Friday, June 12, 2009

Why The 2/3 Majority To Raise Taxes In California Is A *Good* Thing

Lefties whine about the 2/3 requirement in our state legislature to raise taxes, perversely saying that it's that very requirement that has put the state a couple dozen billion dollars in the hole. If only we could raise taxes some more!

In spite of having the highest taxes in the nation, the state is broke.


maxutils said...

One could just as easily say, "Despite the 2/3 majority requirement, Californians have the highest taxes in the nation."

mazenko said...

Of course, in many ways, they are right.

You can cut spending and you can cut taxes. Actually, California - and the US government - needs to do both.

However, on a purely ideological basis, a minority of California's legislators will hamstring the state government, and watch the state sink into massive debt rather than fund the necessary pay-down of the debt. Then, after it's paid down, allow voters to decided what they want to fund.

California's fiscal problems are political inertia, and that needs to change. But doing nothing in terms of tax increases sure hasn't helped ... and I don't see how you can continue to argue that it ever will.

Darren said...

Mazenko, you know not of what you speak, especially since the state sales tax was increased this year, and income tax "surcharges" are on the horizon.

But to me it's still absurd to say that more taxes will solve California's problems. Tell me that when you pay anywhere near the taxes I pay.

mazenko said...

Listen, Darren.

I'm not an advocate of big government or big budgets - I support fiscal responsibility. The Mazenko Economic Plan is "don't buy stuff you can't afford."

But low taxes will not solve the problem. They haven't in the past eight years, or the past thirty. Lowering taxes, and the outright refusal to raise them, has caused the budget problems. And, of course, of course, of course, spending.

But to fix the problems, taxes need to go up - at the statewide and national level. The low taxes schtick just hasn't worked.

I may not live in California, or pay those taxes, but I know basic budgeting.

Darren said...

We didn't have this kind of budget mess 40 years ago, when taxes were a small fraction of what they are now, and infrastructure spending (roads, canals, etc) was far higher than it is now in California.

California doesn't have an income problem. It has a spending problem.

mazenko said...

Yes, of course. But when will conservatives accept that they haven't, aren't, and won't fix their spending problem? Taxes have to go up and spending has to be restrained. It has to be both, not one or the other.

Additionally, it seems logical that if 2/3 is needed to raise taxes, it should also be needed to cut them, and to institute any new tax, and to pass any new spending. To simply put the cap on raising taxes is myopic. 40 years ago, taxes were much less. Of course. There also wasn't state and nationwide infrastructure, energy, telecommunications, and educational costs that exist now - and which the voters want. And these cost money. California is just clueless about what their lifestyle costs.

Then, of course, we can return to Prop 13. Regardless of the justifications, it is clearly at the foundation of the problem. In the past, people have argued that the elderly were being priced out of their homes - OK, so, here in Colorado we offer them a exemption/deduction. Problem, for the most part, solved.

However, it is the cap and the ratchet effect of TABOR that is causing our budget problems. Ultimately, Coloradans are going to repeal/restrain TABOR's tax cut/control obsession because they realize it won't fund the life they want - good roads, quality schools, parks and rec., and some practical social services.

Anonymous said...

I paid more than $80k in taxes last year.

To live in a wonderful country like the US, it is money well spent.

Darren said...

How much did you pay in California, and do you think Californians are getting good service for what they're paying?

Anonymous said...

I paid $35K in California taxes last year. My kids' school doesn't have a librarian, however, they were able to fund a two week dance academy.

Since I have to pay for most of their education, I don't need to give any more of my money to the government.

I see no reason to pay more until spending gets under control and some level of priotization and transparency is accomplished.

Without Prop 13 and the 2/3 requirement, we would be in much worse shape.

Of course, the legislature is usually more worried about whether someone spays their dog, than matters of real importance.

maxutils said...

It's important to know that both tax revenues AND tax rate have increased in California. The biggest problem that we have is that every time we have a positive anomaly, like the dot-com boom, we figure out ways to use every cent of the money, regardless of whether it needed to be spent or not, and assuming that revenues will always be that high.
Then, in off years, we cry poor, wonder where all the money went, and borrow. To raise taxes to cover these off years would be to do two really bad things: 1) exacerbate the problem the next time it happens, and 2) lead us away from the obvious solution, which would be to either save the windfall to pay for the lean times, or refund the windfall to spur investment back in to the economy.

