According to an article in the Malaysia Star, the meteoric stock prices of Google and other California-based tech firms, billions of dollars are being collected to generate new jobs and fund other social programs in California. The Governator and the California Department of Finance are reaping the income tax windfall from top executives at some of the most successful companies in the world. Right now, Google is leading that charge. The article from the Star reveals:

After cashing in more than 9 million shares valued at $3.7 billion (euro2.8 billion) last year, 16 Google insiders will owe the Golden State as much as $380 million (euro292 million) in taxes _ enough to cover the salaries of more than 3,000 state workers.

Taxes paid by Google founders Sergey Brin and Larry Page account for nearly half the amount. There is virtually no way for them or other California billionaires to escape a 9.3 percent state capital gains tax or a recent voter-approved 1 percent tax on the wealthy to underwrite the state’s mental health programs. 

“On behalf of a grateful state, I’ll be happy to wash their windows or mow their lawn,'’ said H.D. Palmer, spokesman for California’s Department of Finance.

For lack of more intelligent commentary, that is scary. Very interesting and mildly entertaining, but definitely scary. The state is essentially hitching its wagon to $500 stock prices and the willingness of its wealthiest residents to play nice when it comes to their tax strategies. I’m all for making hay while the sun shines and any other applicable cliches, but I think at some point you have to look at these windfalls as the rare occurrences that they are and start to use them to prepare for the inevitable downturns in the macro-economic cycle. Eventually, this approach is going to catch up with California to some degree.

Tags: California jobs, google, income taxes

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