Stimulus on One Hand, Anti-Stimulus on the Other

By February 13, 2009Briefly Legal, Energy, Taxation

At the American Beverage Association’s blog, a warning: Many states are busy reversing any jobs-creating impact of the federal stimulus bill by raising taxes. From “Make Sure Stimulus Trickles Down“:

Regardless of whether you agree with the size and scope of the plan, for it to have any chance of working, the dollars must truly trickle down to the families and individuals who so desperately need the help.

This means governors, state lawmakers and mayors must be prevented from undercutting the impact of the stimulus by turning around and raising taxes on middle- and lower-class families, including taxes on the everyday goods and services they buy. Nor should they raise taxes on businesses that provide good-paying jobs with strong health benefits. Yet, this is a very real and dangerous threat in many states.

What good is the stimulus if state and local leaders simply turn around and impose higher taxes on groceries (including our industry’s products), health care, clothes, gasoline, parking, television and other consumer goods, which several states are either proposing or considering right now?

The Beverage Association focuses on New York, no doubt because Gov. Paterson wants to tax non-diet bottled beverages — laughably promoted as an “obesity tax” — as among his 137 taxes on goods services. We tend to focus more on California, because the state’s anti-stimulating polity also embraces excessive regulation and high-cost energy, two major factors in a manufacturer’s competitiveness.

Not that the taxes aren’t bad enough and getting worse. From AP:

SACRAMENTO (AP) — Democratic lawmakers on Wednesday said they wanted to bring a budget package to a vote in the Legislature by week’s end, even as legislative leaders and Gov. Arnold Schwarzenegger scrambled to reach a compromise on fixing California’s $42 billion deficit.

It was unclear whether enough Republicans would support the latest language emerging from negotiations. That proposal calls for $12 billion to $14 billion in tax increases, $15 billion in spending cuts and more than $11 billion in borrowing to address the shortfall through June 2010.

As for energy, it’s a dark green world for California’s economy. Very, very dark.

From Next Big Future:

California is going through a state budget crisis and has been going through chronic and persistent budget problems for over a decade. California chooses not to use its offshore oil or develop more nuclear power. Some environmentalists will say that the oil and nuclear power would not be enough to solve the energy problems of the United States. However, this will show that California could get $5-10 billion per year of tax revenue from the development of 10 billion barrels of oil and 16 trillion cubic feet of natural gas.

Also, the development of nuclear energy could offset electricity purchases from out of state sources which can often be at spot prices. Each nuclear reactor could offset about $1 billion of electricity and natural gas purchases each year. California’s budget gap is projected to be $40 billion over two years. The initial issuance of oil leases would provide immediate revenue to the state of one billion/year or more. The construction to build the oil rigs and nuclear plants would provide construction jobs, taxes and fees which would provide immediate benefits as the projects are being built and before oil is pumped or electricity is generated.

But that would be too stimulating.

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