Not too long ago, California was the envy of the nation- the best economy, most efficient state government and the best schools. Today California is in trouble: faced with perennial budget crises, failing schools and a tax me/sue me/regulate me culture that is making businesses flee the state. It is our elected leaders that have put us here. For the past 40 years, we have had the same broken ideas cycling through the legislature, fed to our elected leaders by the same special interests that have financed their political caste system at we the people’s expense. This is the result of a toxic culture which feels that more government is the solution to every problem.
I have an agenda to put the state back on track. As an outsider, I am not beholden to the special interests and will refuse to play ball by their rules. As an engineer and inventor, I have the mindset to propose and implement outside the box solutions to the state’s toughest problems: kickstarting our flatlining economy, reining in out of control spending, regulation and taxation and ensuring our children are given the education they need to succeed in the 21st century job market. I will work to return as much power and money as possible to local communities or better yet, to you and your family. When I go to Sacramento, I will work tirelessly to make the Golden State shine again.
Six months and one day
By Nathan Mintz | February 28, 2010
For many wealthy Californians, six months and one day is the time in tax exile they spend each year to avoid paying our punitive tax rates while they are going through a major life change– either liquidating their stake in a business, pulling money out of a 401(k), or otherwise unloading assets. In a state where the top 10% of households pay 75% of the income tax, this is a huge problem: the people who are carrying the largest portion of the load are leaving the state to get out from under the taxation burden. Anyone who doesn’t believe this to be the case should take a drive over to the Nevada side of Lake Tahoe and see the multi-million dollar tax shelters in Incline Village. All those houses were financed with the savings from leaving California.
There are two reasons why wealthy Californians choose to leave the state when liquidating: the millionaire’s tax and California’s capital gains tax of 9.3%, which is the highest in the country. The so-called “millionaires” tax that was ushered in under Prop 63 a few years ago, supposedly to pay for mental health services. This is a 1% surtax on any income over $800,000. If you are making 20 million a year, then this tax will hit you for 200K/year just by itself.
The millionaire’s tax is annoying, but the capital gains tax is even worse. Unlike the federal government, which rewards “sweat equity” and charges a lower rate for long term capital gains (5% vs. 15%) California charges the highest rate across the board: 9.3%. Compare this with Washington, Nevada and Texas– no capital gains tax– and you now begin to understand why Millionaires are fleeing the state by the thousands when its time to cash out of long accumulating positions. If you are cashing out a 20 million dollar position, the difference in capital gains tax alone more than offsets the cost of buying a million dollar “cottage” in incline village.
The cost of this for local communities is huge: high end consumers patron local businesses and restaurants, buy goods in local stores and donate to local charities. This flight of millionaires out of the state is costing us millions (if not billions) in revenue for businesses, is retarding the recovery of the real estate market for high end property by displacing demand, and is basically undermining the private sector that is the foundation for the tax base. In other words, this “soak the rich” policy is really only soaking local communities and businesses– the rich will go elsewhere to avoid the pain. As Howard Jarvis Taxpayer’s Association President Jon Coupal put it so aptly: “A recent survey from TNS Research, an international business research firm, found the California counties of Los Angeles, Orange and San Diego had the 1st, 4th and 6th highest number of millionaires in the country. However, even as the national population of millionaire households grew by 5.9% in 2007, Los Angeles County lost about 7000 of these households. Orange and San Diego Counties lost millionaire households as well…Milton Friedman’s maxim that few things are as mobile as rich people and capital, is proven starkly by data showing the wealthy are leaving California in record numbers.”
An anecdotal example of this: one businessman I know has a partner who is getting ready to liquidate. He recently purchased a house in Southern Washington (near the border) and informed his business partner that he would be living there for six months and one day of each year until he was finished selling off his assets. The 10,000 dollar a month mortgage he was paying for the property he was only living in half the year more than paid for itself in the tax savings from not having to liquidate in this state.
So imagine if he stayed here instead: he would have spent hundreds of thousands in local businesses (generating sales tax revenue), given the money to local charities and invested it locally. We must take a serious look at this sort of punitive taxation and ask ourselves if we are really maximizing our revenue when the capital we are trying to tithe can find protection only a few hundred miles…and six months and a day away.
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“Prevailing Wages”
By Nathan Mintz | February 21, 2010
I had a long chat yesterday with a friend of mine who is in the construction/manufacturing business and has been for close to thirty years. His company builds many of the facades and pillars you’ve probably seen at the major hotels in Las Vegas. Recently, he received a bid request from the city of Burbank to install a 3 foot diameter covered pillar (a standard product for him) for a parking lot in the Burbank airport. He completed the bid and submitted an estimate of $37,000 total for the manufacture and installation of the pillar.
