A bad year in the IPO market can do bad things to tax collections.
Newsom announced the deficit in a speech unveiling his proposed 2023-24 budget, which includes $297 billion in spending proposals, an $11 billion decrease from last year. The Democrat acknowledged that the state is “in a very volatile moment … of uncertainty,” which he noted could worsen over the coming months.
The governor dismissed the “old narratives” that Democrats are “profligate” and incapable of “managing budgets,” instead laying the blame on California’s dwindling tax base, which is now roughly half of what it was last year…
The governor announced a strategy of spending “delays,” including on mental health, preschool “inclusion” grants, climate programs, and University of California capital investment. His budget also proposes using federal dollars to make up for reductions to the state’s much-touted climate initiatives.
Leap, the California tax system is set up so that the top earners pay the most by far. No surprise. This means that in good years for the stock market when there are lots of IPOs the state coffers brings in many billions. In years such as 2022, when there were only 180 compared to over 1000 in 2021, the state budget suffers. IPO Statistics and Charts - Stock Analysis.
That is not simply the IPO market if it is accurate.
The bigger thing about the political hit piece why not say how successful 2021 was and leave it at that?
Because 2022 was a terrible year for many business valuations. It is not a shock that IPOs are off. Why pass that off as a Democratic party thing?
As for Texas getting company HQ from CA, those companies are often still producing in CA and paying many taxes in CA. There is no controlling corporations.
I get you want lower taxes. Who doesn’t? Well actually if we give corporations lower taxes your taxes might go up. Further the US GDP growth rate will be slow. I have explained that in detail it is counterintuitive. Basically higher taxes means companies are expensing the means of production instead of paying taxes to a degree. Lower taxes on corporations means expenses cut more so into the profits so companies offshore.
Your need for lower taxes has been destroying our country for 40 years. Now we have $31 tr in debt. We have China producing many goods. We can reverse that without taxing you.
What does that have to do with CA? CA has a corporate tax. Yes Texas is cheaper.
Not every corporation is leaving CA. Lets not get hysterical.
It’s not “the IPO market”, but it is primarily capital gains. And the wealthiest people almost all have massive capital losses in 2022. And with loss carryforward, that may last through 2023 and even 2024. That’s the biggest problem with relying on “tax the rich”, when the rich aren’t earning much, the state isn’t collecting much. Most of the world outside the USA has a much wider (and deeper) tax base, with VAT taxes on everyone, and with very progressive income taxes that begin at a relatively low income, and with things like health taxes, and other taxes that affect a wide swath of the population.
We have only this year moved to a more progressive tax regime after a long period without it.
We have only recently upped corporate taxes.
As the middle class gets wealthier tax receipts will rise without raising taxes for a good while. Longer term in roughly 15 years something like the VAT will come into play.
We have only 10% of white males over 50 as of 2019 able to afford retirement. It must be a lot worse for the other demographic segments.
Today’s society coming up has other plans for their retirements, healthcare and how their children’s education is paid for by the public. This makes for a much wealthier America and the succeeding generations are quite aware that listening to those who were pro supply side econ is a recipe for impoverishing most Americans. Never mind our current $31 tr in debt the results of sheer greed and stupidity.
This has very little to do with tax policy, and a lot to do with the preference of using the money earned to buy large SUVs, buy bigger than needed homes, and buy a lot of other assorted stuff instead of saving for retirement.
Pure fiction. Not anything to do with the vast majority of white males or anyone else.
It has a huge amount to do with tax policy. There are distributions of wealth. The distributions were upward on purpose. Supply side econ is a capitalization policy. But we borrowed $31 tr that ended up with the top income earners and inherited wealth. To assume that has nothing to do with tax policy? Cmon Mark?? You can not say that with a straight face.
Only 10 years ago, California’s general fund was $93 billion – adjusted for inflation, that’s $118 billion today, against the current actual budget of $300 billion. Meanwhile, California’s population has grown only modestly over the same period, from 38 million to 39 million. This means that inflation-adjusted per capita general fund spending in California has increased from $3,124 in 2013 to $6,023 today.
According to the state Department of Finance, roughly 49% of personal income tax collected by California in 2020 came from just 1% of tax filers.
Mr. Newsom intends to cover the shortfall with a patchwork of funding delays, spending reductions to programs and spending shifts. He also proposed trimming the state’s transportation and climate budgets.
If the upcoming year results in a recession, "delays" must become "cuts"
Healthcare costs, Government Services all have been increasing faster than inflation. For example, the number of inmates has declined in the past 10 years, but today it costs an average of about $106,000 per year to incarcerate an inmate in prison in California. Since 2010-11, the average annual cost has increased by about $57,000 or about 117 percent.
