Dan Morain

Dan Morain

Dan Morain: Mitt dings California, as his coffers go 'ka-ching'

Published: Wednesday, May. 23, 2012 - 12:00 am | Page 15A
Last Modified: Friday, Jun. 1, 2012 - 5:02 pm

National politicians are delighted to come to California to raise campaign money. As Mitt Romney showed recently, some of them are perfectly happy to take shots at the Golden State once they leave.

To date, Californians have contributed $43 million in the presidential campaign, far more than any other state. Romney has tapped the Golden State for $10.9 million. He plans to come back next week for a fundraiser at Chateau Carolands, a 65,000-square-foot mansion in Hillsborough named after the daughter of a railroad baron.

President Barack Obama has raised $23 million, plus however many millions more he receives during today's fundraising stop in the Bay Area.

Obama is too smooth to be quoted as criticizing the state that feeds his campaign machinery. But it's not as if he has gotten to know California.

He jets in, hangs out at George Clooney's apartment or the fancy digs of venture capitalists in San Francisco and Silicon Valley, and doesn't bother to stop and talk, say, water issues, agriculture export policy or high-speed rail in our humble Central Valley.

Romney, he of multiple home states, is a Californian, at least some of the time. He owns a beachfront mansion in La Jolla. In an interview with Jim Geraghty of National Review, Romney threw an elbow at Gov. Jerry Brown last week, lamenting that voters did not have the good sense to elect his good friend, billionaire Meg Whitman, as governor in 2010. He then expounded upon the sad situation that has befallen his sometimes home state.

As Romney seems to see it, the problem comes down to taxes.

"There's an unwillingness to deal with fiscal problems before they reach near-crisis level," Romney said. "And the high rate of taxes in California is causing businesses to leave California. I hope that doesn't accelerate, but as the governor continues to raise taxes on the most successful, the most successful will leave.

"Others will decide to not open their doors because the risk will be too great that even if they're successful, the government will end up taking what they earn. The governor is taking them in the wrong direction."

Romney was just getting started. Campaigning later in the swing state of Florida, Romney said he and his wife have mulled relocating to Florida.

"It has the right tax rates, among others," he was quoted as saying.

Florida has no income tax, unlike California, where the state personal income tax would rise by 30 percent for wealthy people like Romney if voters approve Brown's tax hike initiative in November. If it's approved, high earners would pay 13.3 percent on annual income above $1 million.

There's plenty wrong with California's tax structure and Brown's tax initiative. But think through Romney's claims.

Whitman is CEO of Hewlett-Packard. The iconic Silicon Valley company has run into a rough patch, and is expected to announce a restructuring later today that could result in 30,000 pink slips.

Whitman didn't cause Hewlett's ailment, any more than Brown caused California's $15.7 billion budget deficit. But there is a similarity to their responses. By this time next year, Brown has said, there will be 30,000 fewer state employees. If that number turns out to be accurate, it would be hard to argue that Brown is standing idly by.

Of all the reasons for Hewlett-Packard's situation, California's tax burden must be far down the list. Because of the property tax-cutting Proposition 13, Hewlett-Packard's property taxes are fixed at a low rate.

If it bought its land today, the company would be paying up to 7.5 times more in property taxes than it pays currently, according to research by the liberal California Tax Reform Association.

Like all corporations doing business in California, Hewlett-Packard must pay California's corporate tax. The rate is 8.84 percent, high by comparison to most states. But because of rich tax credits, most of which flow to the favored high-tech and biotech industries, the effective tax rate is 5 percent, according to the Legislative Analyst's Office.

By the way, California's corporate tax rate hit a high of 9 percent under that infamous tax-and-spend governor known as Ronald Reagan. Reagan approved the 9 percent rate and Gov. Pete Wilson trimmed it slightly.

Perhaps it's time to cut the rate again, but not because of anything Romney has said. Here's a concept: jettison tax breaks that benefit a handful of favored corporations, and lower the rate for all corporations.

In Massachusetts, where Romney used to be governor, the corporate tax rate has fallen to 8 percent, a decline brought about under the Democratic administration of Gov. Deval Patrick.

If you're curious what the corporate rate was during Romney's term, it was 9.5 percent. Perhaps he'll explain how that helped the state formerly known as Taxachusetts when he drops by Chateau Carolands next week.

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by Dan Morain



Dan Morain, editorial page editor

Dan Morain

Dan Morain, editorial page editor, has been a columnist at The Sacramento Bee since 2010. As a news reporter, he covered the California Supreme Court when Rose Bird was chief justice, the Legislature when Willie Brown was speaker and the Governor's Office during Gray Davis' tenure. He spent 27 years at the Los Angeles Times, where his final assignment was to be part of the team that covered the 2008 presidential campaign. He and his wife, Claudia Morain, have three children, each of whom attended public schools and California's public universities.

Email: dmorain@sacbee.com
Phone: 916-321-1907
Twitter: @DanielMorain

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