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The California Clockwise Swirl

May 15, 2012

So California is in debt again.  You’ll note that not a lot of people are talking about the fact that the real problem was that the state didn’t collect nearly enough tax revenue in comparison to what it anticipated.  Gee, I wonder why?  Victor Davis Hanson (alwasy a great read) has a good starter theory.

To sum up why California has yet another deficit — this time a $16 billion whopper — is pretty easy: The number of demonized one-percenters who pay over 10 percent in their salary to the state has been shrinking, as thousands flee with their ideas, energy, business, and capital to nearby no-tax states, and others make less money due to more and more costs and regulations — while the number of those receiving all sorts of state housing, food, medical, education, and legal support is soaring.

Big bad Texas seems to be doing really well these days, despite everyone thinking that Rick Perry is just a failed Republican candidate for president.  Maybe if we voted on results he and Mr. Romney would still be battling it out.  Then again, if we went on results, Mr. Romney would be President Romney already after beating a forever-term senator and a neophyte politician four years ago… so never mind.

Back to California.  The cuts being proposed really aren’t cuts yet.  The state budget proposed is still growing from last year as far as I can tell.  Sure, state workers might have to take an apparent  cut in hours  (though I doubt it), or perhaps they’ll threaten to cut school lunches, but the machine that is the state government will continue to grow.  I do note that the new budget, for instance, still funds the high-speed rail project from the middle of the state to the middle of the state, with all the ancillary support.

If you read that Chronicle article above, you’ll note that most of the proposed cuts are pretty obvious ones, but also ones with a sympathetic face to them.  Cutting nurses or de-funding improvements to the court system aren’t hard cuts.  They’re commercials for raising taxes more.  Re-negotiating school pension programs like Wisconson did would be a step, but the lack of sympathetic union faces and the likely influx of unbathed protesters in the legislature is probably daunting.

I still don’t see the state trying to completely rethink the budget.  And while that happens, we’ll see more wealthy people find ways to hide income or move out of state while Sacramento burns.

This is all bad for America, by the way.  The tech industry is fueled by the innovation in Silicon Valley.  Sure, we’ll continue to see growth outside the bounds of the Bay, but China and others are getting a leg up funding their own internal growth while America watches California mis-spend itself down the drain.

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6 Comments leave one →
  1. wctaqiyya permalink
    May 17, 2012 4:37 pm

    Well, in a way it’s bad for America. In another way it may be good. Considering that the bloated State and Federal governments with their armies of parasitic bureaucrats are the problem, any disturbance in the money flow feeding those beasts is a good thing. Short of a violent overthrow, I can see where an orderly refusal to pay taxes might be just the medicine we need to bring sanity back to America. It pleases me that increasing numbers of people with lots of money are running for the exits. It is with glee that I watch the politicians scowl and threaten retribution against them. For those threats will only spur more money to flee the grasping talons of the IRS. We need to starve em out, methinks.

    • May 21, 2012 2:27 pm

      Orderly refusal as in: moving to a lower-tax state is okay. Obviously, order refusal as in: don’t pay what you owe, is illegal. Just noting that I don’t advocate law-breaking.

      I do advocate figuring out what it takes to pay only your fair share. I’ve often thought about getting paid less since the tax relief might actually give me a raise…

      • wctaqiyya permalink
        May 22, 2012 1:41 pm

        About that ‘law-abiding’ thing, if I may. Is there a point at which ‘legal’ action becomes so oppressive, it may be opposed? I could ask you if the duly enacted laws in NAZI Germany for sterilizing and exterminating were OK because they were legal? But I won’t. Our forebears went to war over some rather trifling taxes and some modest interference in local policies by the royal governors. I assume you think the American Revolution was OK. Today, the policies and practices of the present regime go far beyond trifling, they are in fact, ruinous. Is it not better to oppose them, even by the mechanism of an organized tax withholding, than to ride this train off the cliff? Or, is it more important to obey the law to economic ruin and complete tyranny because it’s legal? I will add that the supreme law of the nation empowers us to fight all enemies, foreign AND domestic. So, opposing unjust, oppressive and ruinous laws is an obligation and a right.

        • May 22, 2012 8:31 pm

          There is obviously a point where revolt is warranted, but I believe the US is pretty far from that. Higher-class tax rates were well into the 70% range, and the nation survived, but I’m clearly not advocating for that to return.

          I understand your sentiment, and invite dialog as to where to draw the line. I’d rather try to fix the governmental issues through voting at this point.

  2. Ellend permalink
    May 15, 2012 11:21 pm

    Isn’t this raising taxes on the rich and corporations an example of insanity? You know, doing the same thing over and over and expecting different results. I thought I read somewhere the last time California raised taxes on the rich revenues decreased. And they are planning to do this again…

    Unfortunately, when companies expand to other states, the Californians that move seem to bring the same liberal ideas with them that caused companies to move out in the first place.

    • May 16, 2012 7:42 am

      I heard Gov. Brown explain that he was going to the rich because, “that’s where the money is.” Some people have pointed out that this is the same reason people rob banks.

      It’s possible for a government to raise taxes and/or reduce tax relief and gain revenue. At some point the bit flips and revenue goes down. I think everyone in government these days is hoping they don’t see that reduction.

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