Under “workers’ compensation,” enacted in 1914, workers would give up their right to sue employers for injuries and in return, employers would be obligated to pay for medical care and provide cash benefits while disabled employees recuperated. Today, work comp, as it’s dubbed, is a huge program – well over $20 billion a year – whose operating rules are a source of perennial political jousting. . . . However, it still left California employers with – by far – the nation’s highest work comp burden. The 2016 annual survey of costs by the Oregon Department of Consumer and Business Services kept California in the No. 1 spot with an average cost of 3.24 percent of payroll for work comp insurance, 76 percent above the national average. Obviously, working in California is not inherently more dangerous than in other states, and cash benefits to disabled California workers are not out of line, so the enormous cost differential must be rooted in the system itself, which explains why its rules are the subject of constant political infighting. One factor in those costs is what officials say is an enormous amount of fraud, concentrated in Southern California. Last year, the Center for Investigative Reporting reviewed work comp fraud cases that had been prosecuted and reported that they totaled more than $1 billion. But authorities believe that prosecutions merely are the tip of the iceberg.
Oblivious to the fact that these corporate and personal earnings [or just “earners”?] can move to other states or even other countries, Sacramento recently increased the gas tax and car tax by over $5 billion annually. The politicians do not spend this money well. Our freeways, once the envy of a great nation, are an embarrassment. Our dams, once an engineering marvel, threaten hundreds of thousands without warning because maintenance is deferred to cover up pension debt. The CalTrans budget was $13 billion in 2010, the year Governor Brown took office; by 2013, it was reduced to $11 billion. So here is the formula Sacramento politicians have dreamed up for sending our shining stars to other states: tax more, then spend less on the things that matter. Sacramento knows about this problem, but as usual, its solutions are ham-fisted. Here’s an example. Politicians paid Paramount Studios $22 million in tax bribes to film one of the myriad installments of “Transformers” in California instead of taking its business to another state. This is only one of the films in the Transformers “cycle” to be filmed in California; others have been shot in China, Britain and in other states. To keep some of the action in California, Sacramento has created a huge taxpayer-supported fund to help finance films with budgets of $75 million or more “to entice more major motion pictures to choose California and reverse the tide of runaway productions”. According to the LA Times, “California officials hope that more in-state film shoots will help spur local economics through spending and hiring.” Making crony deals with billion-dollar corporations will not stem the flow of our young entrepreneurs from California; it just makes them shake their heads at the pathetic condition of the state they used to love.
Giving its employees a better chance at owning a home was a key consideration in Lighthouse Worldwide Solutions' decision to relocate its headquarters.
Many California cities have issued “pension obligation bonds” to cover rising retiree benefit costs with borrowing rather than tax money, based on the same assumption that arbitrage – betting that the difference between loan interest rates and investment earnings – can be a net winner. However, like Orange County and SANDAG, some learned that trying to predict global markets is dangerous. The largest single debt owed by the city of Stockton when it declared bankruptcy was a pension obligation bond. Hundreds of school districts issued “capital appreciation bonds” that postpone repayments for decades while the accumulated interest magnifies debt. Poway Unified in rural San Diego County became a poster child for financial irresponsibility when it was revealed that its $105 million bond would cost $1 billion to repay.
The Small Business & Entrepreneurship Council’s “Small Business Tax Index 2017” ranks the states from best to worst in terms of the costs of their tax systems on entrepreneurship and small business. This year’s edition of the Index pulls together 26 different tax measures, and combines those into one tax score that allows the 50 states to be compared and ranked.
The 26 measures are: 1) state’s top personal income tax rate, 2) state’s top individual capital gains tax rate, 3) state’s top tax rate on dividends and interest, 4) state’s top corporate income tax rate, 5) state’s top corporate capital gains tax rate, 6) any added income tax on S-Corporations, 7) any added income tax on LLCs, 8) Section 179 expensing conformity, 9) average local personal income tax rate, 10) whether or not the state imposes an alternative minimum tax on individuals, 11) whether or not the state imposes an alternative minimum tax on corporations, 12) whether or not the state’s personal income tax brackets are indexed for inflation, 13) whether or not the state’s corporate income tax brackets are indexed for inflation, 14) the progressivity of the state’s personal income tax brackets, 15), the progressivity of the state’s corporate income tax brackets,16) property taxes, 17) consumption-based taxes (i.e., sales, gross receipts and excise taxes), 18) whether or not the state imposes a death tax, 19) unemployment taxes, 20) whether or not the state has a tax limitation mechanism, 21) whether or not the state imposes an Internet access tax, 22) remote seller taxes, 23) gas tax, 24) diesel tax, 25) wireless taxes, and 26) LLC fees.
The 15 best state tax systems are: 1) Nevada, 2) Texas, 3) South Dakota, 4) Wyoming, 5) Washington, 6) Florida, 7) Alabama, 8) Ohio, 9) North Carolina, 10) Colorado, 11) Arizona, 12) Alaska, 13) Michigan, 14) Indiana, and 15) Utah. The 15 worst state tax systems are: 36) Delaware, 37) Arkansas, 38) Maryland, 39) Nebraska, 40) Kentucky, 41) Connecticut, 42) Oregon, 43) New York, 44) Vermont, 45) Hawaii, 46) Iowa, 47) Minnesota, 48) Maine, 49) New Jersey, and 50) California.