Tuesday, September 4, 2012

New Jersey vs. California--The Governor Smackdown!

Recently, New Jersey's rotund and robust Governor Chris Christie and California's venerable Governor Jerry Brown entered into what might best be called a smackdown.  The entire escapade is somewhat funny given the horrible economic condition of BOTH states.  It's like the zombie telling the corpse that he stinks.

The battle began when Christie Christie, during a speech at the Republican National Convention, called Jerry Brown an "old retread" and a "bad choice".  Jerry Brown, despite his advanced age, shot back with a physical fitness challenge to the immensely obese Chris Christie, including a three-mile race.  Apparently, Jerry Brown misheard "physical" for "fiscal" fitness.

The real loser in this "Battle of the Governors" are the people of California and New Jersey.  Both California and New Jersey suffer from a variety of similar economic maladies and for similar reasons.
  • Both California and New Jersey have among the nation's highest state income tax rates.  New Jersey's top income tax rate is 8.97% and starts at incomes over $500,000 (single taxpayer).  In contrast, California's second-highest rate is 9.3% and starts at incomes over $48,000 (single payer)!  California also adds a 1% surtax on incomes over $1 million, resulting in a 10.3%, which is second nationally only to Hawaii's top rate of 11%.

    California Governor Brown wants to raise California's ALREADY-high state income tax rates via Proposition 30.  Under Governor Brown's plan, those making over $250,000 would pay 10.3%, which is the rate currently only paid by millionaires in California.  Proposition 30 adds two new tax brackets, including an 11.3% bracket at incomes over $300,000 and a 12.3% bracket at incomes over $500,000.  Both new brackets are higher than any other state in the nation.  As before, the 1% surtax on millionaires would boost California's top income tax rate to 13.3%--a full 21% higher than the next highest state, Hawaii!

  • Both California and New Jersey have among the nation's highest state sales tax rates.  California currently has the nation's highest statewide rate, although the combined state, city, county, and local rates in other states may be higher. Governor Brown's Proposition 30, if passed by California voters, would raise the state sales tax rate to 7.50%.

  • California has the nation's highest gasoline tax.  Surprisingly, New Jersey's gasoline tax is relatively low--well below the national average.

  • Both the California and New Jersey Legislatures are dominated by Democrats with close ties to powerful public-sector unions.  In California, public-sector unions are among the biggest spenders in California politics.  Both the Speaker of the California Assembly and the President pro Tempore in the California Senate have strong ties to California labor unions.  Perhaps unsurprisingly, California's public-sector unions are also major funders of Governor Jerry Brown's Proposition 30 tax hikes.

  • Both California and New Jersey are union-only states, where some jobs in the public sector require union membership. In fact, Jerry Brown expanded collective bargaining for California's teachers.
  • Both California and New Jersey have among the nation's worst-rated business climates. Both California and New Jersey duke it out for one of the "coveted" bottom five positions.

On the Kauffman Foundation survey of small business friendliness, California ranked 'F'--primarily for its tax code.  Proposition 30, if passed by voters, will no doubt lower California's already dismal ratings.

  • Both California and New Jersey have unemployment rates well-above the national average. As of July 2012, California had the nation's 3rd worst unemployment rate at 10.7%.  New Jersey had the nation's 4th worst but is almost a full percentage point better than California.  California's unemployment remained steady from June-to-July while New Jersey's rate worsened slightly from 9.6% to 9.8%.

  • Both New Jersey and California have low credit ratings, although California's currently ranks the lowest in the nation. Illinois has since been downgraded since this chart was created, but still ranks above California.

  • California has the nation's largest population of Temporary Aid to Needy Families (TANF) welfare recipients, while New Jersey's TANF population is toward the low end nationally.

While California's Governor Jerry Brown in old and New Jersey's Governor Chris Christie is fat, neither state Governor can boast he has a beautiful economy.  However, in my opinion, Governor Brown is leading California in the wrong direction with his Proposition 30 tax hikes.  I encourage California voters to VOTE NO on PROPOSITION 30 this November.

1 comment:

  1. How dumb things happen at smart universities. The public’s UC Berkeley harvests family savings, Alumni donations, supporter’s money and taxes. Cal. ranked #1 public university total academic cost (resident) as a result of the Provost’s, Chancellor’s ‘charge resident’s higher tuition’. UCB tuition is rising faster than other universities.

    Cal ranked # 2 in faculty earning potential. Spending on salaries increased 29% in last six years. Believe it: Harvard College less costly.

    University of California negates promise of equality of opportunity: access, affordability. Self-absorbed Provost Breslauer Chancellor Birgeneau are outspoken on ‘charging residents much higher’ tuition.

    Birgeneau ($450,000) Breslauer ($306,000) like to blame the politicians, since they stopped giving them their entitled funding. The ‘charge instate students higher tuition’ skyrocketed fees by an average 14% per year from 2006 to 2011 academic years. If they had allowed fees to rise at the same rate of inflation over past 10 years fees would still be in reach of middle income students. Breslauer Birgeneau increase disparities in higher education, defeat the promise of equality of opportunity, and create a less-educated work force.

    Additional state tax funding must sunset. The sluggish economy, 10% unemployment devastates family savings. Simply asking for more taxes (Prop 30, 32, 38) to spend on self-absorbed Cal. leadership, inefficient higher education practices, over-the-top salaries, bonuses, is not the answer.

    UCB is to maximize access to the widest number of residence at a reasonable cost. Birgeneau Breslauer’s ‘charge Californians higher tuition’ denies middle income families the transformative value of Cal.

    The California dream: keep it alive and well. Fire hapless Provost George W Breslauer. Clueless Chancellor Birgeneau resigned. Cal. leadership must accept responsibility for failing Californians.

    Opinions? UC Board of Regents marsha.kelman@ucop.edu Calif. State Senators, Assembly members.