quigley_Sharps

    Quigley_Sharps The Badministrator Administrator Founding Member

    Every time Kalifornicate raises taxes, especially on the "rich," their revenue decreases. The same is happening to Mass.

    I suggest that to solve their budget woes, they raise taxes even more. That will send more high earners including corporations which provide jobs fleeing to other places including offshore.

    As corporations flee, so do the jobs they create and it's a triple whammy but Kalif. is too stupid to see it.

    1. Corporations leave and stop paying taxes.

    2. A lot of people then lose jobs and quit paying taxes.

    3. The people who lose jobs, now instead of paying taxes, begin to cost the state money by collecting unemployment, food stamps, medicaid, etc. etc.

    Who would believe that if your income goes down and your expenses go up that you'd have a problem?

  3. ghrit

    ghrit Bad company Administrator Founding Member

    Isn't that how trickle down economics works?
  4. Brokor

    Brokor Live Free or Cry Moderator Site Supporter+++ Founding Member

    I think it's the opposite of that, but you were probably joking...

    From the
  5. ghrit

    ghrit Bad company Administrator Founding Member

    Not completely joking at all. Stands to reason that if a tax break for the upper income folks will create more jobs (etc., etc.) then if you tax them more, they will create fewer jobs. Either way, it trickles down, the good and the bad.
  6. Brokor

    Brokor Live Free or Cry Moderator Site Supporter+++ Founding Member

    Trickle down poop. Kind of like diarrhea, not trickle down economics. But yeah, semantics. I concede.
  7. Quigley_Sharps

    Quigley_Sharps The Badministrator Administrator Founding Member

  8. Brokor

    Brokor Live Free or Cry Moderator Site Supporter+++ Founding Member

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