From UT San Diego:
California may have the nation’s highest sales tax, but it’s still not generating the revenue it should be to keep up with the state’s economic growth.
A report released this week by the state’s Legislative Analyst’s Office says Californians are spending less on taxable goods, and more on non-taxable services like health care, auto repair and groceries, which have increased in price. That means the state is generating less sales-tax revenue, about half of of which is used for the general fund while the rest is funneled to local municipalities. The average sales tax rate in California municipalities is now 8.4 percent. San Diegans pay 8 percent.
Citizens are spending that on health care because they need it (and while they still can before Obamacare sets in), spending it on auto repair because they can’t afford new cars, and spending on groceries to live. There’s a depression on.
Of course, that’s no reason for the state of California to give up their spending habits and handout habits. So they need MOAR!
Of course, to the left, it’s all the market’s fault.
But it’s not the high rate that’s causing the drop in revenue – it’s that the price of taxable goods in California isn’t rising fast enough. Prices for services, which are not taxed, however, have increased 2.5 percent year-over-year faster than goods. That means they’re taking up a bigger chunk of income. In 1979, Californians spent 53 cents of each dollar on taxable items. In 2012, they spent 33 cents of each dollar on taxable items.
That’s contrary to what analysts expected when they started the research two months ago.
“We thought consumers were buying fewer lawnmowers and, as an alternative, buying more landscaping services,” said Chas Alamo, an LAO fiscal and policy analyst who co-authored the study. “Through our research and revenue forecasting, however, we discovered that the decline occurred primarily because prices of services have increased faster than inflation and prices of taxable goods have increased slower.”
It’s as though the idea of the government spending too much money can’t even occur to them.
And he notes they need Republicans to lead because culturally they’re fiscally more responsible.
I am reminded of a joke by Richard Lewis about government: “They think there’s money left in the bank because they have checks in the book!”