Well, this is about the end of the dialogue, because Bennett is contradicting himself now and I have to prepare for a trip out of town (to California, in fact). Bennett writes (indicated by block quotes):
This is hilarious:As for the structural issues, the long-term attack on taxation that started with Prop 13 in California has resulted in these problems. So, while we may disagree with the optimal structure of a tax system -- which we haven't even touched on, so it isn't relevant to the conversation at hand -- the issue is that in California the cumulative impact of the electricity crisis and following debacle and the mismanagement of domestic and foreign policy by the Bush Administration is the source of immediate problem, a deep decline in state tax revenues.
In the first place, there hasn't been a decline in state tax revenues in California to speak of. There was a sharp rise in 2000, but after that things leveled off to the same regular rate of revenue growth as before. That's myth number one.
Well, get ready to laugh, because Richard Bennett's really dissembling now. According to the state of California's Department of Finance: "As the economy slowed over the last year, the decline in the StateŠ„s revenues was even more pronounced than what was expected at the time the 2001 May Revision was prepared. Since enactment of the 2001 Budget Act (Chapter 106, Statutes 2001), the General Fund revenue forecast for major taxes and licenses has decreased by $5.4 billion for the past and current years combined. Revenue growth should resume in 2002-03 and be up $6.3 billion, or 9.3 percent, from 2001-02, reaching $74 billion. However, this is still $1.6 billion below the 2000-01 level."
That is clearly not what Mr. Bennett suggests the facts to be. In fact, let's break it down:
Year Sales/Use Tax Personal Income Tax Corporation Tax
1999 $21 billion $30.8 billion $5.7 billion
2000 $23.4 billion $39.5 billion $6.6 billion
2001 $24.2 billion $44.6 billion $6.9 billion
2002 $23.6 billion $38.4 billion $5.2 billion
2003 $25.4 billion $42.6 billion $5.9 billion
The key is not just that in 2002 the government of California collected $9.3 billion less in tax revenues from sales tax, personal income tax and corporate taxes in than in 2001. In 2003 (the fiscal year ended on June 31), the state collected $1.8 billion less than in 2001.
More importantly, however the cost of everything government does had risen for all the usual reasons (inflation and pre-negotatiated contracts or bonds that are often built on lower early costs and balloon payments) while the state simultaneously faced substantially increased costs for borrowing due to the lowered bond ratings issued by credit rating agencies, not to mention the direct cost of floating a $12 billion bond offering (approximately $80 million, or about 2.1 percent of the current deficit) to bail out energy retailers and a host of other increased costs relating to the budgets established years earlier (in both the Wilson and Davis administrations) that projected increased revenues and were then confronted with lower or slower-growing revenues.
It's the lack of growth, the fact the states bought into the bubble mentality in their budgeting that built much of the $38 billion shortfall into California's budget and the deficits in other states. Bennett talks about the revenue side dishonestly, while completely ignoring the realities of budgeting processes. Unlike a company, a state can't lay off citizens to whom it has promised services. Many of those promises are the furthest thing from extravagant; they are basic services that have to be delivered regardless of the cost -- and the Wilson-era privatization movement contributed to these costs rising, as well.
Finally, what Bennett refuses to acknowledge is that the state took on $10,675.4 million for the Deficit Financing Bond in 2003 that has to be paid back. Last year, by issuing bonds, California increased its revenues, but that is actually is a cost the people of California will bear long into the future.
Second, I didn't say other states weren't in a bind - I said they're not nearly in the same kind of a bind as California, where 15% of the nation's population has incurred 51% of the nations state deficits.
Actually, what Bennett said was: "I haven't noticed any states going bankrupt. California's budget deficit exceeded the total deficits of all other states, and you clearly can't blame that on Bush."
According to CBS News, since they summarize this nicely, the majority of states are in the same kind of trouble as California: "According to the National Association of State Budget Officers, 37 states reduced the budgets they enacted last year by a total of $14.5 billion, the biggest combined cut in 24 years. Governors in 29 states asked for tax increases totaling $17.5 billion, to offset plummeting tax revenues: sales taxes were down 2.5 percent, income taxes off 8.6 percent, and corporate taxes lower by 8.3 percent. Thirty states missed their revenue targets, NASBO reported."
While the scale of the California budget deficit is huge, it is largely due to the forces I have described in this series of postings and the impact of a deficit where it is unconstitutional is the same, regardless of the magnitude of the deficit.
