California Wealthy Taxpayers Paying 3% Effective Tax Rate?

California Governor, Jerry Brown, is having a hissy fit because Trump’s new tax law limiting some itemized deductions, most notably interest expense, will cause all the wealthy residents to form a line of mass exodus.   California has some of the highest priced real estate in the country, and a significant number of residents negotiate interest-only mortgage loans in order to cut their monthly out-of-pocket costs.   The rationale in the past was the fact that the interest was 100% deductible and therefore their actual cash cost was further lowered.   In addition, this lowered cost allowed more people to buy homes as they could squeak in the debt to income ratio margins.

The Bay Area currently has a median home price of $770,000 which is considered – middle class.   Oddly, it also has some of the lowest property tax rates in the country, lending more speculation that the wealthy vastly under-support the economy. The fact that the highest tax bracket for state income taxes is 13.3% with a 1% mental health surcharge for those earning over $1 million, certainly contributes to California’s cost of living as one of the most incredibly expensive.   And it has nothing to do with Trump – and everything to do with price demand – a capitalistic market.  

Of course, despite the fact that California has an annual budget of $265 billion or roughly $6700 per capita, twice that of Florida, they still can’t make ends meet.   Jerry Brown is convinced that the tax limitation was a Republican conspiracy to hurt California as well as his esteemed reputation.

Not to be out done, the California State Legislature is busily proposing ways to circumvent the new tax law by allowing the reclassification of interest as a ‘charitable contribution’.   Unfortunately, the feds make up the federal laws, so attempting to reclassify a Federal Law would be a slippery slope legality.

According to the Democrats within the Senate, California’s wealthiest 1% pay 48% of the income tax revenue… remember when Romney tried to make the same statement and was ripped apart?   Anyway, income tax revenue represents roughly 35% of the California Budget, 26% is Federal Assistance.   I imagine that if the California Assembly were to try to insert a new law circumventing the interest deduction, Trump could simply offset the dollars against Federal Assistance.  Given the Sanctuary City status, given constant natural disasters, California could easily find themselves stripped of all funding.

It’s much like a game of chess.   Only Jerry Brown doesn’t have his Queen to save him. FYI:  That would have been Hillary.  

But it isn’t just the income taxes California would lose. Their second highest source of revenue is from sales taxes which currently stand at 7.5% with a max State and Local of 10%.   A VAT Tax could generate significantly more revenue from a tourist standpoint, but the wealthy spend – the non-wealthy don’t, so revenue is primarily generated by the wealthy.

If the initiative to divide California and splinter off the rural portions to New California as proposed, Jerry Brown will be left with an even smaller base of income to support their massive welfare programs and prison systems.

As of 2015, California ranks number 1 for total gross federal collections, however, on a per capita basis it falls far short at 16th, below Missouri, which would indicate they are not paying their – “Fair Share”.   Given 38% of Californians earn more than $877,560 per year, compared to the national average of about $48,642, the math would support that they aren’t even close to paying their – Fair Share.  

With roughly 40 million residents, 38% would equate to 15.2 million earning $878,000 at a flat tax rate of 15% would mean they would generate over $2 trillion Federal tax revenue per year… not including remaining taxpayers who contribute 52% to the total take.   In actuality the total revenue collected in 2015 was a mere $405 billion.  A YUGE difference!  This would equate to an effective Federal rate of just – 3%.

Looks like a lot of someone’s in California just aren’t anteing up!!

Interesting…who could it possibly be?

California Gas Leak – State of Emergency

The gas leak in southern California has emit the equivalent of 700 million gallons of gasoline/carbon/methane into the atmosphere since October – nearly 3 months ago. The average car uses about 580 gallons of gas per year. In a 3 month period that would equate to about 165 gallons. The 700 million would thus equate to an additional 4,242,400 cars worth of carbon emissions. That would be the equivalent of 112% of the entire population (including children) of LA which stands at roughly 3.8 million!

And Governor Jerry Brown, a climate activist, is just now declaring a state of emergency and wants it fixed? What about 3 months ago! What about last month when the EDF showed aerial photos of the damage? What amount over the last six to eight weeks since residents began reporting illnesses governor? How much pollution has occurred as a direct result? I’ll bet it’s a lot more than those VW’s that are subject to enormous fines and lawsuits.

The proposal to fix the leak is complicated. It involves an attempt to mask the odors that have been released by attempting to vaporize them in a contained flammable operation, and to disperse the methane that hovers in the atmosphere, and ultimately to clamp the leak by drilling down over 8000 feet.

The utility company, SoCal Gas, claims that the odor in the methane is a result of an additive. That additive is used purposefully to help detect gas leaks. It is called Mercaptan. According to OSHA, at very high concentrations it is extremely toxic and affects the central nervous system. In November 2014, at a DuPont facility in Texas, the accidental death of 4 people and the hospitalization of a fifth was a direct result of exposure to Mercaptan.

According to the Utility company, exposure to this additive is harmless. But that would not be exactly truthful:

Ocular exposures:

Methyl mercaptan is an eye and mucous membrane irritant.  It may cause moderate conjunctivitis and diplopia.

Dermal exposures:

Exposure may result in redness, irritation and swelling.  Frostbite injury can occur from dermal exposure to liquid methyl mercaptan. 

Inhalation exposures:

Symptoms may include fever, cough, dyspnea, tightness and burning in the chest, dizziness, headache, loss of sense of smell, nausea, vomiting and diarrhea. Inhalation may cause CNS depression, respiratory irritation, respiratory paralysis, pulmonary edema, tremors and seizures. It may also cause liver and kidney damage, tachycardia and hypertension Methemoglobinemia and severe hemolytic anemia with hematuria and protenuria have been reported in a patient with G-6-PD deficiency.

Studies on exposure to Mercaptan have all been limited to a very small time frame – 4 minutes to one hour. Prolonged exposure, as in 3 months and counting, has not been assessed. The symptoms presented above were all attributable to this much smaller exposure period.

When all the facts are not offered in an attempt to dispel fear, there is a chance that people will not seek the help they need which could lead to even greater physical distress. Of the 6500 residents that have asked for assistance in relocating until this toxic plume is contained, only 2200 have been afforded that protection. The mere fact that this event is now described as a state of emergency indicates the severity and the longer the residents are subjected to the toxicity, the more harm that can occur.