Rich States, Poor States and California

By February 24, 2008Taxation

With the governors in town for the winter meeting of the National Governors Association, it’s timely to refer again to “Rich States, Poor States,” the report done for the American Legislative Exchange Council by Arthur Laffer and Stephen Moore.

Dr. Laffer appears on this week’s NAM radio program, “America’s Business with Mike Hambrick,” discussing the report. The conversation turned to California as a state that discourage investment; it ranks 43rd in the ALEC report. Laffer:

California, I don’t want to be rough on. It’s a wonderful state, a lot of wonderful people, but it’s lost its way. What it’s done is raise… its highest tax rate is now 10.3 percent, and with the alternative minimum tax, if you’re in that bracket, it’s probably not deductible to you either. So it really … discriminates very much against high-income earners and big job producers and growers.

It also has all sorts of other problems as well. It’s got a very, very high sales tax. And even though the property tax rate that you know of as being Prop. 13, even though the rate is very low, with high housing prices the actual total payment of property taxes is pretty high in California.

I could go on and on, but there’s almost no category where California is really an exceptionally pro-growth, pro-business, pro-jobs state.

A big problem is the gerrymandered legislative process, which entrenches politicians, Laffer explains.

Laffer also discusses his February 13 op-ed in The Wall Street Journal, “That ‘Stimulus’ Nonsense.”

To listen to the full interview, click here.

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