California on ‘verge of system failure’

Canada’s Globe and Mail had an article in today’s paper titled, ;California on ‘verge of system failure’. It had a couple of interesting points that I believe nobody could argue with:

  • stress of economic downturn uncovered many underlying issues with the state
  • Prop 13 had a lot of implications nobody bothered to address for over 30 years.
  • California is un-governorable
  • California is screwed
  • Many people want a federal bailout of California

    And, some quotes of dubious value:

    If you want good schools, you have to pay for them,” she [Jean Ross] said. “Cutting taxes doesn’t raise revenue.”

    Something like 66% of LAUSD students don’t graduate. source. And that survey was before the budget crisis. I think it goes beyond raising revenue.

    Americans have been “brainwashed” into believing they pay a lot of taxes, Prof. Dreier added. In fact, they are among the least-taxed people in the Western “World, particularly if they’re wealthy, he said.”

    Hmm…let’s see if that is true. Let’s take a person who makes $120,000USD in California with someone who makes Eur 96657 (the Euro equivalent at the time this was written). Since the individual is single and makes over Eur70,000, they are exempt from joining the German public health insurance scheme. Instead they pay half and their employer pays half of the private health insurance, we’re saying Eur 3600 total for health insurance.



















































































    California

    Germany
    Annual Gross Pay $120,000.00
    Annual Gross Pay € 96,657.24
    Federal Withholding $25,713.25
    Wage Tax € 31,525.00
    Social Security $6,621.60
    Solidarity Surcharge € 1,733.87
    Medicare $1,740.00
    9.95% Pension € 6,567.00
    California Tax $9727.17
    1.4% unemployment € 924.00
    CA SDI $1,026.48
    Privat Health Ins € 1,500.00
    Net Pay $75,171.50
    Net Pay € 54,407.37



    in USD $67,546.77





    Effective Tax Rate 37.36%

    43.71%

    OK, so Germans do pay about 11% more income taxes than Californians. (If Health Ins. is excluded, it’s about 10% more). Germany of course, has a 19% VAT, and higher taxes on gasoline, and alcohol, while Californians pay ~8.25% sales tax except in places like Oakland where it is 9.75%. If the American owned a house in this example, his/her taxes would be substantially less due to the ability to write off mortage interest. We could go on and on but you get the picture.

    So does California have a high speed rail network? authobahn? Oktoberfest? More importantly, can California raise taxes on the wealthy by 70% so that a Californian has the same tax burden as a German and call it a day? Well, a lot California’s economy is based upon services, and construction, home sales, mortgages, and sales tax, which is why it is in such dire straits right now. The German economy is based upon skilled manufacturing and export of goods. If you raise income taxes, sales tax receipts will go down. Many upper middle class people will flee California (think it can’t happen? It did in the ’90s). The service economy would shrink permanently. And, then, the high-school dropouts and illegals that make up a substantial fraction of the economic work force in California would do what exactly in a high-tech skillled manufacturing based economy?

    Disclaimer: I am not an attorney nor an accountant. Nothing in this blog is intended to give legal or tax advice.
    income tax calculators from paycheck city and here

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  • States Cut Pensions, Too Little, Too Late

    It is my opinion that one of the biggest problems the US faces, besides the demographic and policy consequences of illegal immigration, are pensions. Specifically, the generous retirement benefits provided to local, state and federal employees which states are not capable of repaying, and compare quite favorably with Greece, from a worker’s point of view. Mary Williams Walsh’s article in the New York Times reports some states like Colorado, are reducing, or like Illinois are trying to reduce pension obligations for future workers. The problem is that most of this is too little, too late. If Illinois’ pension fund becomes insolvent in 2018 as Dr. Rauh thinks it will, it will obviously slow growth in Illinois as extra taxes will cause a flight of capital and able-bodied persons from the state. Good luck getting a state job in Illinois after 2018. If the US must pick up the tab, as Rauh believes, where exactly is the money going to come from? Already, federal tax revenues must rise 20-30% according to this other NY Times article on the VAT. Colorado looks like it is doing the right things to straighten its pension. It is one election away, however, from reducing all of those gains, if a politician promises a return to 3% annual increase in exchange for public employee union votes.

    BMW Announces Ethernet Plans

    This EE Times article lays out BMW’s plans for Ethernet in the car.

    What do these men have in common?

    separated at birth, Hugo Chavez and Ollie North???

    At first glance, you may think Oliver North and Hugo Chavez have nothing in common, but let’s see:

    • Both Dealt weapons with Iran
    • Both gave weapons to guerrillas
    • Both campaigned in Nicaragua’s 2006 presidential election for respective preferred candidate source source
    • Both associated with drug dealers source source
    • Both host TV programs
    • Both achieved the highest military rank of Lieutenant Colonel

    Quite a bit, actually! I guess sometimes you have to go above the law.  Next time you meet a light colonel, keep tabs on him, he may be up to something!

    Urban Crude Exhibit

    Clui has an interesting online exhibit, Urban Crude showing oil fields around Los Angeles.

    What restaurant was this picture taken at?


    The second image gives you a hint. The French call fast food restauration rapide or sometimes malbouffe but French McDonalds outlets look infinitely better than their US cousins.

    Anandtech was right

    This report from EEtimes shows that Ganesh called it correctly a month and a half ago. The Apple A4 has the Samsung/Intrinsity Hummingbird core with other IP tacked on. An EETimes article from last year claims Marvell spent $100million on its Sheeva ARM processor and QUALCOMM spent $300 million on Snapdragon. If Apple is able to use Intrinsity’s domino logic tools to extend the Hummingbird core and develop future derivatives beyond the A4, the $50 to 125 million spent for Intrinsity could be a bargain. For other companies which want to be in the high-performance low-power processor business, what are they going to do, spend $250 million and wait 3 years, or buy Cavium for $1.5 bil?