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Works and Days

California’s Assorted Rocks and Hard Places

November 11th, 2010 - 5:19 pm

News came out on Thursday that the California budget deficit is actually closer to $25 billion, twice what we are told. This follows from last year’s $42 billion shortfall, which was closed by all sorts of one-time tax increases and gimmicks. Here is our general dilemma in a nutshell.

Taxes

Fact one: California has among the highest taxes in the nation, over 10% on top incomes, and about 9.5% that hits earners when they get above $47,000.

Sales taxes, depending on the county, average close to 10%. The result is that thousands (the exact number is unclear, perhaps between 2,000 and 3,500) of more affluent Californians are leaving the state each week for low- or no-tax states. Raise income taxes or sales taxes or gas taxes higher, and there will be a stampede. Note that property tax rates are not singularly that high in comparison to other states. Yet that fact is of little help since our assessments are often astronomical (given that we like to live on the coast and then, once there, ensure others cannot).

The apparent solution for now is to slap one- or two-year higher taxes on vehicle registration (sky-high), or issue fees to use state facilities, or to hike tuition at public colleges and universities (still cheap in comparison to private counterparts).

State Employees

Fact two: we have among the highest compensated state employees and teachers in the United States, with singularly powerful public employee unions. (I was governed by one for 21 years: professors at the closed-shop CSU were forced to pay union dues — even if we were not in the union, and objected to the union’s efforts to end merit pay and accountability and to ensure near universal tenure).

Yet in many categories we need more state employees to attend to basic services. But we cannot since the state operates a sort of caste system in which we pay so much to the entrenched that we cannot afford to hire more numerous entry-level workers. (Part-time PhDs at the CSU system make Wal-Mart greeters seem privileged in comparison). This is regrettable, because we tend to reward the superannuated and simply write off the younger and idealistic. An entire cohort of young California credentialed teachers and college graduates in general are in limbo, stuck in low-paying part-time jobs for the foreseeable future that won’t pay the interest on their student loans.

The Refined Classes

Fact three: a particular class, largely coastal, professional, and liberal, believes utopia is nearly here, if we just impose more regulation, higher taxes on businesses, and more environmental legislation. They have not a clue how others pump oil or gas, grow food, and produce lumber, only that they like driving, like eating, and like nice houses, but are not particularly interested in the grubby Neanderthals who allow that to happen.

So in times of near depression voters insist on stringent global warming/carbon emission laws, and keep adding regulations that hamper rather than encourage wealth creation. (Note: the more regulations we impose, the more they are ignored and the more lawless we become. Here in rural California, it is now common to see instant restaurants on the roadside: no septic systems, food preparation trailers plopped down with canopies, picnic tables, and plastic chairs, without the scrutiny that struggling restaurants put up with. Ditto instant hardware stores out on rural intersections where everything from new rakes to gas rototillers are peddled: no sales taxes, no questions, just a quick sale and on to the next location).

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