Petco Park, San Diego
On to today’s California headlines:
The number of Californians reporting incomes of more than $1 million increased sharply last year, as did their share of the income stream, a new report from the Franchise Tax Board reveals.
There were 10,000 taxpayers in the million-dollar income club during the 2009 tax year – just one-third of 1 percent of all returns – but that number jumped 27 percent to more than 13,000 for 2010, based on tax returns filed in 2011.
Listening for two hours to House Republican Whip Kevin McCarthy, I didn’t once hear the word “Obamacare.” And in an election year. How refreshing!
Not that the Bakersfield congressman doesn’t oppose President Obama’s sweeping healthcare act. He does and voted against it.
He just is not as nauseatingly trite about it as, say, Rep. Michele Bachmann, the Minnesota tea party bore who can’t seem to get through two sentences without regurgitating “Obamacare.” But I’m getting off track.
Anyway, Iowa caucus-goers booted her out of the presidential race.
I’m sitting wondering why McCarthy — savvy, substantive, sane and civil — and other Republican members of Congress don’t run for higher office in California: U.S. senator or governor.
Landing in one of those slots would put them in position to run for the White House from a state possessing the nation’s most potent political arsenal: roughly one-fifth of the necessary convention delegates to nominate, and electoral votes to elect, a president.
I’m not saying that McCarthy would be a great senator or governor, let alone a president. Let’s not get ahead of ourselves.
But he certainly has a track record in office that shows he’s plenty qualified to be a senator or governor. And that’s a long step ahead of our most recent Republican nominees for those offices.
The nonpartisan Legislative Analyst’s Office on Wednesday questioned whether Gov. Jerry Brown has put more state programs at risk of further cuts by projecting overly optimistic tax revenues.
Mac Taylor, the legislative analyst, also suggested that the Legislature should consider providing more certainty to schools, which will be on tenterhooks through the year waiting to see whether they can avoid the nearly $5 billion in cuts that would be “triggered” if voters reject Brown’s November tax-hike initiative.
Taylor said the governor, who released his $92.6 billion budget last week, is counting on taxes from investments by the wealthy that might not materialize.
“What we’re concerned about is that his capital gains assumption is a little bit optimistic,” Taylor said at a news conference unveiling the LAO report. “We’ve looked historically, we’ve considered what’s happening in housing, which is fairly stagnant, we’ve looked at projections of where we think the (stock) market will be, and we do get considerably lower numbers from capital gains.”
The LAO’s annual review of the state budget provides an alternative to the governor’s proposal. It’s used by legislators as a key guideline as they move through the first stages of their budget work.
The governor responded by saying that the report backed up his call for tough measures to close the deficit. Brown is proposing $4.2 billion in cuts — many to social programs that serve low-income residents. The cuts would take effect whether or not voters pass Brown’s tax measure, which would temporarily raise sales taxes by a half-percent and the income tax of individuals who make $250,000 a year or more.
“The Legislative Analyst’s Office report underscores the fundamental uncertainty of our time and, therefore, the financial imperative to be prudent, make the tough cuts now and give the voters a choice on additional revenues,” Brown said in a written statement.
The potential for California (STOCA1) to see a tax windfall from a Facebook Inc. public stock offering this year demonstrates how much the state relies on capital-gains taxes, a volatile revenue stream that hampers its credit rating.
Menlo Park, California-based Facebook, the world’s most- used social-networking site, is considering the largest initial public offering for an Internet company on record, a person familiar with the plans said last year. Estimated at $10 billion, the offering would make instant millionaires of company employees and require the state to adjust its revenue forecast to reflect additional capital-gains taxes they’d pay, the state’s legislative analyst said yesterday.
That kind of unanticipated boost shows the boom-and-bust cycle that capital gains taxes often inflict on California’s budget. In fact, capital-gains tax revenue as a percentage of the state’s general fund plummeted from 12 percent to just 3 percent between 2007 and 2009 as investors pulled away from the stock market, a decline of $9.3 billion, according to state finance department figures.
“It is a significant concern,” said Gabriel Petek, an analyst at Standard & Poor’s, which ranks California’s credit the worst among its peers at A-. “It’s probably one of the things that presents a structural impediment to the rating and makes it hard for the state’s credit rating to move up into the AA range that the typical state is.”
Enjoy your morning!