“They’re going to tax California until the top 3 percent throw in the towel,” she said. “California has already lost several corporations over the last several years.”
Campbell’s Soup closed its Sacramento plant in September, taking 700 jobs with it. EDM Laboratories moved to Texas, joining 253 other companies that moved all or part of their business out of state last year, according to a study by Irvine business consultant Joe Vranich.
Chief Executive Magazine ranked California as the worst state for business for the eighth year in a row in May, citing “excessive” taxes as a major reason.
Still, Mr. Pechthalt said he supports making taxes even easier for lawmakers to levy. Currently, California requires state and local legislative bodies to secure two-thirds majority votes in order to raise taxes. Mr. Peschalt said he hopes state legislators will vote to reduce the local threshold to a simple majority.
Lawmakers are already taking steps to reduce the threshold for local taxes. On Dec. 3, the state’s first legislative session of the new term, state Sen. Mark Leno, D-San Francisco, proposed amending Proposition 13 to allow local property tax increases to pass with just a 55 percent voter majority.
Currently, Proposition 13 requires a two-thirds majority to increase those taxes.
Mr. Pechthalt said he would like to reduce the threshold for raising taxes at the state level, too. However, since the two-thirds majority requirement to raise taxes is written into the state’s constitution, that change would require voter approval. Mr. Peschalt is confident he will get it.
Ms. Romero agrees, saying supermajorities give Democrats control of the state’s purse strings — and, therefore, they can decide how much the state should spend on information campaigns, public service announcements and other initiatives that sway public opinion.
After all, Californians already voted to raise their own taxes by passing Proposition 30, Gov. Jerry Brown’s plan to balance the state budget by temporarily raising the sales tax as well as the income tax rate on people who make more than $250,000 a year.
Supporters of Proposition 30 raised almost $70 million to promote the ballot measure, far more than the $54 million opponents of the measure were able to raise, according to MapLight.org, a nonpartisan research organization based in Berkeley, Calif. Almost all of the money opponents raised came in the final month of campaigning, when polls showed voters were actually likely to approve the measure.
Unfortunately, revenue generated from income taxes is notoriously unreliable — particularly on taxes levied on the wealthy, a group that often makes high-risk investments.
“Some of the people that pay the most taxes don’t get income from salaries or wages, they get most of their income from stock market investments,” said Gabriel Petek, an analyst with Standard & Poor’s Ratings Services in San Francisco. “The stock market is a lot more volatile. The bottom line is, the problem with California tax structure is it’s very volatile.”
Mr. Petek pointed to 2008-2009, when the Great Recession hit California: State GDP declined 5 percent, but state revenues plunged 19.3 percent.
While lawmakers have promised that taxes raised by Proposition 30 will go to schools, those funds are not actually earmarked for education. The actual text of the measure only compels California to spend the money it raises on “programs in the state budget.”View Entire Story
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