A net out-migration of more than one million people have left California in the last 20 years, many fleeing to places like North Carolina. So why bring the worst of California here?
That's what the Democrat-led state legislature seems to be attempting to do. It apparently wasn't good enough that we already have the highest tax rates in the Southeast. They're determined to compete with the rest of the nation. And not just in taxes, but in unemployment, too. We've already sustained the fourth highest number of job losses in the nation, which seemingly wasn't good enough either, judging by what the legislature and Gov. Beverly Perdue have in store for the state's businesses in this budget.
They clearly want to be No. 1 in taxes, job losses and economic ruin.
So far, legislative leaders have portrayed the tax hikes in this budget as an attempt to collect the state's fair share from "fat cat" businesses, a laughable story line. The new taxes and fees on business sale transactions, and the baffling bureaucratic bungle they will create for the struggling businesses that still manage to employ people in this state, will fall squarely on mom-and-pop employers and largely bypass the big corporations, whose lobbyists the leadership doesn't want to anger. More devastating still is that most are targeted at small businesses, the employment engine of the state. These businesses created 55 percent of the new jobs in the state between 2004 and 2005 (the latest numbers available) according to the U.S. Small Business Administration. The state won't recover or grow again until they do.
But that's only the first blow of the triple wallop. This week, the state house and senate will debate whether to raise sales taxes on the top two income tax brackets. If we go to the 7-percent sales tax rate proposed, only California, at 7.25 percent, will have a higher rate. Just five states -- Indiana, Mississippi, Tennessee, Rhode Island and New Jersey -- will have the same rate.
The state is proposing to permanently change the top two income tax brackets to 8.25 and 8.5 percent for those making more than $200,000. If that passes, only California, Vermont, Oregon, Maine, New Jersey, Iowa and Hawaii have a higher top rate.
Most people shrug their shoulders at that, figuring that if they don't make that much, why should they care? Year after year, the Charlotte Chamber's business survey turns up the same thing. Business owners' No. 1 concern when evaluating locations to open, move or expand a business is taxes. Business owners and high level managers deliberately avoid places where they personally have to pay more. When business owners don't locate or expand here, they don't create jobs here.
With tax rates like that, the people who work for the business recruitment arm of the Charlotte Chamber might as well bend over and kiss their rear ends goodbye. What will they have left to pitch? The weather and um, the weather and uh, well, have we mentioned the short drive to the beach or mountains over decaying roads?
As usual, the media is asleep at the wheel in asking how the highest taxed state in the Southeast is deeper in the hole than most of the lower taxed states in the Southeast. But a rare admission by the Charlotte Observer editorial board could begin to explain the problem. In an editorial last week, the board listed a couple of examples of waste, then essentially admitted that they don't know how much more pork is in the rest of the state budget. Nobody does because no one has bothered to sort through the junk we've been adding in 8- to 10-percent annual budget increases. Are the programs the legislators added while they were blowing through a staggering $3 billion surplus over the last three years working? Anybody know? Anybody care?
Zero-based budgeting would begin to answer these questions. That's where the legislature goes line by line through the budget to figure out what is actually in it, rather than just automatically continuing spending on whatever has been in the budget since 1972. States that have tried it have found and cut out billions in waste. But so far, legislative leaders and the governor have shown they'd rather fire thousands of teachers, sock it to the children and take it out on mom-and-pop businesses than attempt to take on the lobbyists who fight for waste.
Perdue, in particular, has failed in this regard. Last year, she promised that before her inauguration in January, she would assemble a panel to quickly devise ways to reduce spending. It was nearly April before the full committee was appointed. And it is now June, in the middle of the greatest budget crisis the state has had in decades, and the committee has yet to have a formal meeting. An aide says that the committee will begin meeting soon and present recommendations next year. But that's not what Perdue promised.
It does, however, show where cutting pork and waste and championing schools really fall on the governor's priority list. In Raleigh, nothing has changed except that the governor now wears a skirt.