California has to decrease spending, a state that really has no room to increase taxes.
But it does indeed apply to a large majority. Median household income is ~$70k. We’ve already cut federal income taxes to nearly zero for those people ($70k HH income, 2 kids, income tax is only $890 after the various deductions and credits available to all. And if the contribute to an IRA, their income tax can be even closer to zero!). So that’s at least half the population right there.
Furthermore, look at average house sizes versus average members per household, more than twice as large (pp) as 40 years ago. And, finally, look at the vehicles people choose to buy, SUVs top all the lists, and 86% of their drives have a single person in the vehicle, and they hardly use them for hauling stuff, it’s basically just a status symbol. And as for ancillary stuff, the coffee I bought at the office in 1982 for 50 cents is now a starbucks drink for 6 bucks (Really! Just yesterday I was at starbucks with my daughter and she ordered a vanilla latte that was $6.47 including taxes!!!)
The fact that you can say that the reason that people over 50 can’t afford to retire has nothing to do with spending and savings habits is astounding and even mystifying. In the era of 401ks replacing pensions, I can’t imagine what you are otherwise thinking.
How much federal tax should I pay if I make 70000?
If you make $70,000 a year living in the region of California, USA, you will be taxed $17,665. That means that your net pay will be $52,335 per year, or $4,361 per month. Your average tax rate is 25.2% and your marginal tax rate is 41.0%.
Mark,
We have to deal in facts to have this discussion.
Just about none of this spending has to do with couples earning $53k after taxes in CA.
You are not looking at raising children buying a modest house cars paying for education for their children and finally a small pot to psss in before retiring. There is no miracle cure.
Yes there are deductions for dependents but not enough to raise a child. Admittedly I am not married and do not know the tax treatment for a two income household.
The tax policy is for how to grow the US economy. That goes to how the couple fair job wise, pay wise, etc…over the longer run. The 1981 to 2020 period was a disaster for this hypothetical couple generally speaking.
Discussion of state budgets had me looking up Wisconsin. The state currently has a surplus of $6.6 billion (not counting a $1.7 billion rainy-day fund).
“Based on the fiscal bureau’s November projections, Wisconsin’s general fund balance is estimated to reach more than $8.4 billion by July 1, 2024, and more than $9.7 billion by July 1, 2025, according to the state Department of Administration.”
That is not true in CA. What is left over wont for a couple earning $70k buy luxury cars and big houses. You were not explaining anything having to do with their reality.
Wisconsin is an industrial state and a rural state.
The reps GOP are not to be taking the credit. The IRA feeds the state’s infrastructure needs. This is very productive for Wisconsin meaning state revenue receipts will continue to grow.
Growing Wisconsin’s Green Economy – Between now and 2030, the IRA will bring estimated $4 billion of investment that would boost our manufacturing industry, which employed an average of 472,000 workers and accounted for more than 18.8% of total output in Wisconsin in 2021.Sep 13, 2022
A good percentage of them still lease or buy vehicles that are beyond their means, often way beyond their means. Your means are what you have left to spend after taxes, required insurance, AND retirement savings. It’s just too easy to omit the retirement savings because it is so far in the future. And that nice shiny new car is right here in front of you at the present.
Yes that is true some people in a given ten year period of their work life over extend themselves. Not denying that.
Without over extending themselves in CA a couple earning $70k per year at age 50 is not well off. Retirement is going to be difficult unless they have a pension or two. Most people today will find retiring from that position very problematic.
True, 70k is below median in CA. Median household income in CA is $78k, higher than most other states. But that still means that half the households make under $78k. Are you really claiming that it’s okay or understandable that nearly half the households in CA don’t save enough for retirement?
50% either cant or do not attempt to or fate such as medical conditions preclude their efforts.
50% of white males according the 2019 study do have some saves for retirement. Of those 10% will be okay in retirement but 40% of the total do not have enough savings.
I am not faulting people. That is the difference between us.
I am faulting our government policies. The simple answer is to cut taxes but that is not the answer at all and that is counter productive.
I’m not sure about that. The people that I know that do not save for their retirement is I believe that they do not either have the financial knowledge or self-discipline to save for the future.
I know some very smart folks who are are afraid of the numbers, or are confused by the numbers, or “not a numbers person” who choose to ignore the problem instead of seeking assistance to help them along the way.
I would say giving them more in their pocketbooks would just allow them to “upscale” their unwise spending habits.
Just my perception as a person that helps lots of folks out with finances.
'38Packard