gator
05-20-2009, 04:08 AM
California is a lesson that liberal economics, like the Obama plan, doesn't work. I saw where California is now auctioning off prime real estate, such as the LA Collesium and San Quentin, in hopes of closing their enormous budget cap...approximately $42 billion. I think this situation provides an excellent opportunity to educate anyone who thinks the tax and spend philosophy is a legitimate economic model. You will see striking similarities in the California trek and the road map Obabma has proposed for the entire nation: high spending, high taxes (especially for the rich), and expanded provisions for mental and medical care.
First, the proof:
http://online.wsj.com/article/SB123503429614220905.html
http://www.usatoday.com/news/nation/2009-01-15-schwarzenegger-california-deficit_N.htm
http://www.metnews.com/articles/2008/inmyopinion121908.htm
Second, the soapbox:
I think anyone would agree that California has been one of, if not the most, liberal state in the Union for some time. What has their economic plan been? High spending and high taxes, particularly for the rich. The result is that they bankrupted a state whose economy would be the eight largest in the world if California was its own country. Of particular interest is that California is one of the few states to enact the "Millionaire's tax" (even though they were already a high tax state) in order to expand mental health programs. What happened? Even as the national number of millionaire households rose by 5.9% in 2007, LA county alone lost 7000 millionaire households. Millionaires are leaving the state in record numbers. Interestingly, Maricopa County, with a tax rate less than half of California's, in neighboring Arizona gained 23,000 new millionaire households in the same time period. Since the top 10% of earners pay nearly 75% of the income taxes, the only possible result is a net reduction in income taxes (although I couldn't find exact figures). What is even more laughable about California's millionaire's tax is that while driving out their highest wage earners to provide better mental health care, they then completely mismanaged the collected funds. Of the $3.2 billion collected through the millionaire's tax, an estimated $2.174 billion is just sitting in the bank unused. Can anyone say, "government run healthcare." Oh yeah Mr. Liberal, I'm sure the national plan will be much more effective....kind of like Hurrican Katrina. Unfortunately, the national income tax revenues are headed towards the same distribution as California under Mr. Obama's new budget. I foresee businesses and millionaires going overseas to avoid higher taxes....oh wait, they're already doing that. Obama thinks he can trick them into coming back by offering tax incintives for new businesses in the first 5 years. He should be promising permanent tax breaks; it would bring some businesses back, allow struggling businesses to flourish, encourage the opening of new businesses and actually increase tax revenue.
So now that California is screwed, how are they cleaning it up? Besides selling off pieces of property that I just never thought I would see for sale, they are finally cutting spending and giving tax breaks to corporations. See, California is finally getting the picture. Unfortunately, they are necessarily implementing a set of measures that will hammer the poor and middle class, decrease spending (even 8.6 billion for education), and cut salaries and holidays for government employees. You can't just keep spending money you don't have. Now that they're in the shithouse, they have to cut spending (even the really important stuff) and raise income taxes, sales taxes, and vehicle registation fees on everyone...not just the rich. The less effluent can't just pack up and leave because they hate the tax rate, so they are an easy target and these taxes will actually increase the tax revenue. So that crap about taxing the rich so we can spend like crazy and give 95% of Americans a tax cut always comes back to bite the poor and middle class in the ass.
This could have been avoided. The true problem is spending, spending, spending and taxing the life out of industry and high wage earners. These are the issues that fiscal conservatives are fightning tooth and nail about the Obama plan. Obama's going to add $10 trillion in debt and do the liberal special: tax the rich. We're aimed right for the path California took, and conservatives are trying to slow him down (hopefully around) with events like the tea parties. California now has to cut spending out of attrition, but conservatives are pleading for preemtive cuts in national spending so we don't get to the point of California. Further, I know it all sounds good and Obama promised healthcare and tax breaks for the poor, but you can't get there by only taxing corporations and the rich. They'll either go out of business or leave, leaving the middle class and poor to pick up the tab. Finally, just remember that the shitstorm in California is all happening over a budget deficit of $42 billion, what's debt in the double digit trillions going to do to the country?
First, the proof:
http://online.wsj.com/article/SB123503429614220905.html
http://www.usatoday.com/news/nation/2009-01-15-schwarzenegger-california-deficit_N.htm
http://www.metnews.com/articles/2008/inmyopinion121908.htm
Second, the soapbox:
I think anyone would agree that California has been one of, if not the most, liberal state in the Union for some time. What has their economic plan been? High spending and high taxes, particularly for the rich. The result is that they bankrupted a state whose economy would be the eight largest in the world if California was its own country. Of particular interest is that California is one of the few states to enact the "Millionaire's tax" (even though they were already a high tax state) in order to expand mental health programs. What happened? Even as the national number of millionaire households rose by 5.9% in 2007, LA county alone lost 7000 millionaire households. Millionaires are leaving the state in record numbers. Interestingly, Maricopa County, with a tax rate less than half of California's, in neighboring Arizona gained 23,000 new millionaire households in the same time period. Since the top 10% of earners pay nearly 75% of the income taxes, the only possible result is a net reduction in income taxes (although I couldn't find exact figures). What is even more laughable about California's millionaire's tax is that while driving out their highest wage earners to provide better mental health care, they then completely mismanaged the collected funds. Of the $3.2 billion collected through the millionaire's tax, an estimated $2.174 billion is just sitting in the bank unused. Can anyone say, "government run healthcare." Oh yeah Mr. Liberal, I'm sure the national plan will be much more effective....kind of like Hurrican Katrina. Unfortunately, the national income tax revenues are headed towards the same distribution as California under Mr. Obama's new budget. I foresee businesses and millionaires going overseas to avoid higher taxes....oh wait, they're already doing that. Obama thinks he can trick them into coming back by offering tax incintives for new businesses in the first 5 years. He should be promising permanent tax breaks; it would bring some businesses back, allow struggling businesses to flourish, encourage the opening of new businesses and actually increase tax revenue.
So now that California is screwed, how are they cleaning it up? Besides selling off pieces of property that I just never thought I would see for sale, they are finally cutting spending and giving tax breaks to corporations. See, California is finally getting the picture. Unfortunately, they are necessarily implementing a set of measures that will hammer the poor and middle class, decrease spending (even 8.6 billion for education), and cut salaries and holidays for government employees. You can't just keep spending money you don't have. Now that they're in the shithouse, they have to cut spending (even the really important stuff) and raise income taxes, sales taxes, and vehicle registation fees on everyone...not just the rich. The less effluent can't just pack up and leave because they hate the tax rate, so they are an easy target and these taxes will actually increase the tax revenue. So that crap about taxing the rich so we can spend like crazy and give 95% of Americans a tax cut always comes back to bite the poor and middle class in the ass.
This could have been avoided. The true problem is spending, spending, spending and taxing the life out of industry and high wage earners. These are the issues that fiscal conservatives are fightning tooth and nail about the Obama plan. Obama's going to add $10 trillion in debt and do the liberal special: tax the rich. We're aimed right for the path California took, and conservatives are trying to slow him down (hopefully around) with events like the tea parties. California now has to cut spending out of attrition, but conservatives are pleading for preemtive cuts in national spending so we don't get to the point of California. Further, I know it all sounds good and Obama promised healthcare and tax breaks for the poor, but you can't get there by only taxing corporations and the rich. They'll either go out of business or leave, leaving the middle class and poor to pick up the tab. Finally, just remember that the shitstorm in California is all happening over a budget deficit of $42 billion, what's debt in the double digit trillions going to do to the country?