The next day, the contract manager with the city calls him back to inform him he had underbid the other bidders by more than 50%. The contracts manager asked him if he had taken the prevailing wages required to comply with government rules into account when bidding the job, along with other provisions such as mandatory overtime. Because he had only done commercial construction up to this point and was unfamiliar with “prevailing wage” rules, he hadn’t. He was asked to recalculate his estimate using the prevailing wage rules and resubmit his bid.
My friend recalculated the bid as requested and its cost went from $37,000 to $75,000. His installer, who he had paid $18 per hour previously, was now required to receive a “prevailing wage” rate of $49 per hour. The assistant, who had received $10 per hour before, was now required to make $35 per hour. In other words, the labor rates under the government rules were almost three times what he was paying competitively for the same job in the private sector.
To make matters even worse for him, it created problems for him down the road when he moved the same team back to a commercial contract: the workers were upset that they were making a third of the ludicrous wage they had received on the previous job. The profit margin on the contract was no greater for him, despite the higher cost. My friend decided to never pursue such a job again, because it was no more profitable for him and created numerous labor problems for him on the more profitable commercial contracts. As he put it to me: “I get these emails every day for prevailing wage contracts– and I just delete them. I feel bad overcharging the government that ludicrously and I don’t make any more money on them.”
Putting this in perspective, as a highly trained radar systems engineer with two college degrees and five years of experience, I receive a lower hourly wage rate (based on my salary) than the “prevailing wage” rate of $49 per hour that is mandated to be paid to arguably a semi-skilled laborer as “prevailing wages”. Why on earth did I go to college?
Now imagine these same rules being applied across the board and you suddenly understand why every construction contract in the state is overrun, which costs us billions each year. These contracts are known as Project Labor Agreements or PLAs, and as a state we must re-evaluate whether or not it makes sense to pay semi-skilled labor close to a six figure annual income when we have a double digit unemployment rate. By the way, one of the provisions in the Federal Stimulus states that these contracts must be in place for any construction contract of $25 million or more.
Post script- if you believe that this is too outlandish to be true, check out some of the regulations off of the state website: http://www.dir.ca.gov/dlsr/PWD/Determinations/Southern/SC-023-102-2.pdf . The prevailing wage rate for a General Construction Laborer according to PLA rules: $26.33 per hour plus another $15.09 per hour in benefits for a total cost of $41.42 per hour.
Topics: Economy | 1 Comment »
Caltrans conferences and your taxdollars at work
By Nathan Mintz | February 19, 2010
This article is a few months old, but I think it helps illustrate just how bad the entitlement culture is in Sacramento. While we’re putting teachers on furlough a couple days a month and eschewing essential services throughout the state, they are spending over $29,000 for 52 cal trans workers to attend a convention at this four star luxury resort. That’s about $580 each in case you were wondering- about 195 dollars per night (assume three nights). That’s not including food, liquour, massages, or whatever else may have been charged- the total bill for this could easily exceed $50,000 after all that is included.
We go after AIG executives after it was bailed out for going on an executive retreat less than a year ago, and suddenly its ok for Caltrans to do the same thing? Someone should have rejected this training request. This is a prime example of how the bureaucracy doesn’t know how to save money- its cultural. This conference request could have easily been furloughed this year in light of the budget crunch. So much for common sense in government.
Sometimes it’s appropriate for companies or even the government to sponsor sending their employees to conferences or symposium, particularly as part of continuing education. However, in the private sector, this never occurs when their is no budget for it. How we can approve this as a legitimate expense when we are shutting down offices statewide to balance the budget?
Topics: Sacramento, Taxes | No Comments »
Citizen’s Power Initiative Needs Your Help
By Nathan Mintz | February 8, 2010
The Citizen’s Power Initiative, colloquially known as the “paycheck protection” initiative, needs your help. This initiative would take away the ability of bureacratic public employee unions to use member dues for political purposes without their members permission. It is also officially sponsored and organized by the California Tea Parties, working together across the state to bring in signatures.
Each year, union leadership uses the power of the dues purse to effectively buy the votes of dozens of politicians (from both parties) and ensure that they get the best deals and contracts that money can buy. In the last election cycle, they donated close to 40 million dollars to state senate and assembly races, making them the largest donor in almost 25% of the races. This has allowed them to basically keep salaries off the table in the perennial budget debacle and to also feather their nests to create one of the most lavish pension systems in the free world: over 9,000 California pensionees receive pensions of 100K/year or more from the state and the number grows daily.
Similar initatives have passed in several other western states, including Idaho and Washington. Indeed, this initiative would put California law in line with federal law and the law in 40+ other states. It is an essential element of restoring the balance of power in Sacramento back towards the people and away from the bureacratic unions.
