these people are drug addicted in some cases. Their alcohol addicted in some cases, they're mentally unstable. They have mental deficiencies. This is the reason I pay taxes. I want these people to get the help they deserve. Well, if we're, if we spent 26 billion and they're still outside my office building right now, what's the disconnect? Why isn't it getting them? So you sell your business that you spend 30 years building, not indexed to inflation. 13.5% goes to the state government. On top of the 20 that went to the federal and the 3.8 that went to the federal, I lived through that. And so we just discourage growth. We discourage capital formation with our tax code. So we spend more than anybody. So if we're spending more and there's got to be some economies of scale to spending, shouldn't we have the best of many, many things? Like so I started with education. Where are we in reading? We're 44th. Yeah. We're 44th in reading. Where and then a 51 What's a 50 state?

50 at 50. Yeah, we're 48 in

School bus safety like I didn't even know that was the thing we measured alone a citizen, right?

So I want to implement this plan where we read every transaction we condition the release of money on

Reporting which I dictate the method of reporting that's constitutional power I'm sorry.

I'm sorry.

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I'm sorry.

I'm sorry. I'm allowed to read the transactions from your accounts on a daily basis, deposit on a blockchain ledger, read it with artificial intelligence, draw relationship conclusions using artificial intelligence, implement this program statewide, countywide, citywide, agencywide that will drive down the propensity towards waste-fronted abuse. We'll make California the model for financial reporting for the world. Welcome to the Mike Litton Experience Podcast. Everyone has a story. And our passion is to help them tell it. Mike is passionate about being a father, a teacher, a realtor, an investor, and a leader. And now introducing the host of the Mike Litton Experience Mike Litton. Hello Morgan, thank you so much for being our guest on the Mike Litton Experience. I think this is number three or four. I don't, we don't need to count. Thank you so much for being our guest on the Michael itni

experience. I think this is number three or four. I don't we don't need to count, but thank you again for being our guest. I am so excited about her Morgan for controller of the state of California. I don't even know what to do with myself. Thank you for making the time to be here and to be with our audience. I appreciate you, bud. Well, it's good to be. I hope I'm allowed to tell to tell this, but you and I have known each other since we're about 11 or 12 years old, which is a very long time, because I remember riding the school bus with you to go to Lincoln, Jr. High School in Oceanside. 46 years, brother. 46 years we've known each other. I've gotten gotten older but I haven't matured one bit. See when I grow up I would have been just like you. What's that about right? Yep. So I know you you've been on the podcast. Obviously we've known each other forever. You've been on the podcast and we've and we've shared with our listeners your your life story. What I would like to do today if you're okay with it is talk about sort of the events and the story that led up to you deciding to throw your hat in the ring and run for control of California. And real quick, before we start the story part of it, when I found out that you were running for controller, the first question I had was why not governor? Well, let's say baby steps first. So we're either going to it, are we? We've got some call if I can and it's for governor as well. But I think I think I think people should go to their skill set as often as possible and put their skills ahead of your ego first. And of course the top job would be really fancy, but I'm a finance guy. I'm typecast for this. Right? So yeah. I got to. That's a great answer, by the way. Thank you. So you've been self-employed now for how many years? Well, I started a company in 2004. It was an asset management business in San Diego. I sold that company to Cantor Fitzgerald to Howard Lutnik in 2017 and I joined Cantor Fitzgerald then back to being an employee but still running the company that I started and founded. So I've been here about nine years and I'm actually retiring to go full-time into public service and this is the endeavor that I'm doing. Running for state controller, I think we need some help in that area in California. Yeah, totally agree with that. And I wanna go through a lot of that type of what you're running on, like what your platform is, that kind of thing. Sure. Can you talk a little bit about, so I know that you and I have spoken off recording, so off camera, right? About some of the challenges and some of the things that owning a business in the state of California has, there are some challenges, okay? Can you talk a little bit about that 14, 15 years span where you started your own business, built it up basically from scratch. You had a number of people working for you. You kept expanding, kept expanding, right? and eventually got to a place to where, like you said, sold the counter Fitzgerald which I think is amazing. Can you talk a little bit about before like when you own your own company before you sold the counter and then afterward some of the challenges that you experienced because I know you and I we both own businesses, businesses in California, and we were sort of commiserating about some of the things that have been quite honestly challenges that you don't have in other states, right? Can you talk a little bit about that? Yeah, I could talk about it. I think, you know, first and foremost, when you first start out and you're really small, you know, they get you $800 fee. Well, $800 is not that big a deal if you're Apple computer. But if you're Susie with a chair and a nail salon, you're a business owner, right? Or you're a guy of Moan some lawns, you're a business owner. And every year that $800 check comes due and you know states close by Arizona, Nevada, Utah, they don't charge $800. So we're unique and that's just where it starts. And you say, well, okay, why do you want to start your business in California? Well, there's 39 million people here. So 39 million potential customers for any business. There's still a lot of wealth here. We've been created here. We have functioning infrastructure. There's a lot of great reasons. But the state of California in general makes it pretty difficult with high, for example, higher unemployment insurance tax rates than most labor regulations are among the toughest in the world. Even though we're right to work state, it's very, very difficult to terminate a problematic employee regulations that are put on that are probably unnecessary if we're all just adults and nice to each other. Things like a small business needs to, you know, restrooms and different things like, you know, folks, we can handle our own restrooms stuff as adults, no matter who we are or where we, you know, we don't need the state sort of being nanny-like in that area. And that sort of level of regulation that California has for makes it more difficult. And what it does is it then favors big business over small because well it may seem like an easy cost of compliance. It is if you are again your Google and you have armies of lawyers that can help you comply with all of the various regulations but there's generally not much in the way of carve out for smaller businesses. And by the way, small business is the biggest employer, small business is the growth engine. And so what we should be doing in California is, well, gosh, we need all of these businesses to be successful because they generate revenue that allows us to provide services. What can we do to help these businesses succeed? And instead, the mindset is how do we extract more of the productive capacity of those business and bring it into our coffers and not recognizing that we're beyond the law of diminishing returns, which is why now California has the highest unemployment rate in the country. How is that possible, right? This great booming place. We have the highest unemployment rate in the country at a time of very strong economic activity, and it's a relative ease of doing business that's the culprit. Yeah, 1,000 percent, by the way. So one of the things that we've done on this podcast is we've interviewed the co-author, Arthur Laffer's co-author of the book, Taxes Have Consequences, right? And what that book talks about, by the way, it's a fascinating read, highly recommended. What that book talks about is the more you tax people, the more they flee, The more you tax people then regulate them, the more they seek. It's almost like water, right? Water seeks the path of least resistance. If you're looking at a map of a river, a tributary, right? It ebbs and flows and turns and, you know, to ride all this stuff. And that's what people do. Sometimes it's survival, right? So small businesses are the single greatest employer in terms of new jobs, growth engine, and not just California, but the entire nation in the entire United States. The harder we are on small business, the more we're encouraging small business to do one of two things. Not start or move, right? Go somewhere else. And that is something we're seeing. We're seeing an exodus from the fourth largest economy in the world, okay? To smaller economy, simply because it's less regular, less regulated, more user friendly, less taxed, okay? And I mean, look at gasoline. We pay 78 cents a gallon just in taxes for gasoline in California.

