A Stable Budget for California

California is attempting to find a way to stabilize tax revenues so the budget becomes more stable (and manageable). Here is what the blue-ribbon panel came up with:

– Flatten the state’s income tax by reducing the number of brackets from six to two and capping the top rate at 6.5 percent. Millionaires would still pay an additional 1 percent on income above $1 million for mental health programs.

– Install a new form of tax on all businesses that applies to their net revenues minus purchases from other firms, dubbed the Business Net Receipts Tax. Companies would not be able to exempt wages and benefits for in-house employees, although they could exempt any payments to contractors. The rate would top out at around 4 percent, less than half of the existing corporate tax.

– Eliminate the 5 percent state sales tax portion that goes toward the general fund.

– Eliminate the state corporate tax.

– Establish a new independent tax forum to resolve tax disputes.

– Ask voters to establish a new rainy-day fund and spending cap.

The Textbook Economics of Cap-and-Trade

Nobel winner Paul Krugman does a good job of explaining “Cap-and-Trade.

California’s UC System Protests Budget Cuts

UC Berkeley and UC Davis had protests over the budget cuts today (the entire University system protested):

Professors, students and workers at all 10 University of California campuses today are staging protests, rallies and pickets to draw attention to the effect of state budget cuts on the university.

Originally planned by professors angry that they’ve been forbidden from taking their furloughs on teaching days, the rallies have snowballed. Professors have been joined by workers locked in labor negotiations with the university and students upset about a proposal to raise fees by 15 percent in the spring and another 15 percent in the fall.

California’s Income Growth 1.8 Percent

Where to Find the Fattest Paychecks

California has a fairly high average pay but its growth rate is near the bottom.

California Joblessness Reaches 70-Year High

LOS ANGELES — California’s unemployment rate in August hit its highest point in nearly 70 years, starkly underscoring how the nation’s incipient economic recovery continues to elude millions of Americans looking for work.

While job losses continue to fall, the state’s new unemployment rate — 12.2 percent, according to the Bureau of Labor Statistics— is far above the national average of 9.7 percent and places California, the nation’s most-populous state, fourth behind Michigan, Nevada and Rhode Island. Statistics kept by the state show California’s unemployment rate was 14.7 percent in 1940, said Kevin Callori, a spokesman for the California Employment Development Department.While California has convulsed under the same blows as the rest of the country over the last two years, its exposure to both the foreclosure crisis and the slowdown in construction — an industry that has fueled growth in much of the state over the last decade — has been outsized.

Taxing Soda to Fight Obesity

From the Sacramento Bee:

ATLANTA — In a bid to ramp up the public health battle against obesity, a group of nutrition and economics experts are pushing for a tax of 1 cent on every of ounce of sodas and other sweetened beverages.

Proposals for a hefty soda tax though have repeatedly fallen flat. The idea was even floated as a way to help pay for health care reform, but government officials on Wednesday said that’s not likely to happen.

Retail Sales Surged in August

NEW YORK (CNNMoney.com) — Retail sales surged in August, with the Cash for Clunkers program giving auto sales an extra boost, the government reported Tuesday.

The Commerce Department said total retail sales jumped 2.7% last month, compared with July’s revised decline of 0.2%. Economists surveyed by Briefing.com predicted August sales increased 2%.

Sales excluding autos and auto parts rose 1.1%, compared to a 0.6% decrease in July. Economists expected a gain of 0.4% in August sales, excluding auto purchases.

“With broad-based gains, it’s hard to say any sector is a standout, which is great,” said Adam York, analyst at Wells Fargo Securities. “We had promising core numbers, but we don’t want to call a trend out of one month.”

Why Tariffs Hurt Americans

Professor Mark Perry, University of Michigan, provides us with a great explanation on why our tariffs on China are a bad idea.

Here is the link to Carpe Diem

Best Undergrad College Degrees By Salary

Economics is #5!

California 8th Among World Economies

From the SF Gate, if California were a separate nation, it would be the eighth-largest economy in the world.

If the San Francisco Bay Area were a separate nation, it would be the 22nd largest economy in the world.