This initiative had the bad luck of getting kicked off a mere two weeks before the holiday season and suffered from significant lack of momentum as result. As of today, it is not on pace to collect the million signatures it needs to qualify for the November ballot. We need your help: I personally have 8 boxes of petitions in my living room that need to be distributed. If you are interested in helping out, let me know and I’ll bring them or mail them to you. So far, our little group, the southbayteaparty, has collected over 1000 signatures, with more coming in every day.
Please go to their official website and find out how you can contribute if you can.
Topics: Uncategorized | No Comments »
Newt Gingrich asks Nathan and Tea Party Leaders for Input
By Gary Aven | February 5, 2010
We met yesterday in a small group with Newt Gingrich who had asked Nathan and other Tea Party leaders to meet to help him understand the Tea Party movement in California. Newt listened for 55 of the 60 minutes that he met with the group. For all you Newt skeptics, yes Newt does not have a perfect record as far as Tea Party Candidates goes, however, with that said he is one of the hero’s of the Conservative Revolution in America. Now we need to do it again with the Tea Party Patriots. And we ALL need to work together to win against this unprecedented onslaught of socialism. That does not mean that we compromise our principles but it does mean that we MUST find every way we can to overcome the grave dangers to our freedoms and way of life.
Newt Gingrich and Nathan
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Key Endorsements in Race for State Assembly
By Gary Aven | February 3, 2010
Tom Campbell, candidate for US Senate vs Boxer, announced at the South Bay Tea Party event in Redondo Beach that he whole heartedly endorses Nathan Mintz for Assembly. “Nathan will make a great Assemblyman and I’m proud to give him my endorsement,” said Campbell. “We need more people with his in-depth understanding of the issues in Sacramento.”
Tom Campbell Endorses Nathan Mintz
TEA PAC also Endorses Nathan Mintz
Nathan also reported gaining the Endorsement of TEA PAC – a political action committee dedicated to providing funds and resources to Tea Party groups and grassroots candidates across America. TEA PAC provided support and resources to Scott Brown’s successful campaign in Massachusetts.
Topics: Uncategorized | 1 Comment »
Mandatory Rainwater Capture rules likely to slow construction growth
By Nathan Mintz | February 1, 2010
In today’s LA Times there is a story about how the LA County Public Works Commission is passing an ordinance to raise standards for “low impact development” in Los Angeles. The ordinance increase calls for 100% rainwater capture to prevent runoff into storm drains. This is all part of their “Low Impact Development” ordinance.
Living in Redondo Beach and working in El Segundo, I fully appreciate the havoc that winter storms can cause- our storm drain infrastructure is signficantly underpowered in some areas and the results are flooded streets during bad storms. There are certainly areas where better rainwater runoff could really help things along, so I can appreciate putting more money into storm drains. What I question is whether the solution is to require 100% rainwater capture, a measure that seems economically unreasonable, since it requires the addition of capture tanks and other measures more appropriate to desert areas where water is in scarce supply. Why wouldn’t an 80% solution like improving building standards for rainfall diversion (drainage for large concrete surfaces, wider storm drains, increasing paved surface slope to direct water more towards stormdrains) make more sense? Why must we have 100% diversion with twice the cost?
The other problem I have is how the city of Los Angles Public Works Commission defines “Redevelopment”– basically any “means land-disturbing activities that result in the creation, addition, or replacement of 500 square feet or more of impervious surface area on an already developed site.” In other words, anytime you add an extra bedroom to your house or decide to build a deck in your backyard, you may become subject to this ordinance. Sounds like a recipe for homeowners, businesses and even renters (since fees get passed on to them) to get dinged with extra fees. You can read the full text of the amended ordinance here: Low Impact Development Ordinance. This is just another example of California’s green bulding standards run amock: I’m all for green development when its reasonable, but not when it costs three time as much.
The irony of course is that this “Low Impact Development” ordinance is anything but “Low Impact” to taxpayers in Los Angeles. Expect to see higher construction costs, less development and longer construction times as a result of this law, which was passed unanimously and with little advertisement to the affected public by the LA public works commission.
Topics: Uncategorized | 1 Comment »
California’s Misplaced Priorities: Going for “Broke” with Universal Health Care
By Nathan Mintz | January 21, 2010
When you have dug yourself into a hole and you want to get out, the first thing you need to do is stop digging. Apparently, State Senator Mark Leno and his 45 co-sponsors, including South Bay Assemblyman Ted Lieu and South Bay State Senator Jenny Oropeza, missed that lesson in kindergarten.