Yeah, and we have special formulas that are different. I live in San Diego County where we have our own even more special formula, which adds to the cost. Yeah.

Neighboring states, Arizona, Nevada, Utah, their tax costs are on 19.20 cents.

And you set something very interesting.

The more you tax, perhaps you Utah, their costs are, their tax costs are on 19.20 cents, you know, and you said something very interesting, the more you tax, perhaps, you know, and this was the basis of the Laffer curve, Chuck Cadillac and Art Laffer and Jack Camp, all for the Reagan administration's justify the tax cuts. But there's also a point where taxes help, right? So if we have zero tax rate and zero government services, zero police, zero fire, zero roads, zero university, zero schools, well, it's not going to be a very good place to do business. Right. So we Republicans are not anti-tax where we want we are pros figuring out the optimal level of tax that fosters economic growth and delivers of world-class services that are needed. So if we're living in anarchy, I'm going to support the first couple of percent in tax, right? So I need police, fire, roads, and need education. So okay, we're getting up there. But we've long passed that in the state of California, right? We've long passed that because it's the explicit income tax. It's the capital gains tax, taxing long term capital formation at ordinary income tax rates. So you sell your business that you spend 30 years building, not indexed to inflation, 13.5% goes to the state government on top of the 20 that went to the federal and the 3.8 that went to the federal. I lived through that. And so we just discourage growth. We discourage capital formation with our tax code. The controller doesn't get set tax code. That's the legislature, of course. But we have a lot of work to do in our beautiful state. But the controller does have a say. So the controller does have an opportunity to have the ear of the legislature. No question about that. The lawmakers come to you and or come to the controller and ask some of these questions. Oh, 100%. And you know, one of the beautiful things about our republic, whether it's the federal republic or the state republic, is that we are citizen legislators. And I've advised members of Congress over the year on economic issues, city council people on pension issues, things that are their responsibility, perhaps to vote on, and if they may not have that expertise, right? Somebody could get elected and he was a chief of police. Well, he may not understand a fiscal issue or something like that. So I'm always willing to provide that advice and guidance and I plan to do that, you know, aggressively as a state controller. Yeah. And that's that's where I think this comes down to competency, right? And it comes down to experience. You've been in a very unique position. You've you started a business of your own, you built it up, it was incredibly successful, so successful that one of the top one of the top investment companies in the world purchased it. Right. When an investment company purchases your company, it's because they're looking to add your competitive advantage to their family of companies. That's right. To their overall, and that's saying something, okay? You've experienced what it's like to start from zero to build it up, to deal with all the things like the $800 per year tax thing, right? We just spent with our CPA this morning and we're gonna be paying.

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