Morning Bell: California’s High Tax, High Spending Disaster
Posted May 21st, 2009 at 9.26am in Ongoing Priorities.
The progressive movement suffered a major defeat this Tuesday when California voters rejected all five tax raising measures on the ballot, four out of five of them by nearly 2-to-1 margins. The vote clearly shows that even in one of the most liberal states in the nation, there is an upper limit to how high Americans are willing to be taxed.
The response from the new online left has been largely mute, but Mother Jones blogger Kevin Drum did try and spin the defeat this way:
Historically, California has been a high tax/high service state. That’s fine. Some states prefer a low tax/low service model. That’s fine too. (It’s a lousy idea, I think, but fiscally it’s fine.) But over the past few decades we Californians have somehow concluded that we can be a medium tax/high service state. It’s a fantasy.
The only fantasy here is that California is a ”medium tax” state. While it is true that Proposition 13 has limited property tax collections, Californians still paid a combined $1,030.60 in per capita state and local property taxes. According to the Tax Foundation, this places them 28th highest nationally. But property taxes are just one source of state revenue. In other taxing categories, California either leads the league or is in the top 10 nationally, including:
- Corporate Taxes - California has the highest corporate income taxes in the West. Even Apple, the star of California’s technology economy set up a company in Nevada to avoid the state’s high tax rates. Only seven states have higher corporate rates.
- Income Taxes - California has the most progressive tax scheme in the country including the second highest rate in the nation for those making more than $1 million.
- Sales Taxes - California enforces a number of sales taxes including a general sales tax, a gas tax, and a cigarette tax. Overall California has the 13th highest state and local sales tax burden in the nation.
- Total Tax Burden - According to the Tax Foundation, once all state and local taxes are taken into account, Californians face the nation’s 6th highest tax burden.
So if low taxes are not to blame for California’s huge deficits, what is? Spending. The Reason Foundation’s Adam Summers details California’s government spending explosion:
When Gov. Pete Wilson took office in 1991, the state budget was $51.4 billion. When he left eight years later, it was $75.3 billion. After five years of Gov. Davis’s administration, the budget had jumped to $104.2, and after another five years under the stewardship of Gov. Schwarzenegger, it has continued to increase significantly to its present level of $144.5 billion. In just the last 10 years state spending has nearly doubled, increasing approximately 92 percent.
Already California’s leaders are pressing the Obama administration for a federal bailout to cover their massive deficits. Don’t expect spending cuts to be part of any Obama plan to fix the Golden State.
Quick Hits:
- Four New York men were arrested Wednesday in connection with an alleged plot to blow up area Jewish centers and military targets.
- Iranian President Mahmoud Ahmadinejad announced Wednesday that his country had successfully test-fired a medium-range solid-fuel missile apparently capable of striking Israel and U.S. bases in the Persian Gulf region and he tied the test to Iran’s nuclear program.
- President Barack Obama and former Vice President Dick Cheney will both be giving anti-terrorism policy speeches today in Washington, DC.
- An unreleased Pentagon report concludes that about one in seven of the 534 prisoners already transferred abroad from the detention center in Guantánamo Bay, Cuba have returned to terrorism or militant activity.
- The United Nations, which aspires to protect human rights around the world, is struggling to deal with an embarrassing string of sexual-harassment complaints within its own ranks.

May 21, 2009 Jack Lohman writes:
California’s budget problem is caused by the same thing as in every other state; a corrupt political system. Only public funding of campaigns will begin to solve it.
Taxpayers pay legislators to spend money wisely, but special interests fund their elections to achieve just the opposite. And they do. Cash contributions divert taxpayer dollars, thus robbing from their intended purpose (schools and fire and police departments), where replacement tax money is then needed.
The insurance industry contributed $46 million to politicians in 2008, and has succeeded in compromising our Democrats in the Senate Finance Committee. They have blocked all consideration for a single-payer healthcare option, which is vitally needed to keep US businesses competitive with the rest of the world. But it replaces the 31% of waste generated by the insurance bureaucracy. Unfortunately the politicians have to run for re-elections and the special interests transcend the elections.
$46 million was a big investment because there is much profits to be had from a private health care system.
Jack Lohman
http://MoneyedPoliticians.net