With the State facing an almost 20 billion dollar budget deficit in the coming year and pension obligations that are driving California over a cliff, they have decided that a universal health care plan, with a price tag of almost 42 billion dollars in its first year alone, is a worthwhile use of the legislature’s time. Yes, you heard me right: while government managed health care may be on life support in Congress, California’s state senate is considering legislation to outlaw private insurance and have the state of California seize control of more than 200 billion dollars in private industry!
They have reintroduced SB 810, the California Universal Healthcare Act, which is arguably one of the most capricious and foolish bills ever written. Forget AB 32, the California Cap & Trade Bill with its over 150 billion dollar/1.1 million jobs price tag, this is the biggest power grab the legislature has tried for yet.
The utter illegality of ”nationalizing” an entire industry at the state level aside, this bill is a fiscal disaster. California’s non-partisan Legislative Analysis Office does not mince words on this, stating:
“The analysis predicted a net shortfall of $42 billion in the FY 2011-2012, the first full year of implementation, and $46 billion in 2015-2016… The LAO estimated that it would take a tax of 16 percent to mitigate the predicted shortfall in revenues.”
So let’s review: the state is in the midst of a 21 billion dollar revenue shortfall, our economy is in shambles with nearly 13% unemployment, and our legislators are busy wasting time on a single payer health care plan that is not only illegal, but will increase payroll taxes on the middle class by 16 percent (yes, a 26% state income tax to afford this), and triple the budget deficit to at least 63 billion in one year.
This exemplifies why we need new leadership in Sacramento. Massuchusetts just elected Scott Brown to the US Senate, in what was by consensus considered a referendum on progressive health care reform, and our lawmakers in Sacramento are trying to “nationalize” an entire industry. The words of Lord d’Abernon regarding state sponsored insanity ring true: “It appears almost impossible to hope for the recovery of a country where such things are possible. It is certainly vain to hope for it unless power is taken entirely from the lunatics presently in charge.”
California is in deep trouble– record unemployment, thousands of farms being destroyed by drought, perennial budget deficits in the tens of billions of dollars, and pension and salary obligations spiraling out of control– and the South Bay’s Representatives in Sacramento, Ted Lieu and Jenny Oropeza, are wasting the people’s time and money promoting the most insipid piece of legislation in Sacramento’s history. A reasonable person has to ask: have they completely and utterly lost their minds?! Is this a worthwhile use of my lawmaker’s time? Are their lawmaking efforts aligned with the issues I care about?
It’s clear that we need a new breed of leadership in Sacramento- who will tackle the real problems, not author illegal legislation that will bankrupt the state.
Topics: Health Care, Sacramento | 3 Comments »
California Spending 1.1 Billion Each Year Incarcerating Illegal Immigrants
By Nathan Mintz | January 17, 2010
The Federal Government can’t keep our borders secured, and we here in California are footing the bill– to the tune of 1.1 Billion Dollars last year just to incarcerate illegal immigrants who shouldn’t even be here! Full Story Here.
We have over 20,000 illegal immigrants in California prisons– at a $53,000 per year incarceration fee each. That’s how much it costs to pay the prison guards to watch them, keep a roof over their head, feed them and ensure they have access to the best medical care the state can afford. The amazing thing is, we are told that we can’t just deport them, because they’ll simply just come back over the border illegally again– what a defeatist mindset. This is the problem with having poor border security: each day dozens more felons and criminals enter our borders, that undermine law and order and fill up our already overcrowded prisons and we have no means to stop them.
What about the 1,000 or so that are from El Salvador? Can’t we deport them? It’s a lot harder to get back here from San Salvador, El Salvador than it is from Tijuana, Mexico. I don’t understand why our state legislature is so impotent as to call this an all or nothing problem. It’s time we get someone in there who is willing to explore every possible avenue to get these illegal aliens out of our prisons, rather than waiting around for an extradition/prisoner transfer treaty with these other countries that may never happen.
Topics: Budget, California Tax Policy | No Comments »
2010 Budget To Take a Bite Out of State Pension Burden
By Nathan Mintz | January 16, 2010
Good News: In this year’s budget, the governor proposes increasing employee contributions to increase what state employees pay into CalPers. This will increase it to 10% of employee pay (on average) from 5% today. So they are making state employees share more of the burden for their own retirement– that’s a good thing.
Bad News: they won’t touch existing pension obligations- so the hole in the budget will continue to grow. Arnold thinks those are a sacred contract that cannot be broken. Yet this is a contract we cannot afford to pay: a 120 billion dollar liability we are putting onto our children today, which will continue to grow for years to come.
If a contract was signed under false pretenses– shouldn’t one of the parties have the right to demand we come back to the table? How sacred of an obligation is a 90% of salary pension at age 50 with cost of living increases? Nothing should be off the table from re-examination.
Topics: Uncategorized | 1 Comment »
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