Breaking Bad:  California vs. the Other States

by Richard Rider – Chairman, San Diego Tax Fighters

Version 2.71         Revised:  20 October, 2017

 Online version at:        Email:       Phone:  858-530-3027

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Here’s a depressing but documented comparison of California taxes and economic climate with the rest of the states.  The news is not good (at least once a month, I update crucial data on this fact sheet):

Prior to Prop 30 passing in Nov. 2012, CA already had the 3rd worst state income tax rate in the nation. Our 9.3% tax bracket started at under $50,000 for people filing as individuals. 10.3% started at $1 million. Now our “millionaires’ tax” rate is 13.3% – including capital gains (CA total CG rate now the 2nd highest in the world!).  10+% taxes now start at $250K. CA now has by far the nation’s highest state income tax rate. 
We are 34% higher than 2nd place Oregon, and a heck of a lot higher than all the rest – including 7 states with zero state income tax – and two states (NH and TN) that tax only dividends and interest income (not capital gains). NOTE: TN tax phases out by 2022.
CA is so bad, we also have the nation's 2nd highest state income tax bracket.  AND the 3rd. AND the 4th!   Table #12   and


CA has the highest state sales tax rate in the nation.  7.25% (does not include local sales taxes).  10th highest state with the average local sales tax included (8.25%).


CA corporate income tax rate (8.84%) is the highest west of Iowa except for Alaska (our economic competitors). Overall CA has the 8th highest corporate tax rate in nation.   Table #15


CA had the nation’s 7th highest “gas pump” tax at 57.2 cents/gallon (May, 2017).  Add in the unique 10-12 cent CA “cap and trade” tax per gallon, and CA is tied with PA as most expensive. National average is 49.4 cents.  Yet CA has the 9th worst highways. FLASH: CA recently passed an additional 12 cents/gal gasoline tax and a new $48 car tax starting in 2018, plus a major diesel tax.    and    (CA roughly tied w/WA for highest total diesel tax)   

and      and


California in 2015 ranked 14th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states.  But the 2014 average CA single-family residence (SFR) property tax is the 8th highest state in the nation. Indeed, the median CA homeowner property tax bill is 93% higher than the average for the other 49 states.      and      and


Average 2012 CA impact fee for single-family residence was $31,100, 90% higher than next worst state. 265% higher than jurisdictions that levy such fees (many governments east of the Sierras do not). For apartments, fee averaged $18,800, 290% above average outside state. The fee is part of the purchase price, so buyer pays an annual property tax on the fee!     and


CA has now instituted highest “cap and trade” tax in the nation – indeed, the ONLY such U.S. tax. Even proponents concede that it will have zero impact on global warming. The tax especially increases the cost of electricity, gasoline and manufacturing.


California has a nasty anti-small business $800 minimum corporate income tax, even if no profit is earned, and even for many nonprofits.  Next highest state is Rhode Island at $500 (only for “C” corporations).  3rd is Delaware at $175. Most states are at zero.

Based just on GDP, CA, by far the most populous state, ranks as the 6th largest economy in the world.  But adjusted for population and cost of living, CA ranks lower than all but 13 U.S. states.


California’s 2018 “business tax climate” ranks 3rd worst in the nation – behind New York and anchor-clanker New Jersey. In addition, CA has a lock on the worst rank in the 2017 Small Business Tax Index – 8% worse than the 2nd worst business state (New Jersey).      and


The American Tort Reform Foundation in 2015 again ranks CA the “worst state judicial hellhole” in U.S. – the most anti-business.  The U.S. Chamber of Commerce ranks CA a bit better – “only” the 4th worst state in 2015 (unfortunately, sliding from 7th worst in 2008).     and


CA driving tickets are incredibly high. Red-light camera ticket $490. Next highest state is $250.  Most are around $100.


CA needlessly licenses more occupations than any state – 177. Second worst state is Connecticut at 155.  The average state is 92. But CA is “only” the 2nd worst licensing state for low income occupations.      and


CA has the highest/worst state workers’ compensation rates in 2014, up from 3rd in 2012. CA rates 21.3% higher than 2nd highest state, 88% higher than median state. Yet we pay low benefits -- much goes to lawyers.

Tax Foundation study ranks CA as tied for the 5th worst taxed state in 2017 – deteriorating from only the 7th worst last year. And that does not count the new CA gas and car taxes. CA taxes are the most progressive of all states, hammering the upper third of the populace. The top 1% pay 50% of all CA state income taxes.


CA unemployment rate (Sept, 2017) has stopped improving and slipped a bit. We are now the 7th worst – 5.1%. National unemployment rate IMPROVED to 4.2%.  The CA unemployment rate is 25.1% higher than the average of the other 49 states.  and


But using the lagging yet arguably more accurate U-6 measure of unemployment (includes involuntary part-time workers), CA is the 4th worst – 10.7% vs. national 9.2%.  National U-6 not including CA is 9.0%, making CA’s U-6 18.9% higher than other states.  


