Commentary: State’s high tax burden thwarts recovery

State Controller John Chiang continues to uphold the California Great Seal motto, “Eureka, I have found it!”

But what Chiang is finding as controller is that California’s economy, as measured by tax revenues, is still tanking. State tax collections for February shriveled by $1.2 billion, or 22%, as compared with last year. The cumulative fiscal year decline is $6.1 billion or an 11% decline versus this period in 2011.

While Gov. Jerry Brown promises strong economic growth is just around the corner, Chiang proves that the best way for Sacramento politicians to hurt the economy, and thereby generate lower taxes, is to have the highest tax rates in the nation.

California politicians seem delusional in their continued optimism that high taxes have not savaged the state’s economy. Each month’s disappointment is written off as due to some one-time event. The state controller’s office did acknowledge that higher-than-normal tax refunds for February might have reduced the collection of some personal income taxes. Given that 2012 has an extra day in February for leap year, there might have been one day more of tax refunds sent out.

But the controller’s report shows personal income taxes fell by $325 million, or 16%, versus last year. Furthermore, leap year would have added another day for retail sales and use taxes, but those taxes also fell during February by an even larger $813 million, 25% over 2011.

The more likely reason tax collections continue falling is that businesses and successful people are leaving California for the better tax rates available in more pro-business states. Derisively referred to as “Taxifornia” by the independent Pacific Research Institute, California wins the booby prize for the highest personal income taxes in the nation and higher sales tax rates than all but four other states. Though Californians benefit from Proposition 13 restrictions on how much their property tax can increase in one year, the state still has the worst state tax burden in the U.S.

Spectrum Locations Consultants recorded 254 California companies moved some or all of their work and jobs out of state in 2011, 26% more than in 2010 and five times as many as in 2009.

Brown’s answer to the state’s failing economy and crumbling tax revenue is to place a $6-billion tax increase initiative on the ballot to support K-12 public schools.

He promises to only “temporarily” raise personal income rates by 25% on any of the rich folk who haven’t already left.

CHRISS STREET is the former Orange County treasurer-tax collector and a Newport Beach resident.