Prop 13 gets a bad rap. When you buy into a purchase as large as a house, you have a right to know up front what your tax liability is. If that doesn't work as a basis for funding government, then eliminate the property tax altogether, and raise income taxes. That would be a more efficient and equitable solution in any event.

PeggyU said...

But when will conservatives accept that they haven't, aren't, and won't fix their spending problem?

I hope you are not speaking of Ahnold as a conservative. He isn't one now. Not sure if he ever was, actually.

Anonymous said...

I paid $35K to California (on top of my federal taxes). I don't think I'm getting what I paid for.

allen (in Michigan) said...

For someone whose not an advocate of big government and big budgets you do seem to be full of objections to the obvious solution to both - make 'em smaller.

Matter of fact, for someone whose not an advocate of big government and big budgets your solution to both seems to be to make them both bigger.

That would be the outcome of raising taxes since the money wouldn't go to pay down debt. There certainly hasn't been much effort made to use previous tax increases to pay down debt so it's a bit difficult to credit any predictions that future tax increases would fare any better.

But it is a neat tactic, frantically branding tax cuts as irresponsible. Kind of like claiming that if enough gasoline is poured on the fire it'll smother it.

It might even work for a while what with so many constituencies dependent on taxes along with the simple novelty and boldness of the idea that in order to reduce taxes they have to be raised.

Ultimately though it can't do anything other then fail since there isn't enough money in the world to satisfy the hunger for other people's money that tax consumers have.

Anonymous said...

"But low taxes will not solve the problem. They haven't in the past eight years, or the past thirty."

I think you may be mixing federal and state taxes. Or are you suggesting that California has had low tax rates (note: I'm using the word rates here and possibly moving the topic of discussion) for the last 8 years?

-Mark Roulo

mazenko said...

I'm simply arguing that many in the GOP - clearly not purely conservative as some have noted - have supported the party based on the "starve-the-beast" theory, and it just hasn't worked - even with control of both the executive and legislative branch.

I haven't advocated making the government bigger; I've advocated paying the bills the only way possible - increasing taxes and cutting spending. That is simply the most pragmatic way to address the issue. Others who say California, or the US, simply needs to cut spending have little knowledge or understanding of history.

Ellen K said...

California is a microcosm of what Team Obama intends for the nation. Between the fairly loose handling of social welfare issues and the rich compensation for unemployment in comparison to other states, California set itself up for failure. You cannot continually raise taxes and expect businesses to stay. Businesses exist to make a profit. That is how jobs are created. And yet this same philosophy, no doubt pushed by Pelosi and Boxer, is now a similar framework for the nation. The sad thing is, we have nowhere else to go. And yes, this does have a great deal to do with immigration issues. No immigrant, legal or otherwise, is going to become a citizen if that means paying more taxes. And right now, illegal immigrants get far more in terms of education, welfare, ADFC, and other federally mandated programs than they put into the system in the form of taxes. If this issue is not resolved by the time Obamacare hits the Congress, expect to be assessed more in taxes in order to pay for universal health care for illegals as well as citizens.

allen (in Michigan) said...

Politics is referred too as "the art of the possible". I you can hold down taxes and you can't hold down spending do you just throw up your hands and not do the former?

Refusing to fund the unrestrained and irresponsible spending of tax money will result in a crisis immediately but that crisis is nothing compared to the results of enabling the unrestrained and irresponsible spending of tax money.

As a practical political matter if there aren't real, and painful, cuts in spending that precede a tax increase it'll just go to fund the extant spending programs. That's the only means a tax increase is likely to be credited with being used to pay down debt.

maxutils said...

Mazenko, if you're saying that Republicans have never ACTUALLY starved the beast, and that we need a new party to do so, I'm with you. If you don't think the policy can work, I'm curious as to what you would do. At some point, the tax rate will be so high, and services to the un or underemployed so large, that people will stop having incentive to work. At that point, the beast we will be starving is the revenue stream.