CA public school teachers are the 3rd highest paid in the nation.  CA students rank 48th in math achievement, 49th in reading.  page 36    and

CA annual per state prisoner cost ($75,560) is easily the highest in the nation – over triple the avg. cost of the 18 states with the least-costly rates.     and 

California, a destitute state, still gives away community college education at fire sale prices.
 Our CC tuition and fees are the lowest in the nation.  How low?  Nationwide, the average community college tuition and fees are more than double our California CC’s.

This ridiculously low tuition devalues education to students – often resulting in a 25+% drop rate for class completion.  In addition, because of grants and tax credits, up to 2/3 of California CC students pay no net tuition at all!


Complaints about increased UC student fees too often ignore a key point -- all poor and many middle class CA students don't pay the UC “fees” (our state’s euphemism for tuition).  There are no fees for most California families with under $80K income.  55% of all undergraduate CA UC students pay zero tuition, and another 14% pay only partial tuition.  Moreover, CA's new “Middle Class Scholarship” program provides partial tuition aid for CA public college students of families with income from $80K to $150K.    and    and


California’s real (“supplemental”) 2016 poverty rate (the new census bureau standard adjusted for the COL) is still easily the worst in the nation at 20.4%.  We are 46.5% higher than the average for the other 49 states. Texas is 14.7%. CA poverty rate is 38.8% higher than Texas.   Table A-5 on page 27


California has 12% of the nation’s population, but 33% of the country’s TANF (“Temporary” Assistance for Needy Families) welfare recipients – more than the next 7 states combined.  Unlike other states, this “temporary” assistance becomes much more permanent in CA.


California ranks 50th worst for people's debt-to-income ratio, and 49th worst for percentage of home ownership.    and

California has the 2nd lowest bond rating of any state – Basket case Illinois beat us out for the lowest spot.  We didn’t improve our rating – Illinois just got worse.


Average California firefighter paid 60% more than paid firefighters in other 49 states. CA cops paid 56% more. CA 2011 median household income (including gov’t workers) is 13.4% above nat’l avg.   and


Of 100 U.S. real estate markets, in 2013 CA contained by far the least affordable middle class housing market (San Francisco). PLUS the 2nd, 3rd, 5th, 6th and 7th. San Diego is #5 (with “middle class” affordable homes averaging 1,056 sq. ft.)

The median home in other 49 states is 1/3 the price of the median CA home.

A has 2nd highest annual cost for owning a car – $4,112. $370 higher than the other 49 states' average.


CA residential electricity costs an average of 56.1% more per kWh than the average for the other 49 states. CA commercial rates are “only” 46.1% higher.  For industrial use, CA electricity is an astonishing 82.0% higher than the other states' average. (March, 2017).       NOTE: SDG&E/Sempra is considerably higher than the CA average.     


A 2015 U-T survey of home water bills for the 30 largest U.S. cities found that for 200 gallons a day usage, San Diego has the 3rd highest cost – 73.7% higher than the median city surveyed.  At 600 gal/day, San Diego was again 3rd highest – 81.7% higher than the median city.


The top CEO’s surveyed rank CA “the worst state in which to do business” for the 13th straight year (May, 2017).


From 2007 through 2010, 10,763 manufacturing facilities were built or expanded across the country — but only 176 of those were in CA. So with roughly 12% of the nation's population, CA got 1.6% of the built or expanded manufacturing facilities. Stated differently, adjusted for population, the other 49 states averaged 8.4 times more manufacturing growth than did California.   -- prepared by California Manufacturers and Technology Association


California is now ranked as the 3rd worst state to retire in by Kiplinger.  Easily the lowest percentage of people over age 65. Only NY and NJ are deemed worse.


The 2015 median Texas household income is 13.7% less than CA. But adjusted for COL, TX median household income is 30.1% more than CA.    and


Consider California’s net domestic migration (migration between states).  From 1992 through 2016, California lost a NET 4.0 million people to other states.  Net departures slowed in 2008 only because people couldn’t sell their homes.  But more people still leave each year -- in 2016 we lost 109,000. Again, note that these are NET losses.  Sadly, our policies have split up many California families.       and
It’s likely that it’s not the welfare kings and queens departing.  They are primarily the young, the educated, the productive, the entrepreneurial, the ambitious, the wealthy (such as Tiger Woods) – and retirees seeking to make their nest-eggs provide more bang for the buck.

NOTE:  To see more such fact-based disclosures, go to my blog at, or my more active Facebook “page”  (“friend” me).  The very latest two-page fact sheet Word file (this wonky handout) is available free upon request.

© 2018, Silicon Valley Taxpayers Association | P.O. Box 2091, Cupertino, CA 95015-2091 | | 408-279-5000

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