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July 5, 2009

California’s problem is taxation

by Quincy

Instapundit links to a NYT Magazine propaganda piece about governing California, and the part about taxation reads as if it were written by Assembly Speaker Karen Bass, right down to euphemistically renaming taxes “revenue”:

In the view of many, the origins of the mud slog began with the passage of Proposition 13 in 1978, the landmark referendum that capped property taxes. “Over 50 percent of our revenue is dependent on personal income tax, and that’s a very important part of explaining the boom-and-bust cycle,” according to another Republican candidate for governor, Tom Campbell, an immaculately credentialed policy marvel who graduated from Harvard Law School magna cum laude and who later studied under the conservative economist Milton Friedman before going on to represent Silicon Valley for five terms in the United States Congress.

This dependence on income tax was the first thing Dianne Feinstein mentioned when I asked her to assess California’s problems. “In most states, it’s one-third property tax, one-third sales tax and one-third income tax,” Feinstein said. “It’s 55 percent income tax in California. And 45 percent of that comes from the top brackets.”

When the economy is booming, the stock market soaring and jobs abundant, relying on income taxes is not a problem. That was the case in the years after Schwarzenegger first became governor in 2003, and he was hailed as a “postpartisan” leader who cut taxes and appealed to Democrats by aggressively tackling issues like global warming. But in today’s cratering economy — in which California faces a decline in personal income for the first time since 1938 and unemployment sits at 11.5 percent — the state’s coffers have shriveled up quickly, along with the governor’s popularity.

Passing a budget or increasing revenues in California is dicey in the best of times. The state constitution requires that two-thirds of the Legislature agree on a budget or higher taxes — the kind of overwhelming political consensus, in other words, usually reserved for amendments to the federal Constitution. (California is one of just a handful states that require a two-thirds vote to pass a budget.)

These words were written not by Speaker Bass, but rather by the Times’ own Mark Leibovich. He gets some of the facts right, but draws from them a woefully wrong conclusion. Where Liebovich sees a state that would be better off if only politicians could increase property taxes without limit or one party had total control of the budgeting process, I see a state that manages to overtax its citizens despite some pretty robust taxpayer protections in the state constitution. What’s the difference between me and Mark Leibovich? I actually have to pay for the excesses of Sacramento.

Let me list out for you the taxes and fees I remember having to pay in the last year:

  • Income tax
  • Sales tax
  • Property tax
  • Gas tax
  • Vehicle License fee

This doesn’t include the various line items about government surcharges and fees on every utility bill I pay, some of which I’m sure is attributable to the state. Even so, the taxes and fees I listed above still amount to about 25% of my income. On top of the 30% of my income that goes to Washington D.C., that’s more than half my income.

You might think that such a fate could only happen to someone who was rich enough not to worry about only having 55% of his income go to Washington and Sacramento. You’d be wrong. I’m very solidly in the middle class, and it would be even harder making ends meet if California’s political class could force me to surrender even more of my hard-earned income. I hear the same from nearly everyone I know.

I’m a Californian, and I pay more for government than I do for anything else. From the perspective of a citizen, California’s problem is taxation–too much, not too little.

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3 Comments

  1. Property taxes are nice for government employees, since they remain pretty stable over time. They are, however, not so nice for citizens who have to pay them even when their income suddenly disappears.

    Comment by Peter — July 5, 2009 @ 6:22 pm
  2. Taxes are not nice to pay even when your income hasn’t disappeared.

    Comment by Thane Eichenauer — July 5, 2009 @ 10:15 pm
  3. Ultimately, in the State of California, they want to tax us even more. The State is trying to take money from local governments which will eventually result in even more taxation from the State and from local governments. Local governments are actually organizing to stop this unconstitutional State action. The Governor of California is trying to convince the Legislature to take 2 billion collectively away from cities, counties, and school districts, under the terms of Proposition 1A of 2004, even though the cities, counties and school districts don’t have all this money to give to the State — and critically, such a take would be unconstitutional. Hundreds of cities and counties here have opposed the State of California’s attempts and are organizing to go to court against the State if the take occurs, with schools, counties and cities alike organizing with the League of California Cities to protect people (not just government) from the State.
    There is a petition and instruction to the Governor and Legislature to tell them to stop this unconstitutional activity at:
    http://www.thepetitionsite.com/1/californians-for-protective-action-to-protect-federal-constitutional-rights-and-to-preserve-local

    Comment by Freethinking Californian — July 12, 2009 @ 8:38 am

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