Third, Californians are not under-taxed. Their state sales tax is higher than Washington's, their state income tax is higher than Oregon's, and the property taxes are comparable to most states.
Well, gee, but remember what California used to have? The worlds best educational system, for example? Californians used to get something for their money, not just the opportunity to pay for the scams of power companies. But, let's look at Bennett's false claims.
According to taxadmin.org, the people of California pay a rate of between 1.0 percent and 6.5 percent in state income tax, depending on their tax bracket. Oregon, by contrast, pays between 5.0 percent and 9.0 percent, higher than California by factors of between two and five -- as substantial difference, I'd say. You can also see here how Oregon taxes much more of a person's income.
Regarding Washington, which does not have an income tax, we (I write as a resident of Washington) pay for government in many different ways, not just sales tax. For example, as of 2001 California's fuel tax was $0.18 a gallon (33rd in the nation) compared to Washington's $0.23 per gallon (13th in the nation). Here are the statistics.
How about cigarette taxes, which Washington uses to bolster revenues. As of January 1, 2002, our cigarette tax was $1.425 per pack while Californians paid $0.87 -- we recently increased the cigarette tax.
Sales taxes? They are roughly even, but Bennett's statement that California's sales tax is higher than Washington's is only true when you don't account for the wider use of local sales taxes in Washington. California's sales taxes is 7.25 percent plus local taxes of between 0.125 and 0.5 percent for a total of up to 8 percent, while Washington's was 6.5 percent, plus an average of about 1.9 percent additional local sales tax, or 8.4 percent. Oregon doesn't have a sales tax.
Both Oregon and Washington's property tax rates are higher than California's by about a nickel per thousand dollars of value. A $200,000 home in California would cost the owner $206 a year in property taxes; in Washington, a home of the same value would cost $220 a year and in Oregon it would cost $264 a year.
Fourth, the de-reg split wholesalers from retailers and capped retail prices on power. The retailers went backrupt when the couldn't pass costs on to consumers, and the legislature squelched the plan. To assert that the power crisis was the cause of the deflation of the Internet bubble, as you've done, is to engage in some very creative activity.
I didn't say the Internet bubble burst because of the the energy crisis, and suggesting I did is an act of intentional distortion. I said the rising cost of energy increased costs for all California business at a time when prices for technology and other products were falling globally. That has impacted many industries, as evidenced by the fact that California's 2003 corporate tax revenues were 15 percent below 2001 revenues. Companies are selling less and laying off workers, which has consequences up and down the California economy and for state revenues.
Why don't you try writing about something you actually understand?
Ah, Richard. Let me call you Dick, okay? Dick, you ought to be careful about bandying around those kinds of accusations. You got every point in this message wrong... game, set and match, you intellectual dwarf.
Posted by Mitch Ratcliffe at October 14, 2003 05:07 PM | TrackBackIt's odd that you go to the trouble to find links to tax rates, and then don't transcribe correctly. California's income tax rate is 9.3%, higher than Oregon's 9%. See my blog for more details on how confused you are.
Posted by: Richard Bennett at October 20, 2003 02:53 AMI'm through with you. The numbers I used were from state sites. Of the eleven or so different facts you got wrong, you're hoping one will save your sorry ass from total embarrassment, when it won't. If you look at the amount of income tax paid at each income level, which I linked to but you did not, you will see that the average income tax paid in California is lower, as Oregon taxes much lower incomes than California. Like you said, if you actually understood numbers, you'd be a more informed voter. But you willfully ignore the numbers.
Posted by: Mitch Ratcliffe at October 20, 2003 07:56 AMI see why you're so aggressive now - you hope you can prevent people from seeing through your lack of understanding by lashing out so violently.
The table you linked yourself says that California's top bracket is 9.3%. You couldn't even type that in accurately. You also lie about he sales tax, higher in California than in Washington, and in your analysis of property tax you ignore the higher median house prices in California and what that has to do with the size of the tax bill.
Initially, I thought you were a demagogue, but looking at the desperate arguments you raise about things like cigarette taxes, while dodging the car tax, it's apparent that you're simply ignorant.
But don't be sad because I made you look so bad in the course of this lesson - I've mopped the floor with better men than you'll ever be, so you're in good company.
Happy Emergence.
Posted by: Richard Bennett at October 20, 2003 07:14 PM