We have heard of a debt trap. This is where the cost of servicing a debt exceeds the cash flow needed to service the debt. In those instances, some borrowers take on additional debt hoping for better days and hoping to outrun the bankruptcy.
States, cities and provinces don’t have the luxury of printing money. They need to live within their means, or at least within their ability to get revenue from taxation.
It’s no secret that companies and wealthy individuals have been leaving high tax states in search of low tax states. There is a well worn groove in the freeway from California to Texas and from New York to Florida.
Rather than try to create the incentives for businesses to move to California, the state of California is doing the opposite. They’re doubling down on the incentive for people to leave.
California lawmakers are once again considering a wealth tax. This is on top of the state surtax implemented recently which raises the state income tax level to 13.3%.
Host: Victor Menasce