Like the Mystics and Statistics Say It Will

By November 24, 2008Economy

At the California Manufacturers and Technology Association blog, MPowered, Greg Hines reacts to all the talk of getting people to pay their “fair share” to counter the state’s latest budget crisis. Of course, “fair share” always means higher-income taxpayers and business pay more, even though in a state of more than 34 million people, fewer than 150,000 people contribute approximately 27.5 percent of the state’s entire general fund, while corporate and franchise taxes account for another 11 percent of the general fund budget.

The problem is that we have slowly sent signals to businesses and individuals that California will tax success more than any other State.  Why would any business leader operating in today’s global marketplace make a decision to expand or invest in California?  Ask Intel why they no longer manufacture in the state they were founded, or try to talk to Tiger Woods, the Southern California native golfer, about moving to Florida after turning pro.   Simple answers: Less taxes for the former and $9.6 million less taxes for the latter.

Elsewhere, historian Vincent Davis Hanson, a Californian, includes the state’s errors in a list of 10 random, politically incorrect thoughts.

5. California is now a valuable touchstone to the country, a warning of what not to do. Rarely has a single generation inherited so much natural wealth and bounty from the investment and hard work of those more noble now resting in our cemeteries—and squandered that gift within a generation. Compare the vast gulf from old Governor Pat Brown to Gray Davis or Arnold Schwarzenegger. We did not invest in many dams, canals, rails, and airports (though we use them all to excess); we sued each other rather than planned; wrote impact statements rather than left behind infrastructure; we redistributed, indulged, blamed, and so managed all at once to create a state with about the highest income and sales taxes and the worst schools, roads, hospitals, and airports. A walk through downtown San Francisco, a stroll up the Fresno downtown mall, a drive along highway 101 (yes, in many places it is still a four-lane, pot-holed highway), an afternoon at LAX, a glance at the catalogue of Cal State Monterey, a visit to the park in Parlier—all that would make our forefathers weep. We can’t build a new nuclear plant; can’t drill a new offshore oil well; can’t build an all-weather road across the Sierra; can’t build a few tracts of new affordable houses in the Bay Area; can’t build a dam for a water-short state; and can’t create even a mediocre passenger rail system. Everything else—well, we do that well.

From Dan Walters, Sacramento Bee, “State may need total fiscal overhaul“:

Schwarzenegger’s centerpiece is a 1.5-cent sales tax boost for three years. Another important piece is borrowing $15 billion against the state lottery’s profits to provide $5 billion a year for three years. Many of his spending cuts also are limited in term.

Schwarzenegger’s approach conflicts with forecasts of potentially immense deficits for many years due to economic uncertainty and the underlying structural deficit and because so many recent fiscal moves are short-term gimmicks. It could leave his successor with a big mess.

Causing the biggest ruckus? Schwarzenegger’s proposed tax on veterinarian services. In attempts to broaden the sales tax to services, you always encounter one targeted group that has passion and organization on its side. Pet owners fit the bill this time. Never go up against pet owners.

Meanwhile…San Francisco Chronicle, “California’s clout in Congress grows.”

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