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California has one of the nation’s highest levels of government spending and taxes, and it adversely affects the state’s economic competitiveness, according to a new report by the conservative, San Francisco-based Pacific Research Institute.
Titled “Taxifornia,” the study by Robert P. Murphy and Jason Clemens found that state and local government spending in California is the nation’s fourth-highest at 18.4 percent of its economic input. Alaska is highest at 20 percent and South Dakota lowest at 11.6 percent.
The data represent a new wrinkle in California’s perpetual debate over spending and taxes, since comparisons usually focus on tax burdens. The authors said they looked at total spending so that it include spending out of fees and borrowed money, as well as tax receipts.
The PRI report was especially critical of California’s high marginal income tax rate and its reliance on high-income taxpayers. “If policy makers want to understand why the Golden State is lagging behind other states economically,” the report said, “the punitive and steeply progressive personal income tax code is a good place to start looking.”
However, the report doesn’t ignore taxes, placing California among the nation’s highest-taxing states, especially personal and corporate income and sales taxes, and suggests that they are inhibiting California’s economic progress. A liberal counterpart organization, the California Budget Project, has labeled California a moderate tax state.
HONG KONG — The Chinese government is preparing to announce in the coming days that it will allow its currency to strengthen slightly and vary more from day to day, a move being taken for domestic policy reasons in China but likely to please the Obama administration, people with knowledge of the emerging consensus in Beijing said on Thursday.
A more market-oriented currency policy in Beijing, with a trend toward a stronger renminbi, could help the American economy in several ways, according to economists. A stronger renminbi would make Chinese goods more expensive in the United States and make American goods cheaper in China, which is currently exporting more than four times as much to the United States as it imports.
Against that background, the Public Policy Institute of California has issued a study concluding that legalization would have very little economic impact, despite widespread belief that it would.
“Our research suggests … that legalizing most currently unauthorized immigrants would not lead to dramatic changes in the labor market, either for unauthorized immigrants or for native workers,” the PPIC report concludes, “We also find little evidence to support the view that such a step would have significant effects on the broader economy, particularly on tax revenues or public assistance programs.”
With illegal immigrants constituting about 10 percent of California’s workforce, jobs skills are a more important factor in their economic progression than their immigration status, PPIC says. And it’s also not likely that legalization would have a major impact, positive or negative, on local and state government finances, it says.
The full report, which advocates that California begin planning for legalization, is available here.