In 2009, politicians in Sacramento enacted the largest tax increase in the state’s history, a $12.8 billion infusion of cash that was supposed to end the state’s fiscal woes. Three years later, the state finds itself nearly $16 billion in the red and now the same politicians want another $50 billion in higher taxes to bail them out. As we have seen, no matter how much they raise our taxes, it is never enough for the free-spending politicians in Sacramento.
The problem with sending more money to Sacramento is that it gives politicians the easy way out. They’re not forced to reform the dysfunctional system as long as taxpayers continue let them off the hook with higher taxes to paper over the problems.
California already has the highest average state tax rate in the nation, and this measure would increase it 3% to 8.4%. Income taxes would jump as much as 32%. These higher income taxes would stay in place for seven years, regardless of whether or not the state’s economy improves, giving politicians a slush fund to continue their reckless spending.
The measure hurts small businesses, the engine that drives our economy and creates jobs, particularly hard. The measure doesn’t go after huge multi-national corporations but instead punishes small Mom-and-Pop businesses that will have to resort to cutting jobs, moving out of state, or simply going out of business.
Proponents of the measure say the money goes to schools. But hidden in the measure is language that allows the politicians to play a shell game with creative math. They move money around so it appears that schools get new money, but not a dime of new revenue is dedicated to schools.
In fact, a recent study by Pepperdine University’s Davenport Institute found that up to 50% of the money the state spends on education never actually gets to the classroom.
According to a recent editorial in the Wall Street Journal, “schools will have to use the money to cover their pension bills, or alternatively, to pay teachers more to offset the higher contributions that teachers may be asked to make to their retirements…At any rate, the tax hike won’t improve schools or even education-related services as Democrats suggest. It will merely postpone critical pension reforms that might otherwise take place.”
Completely missing from the discussion is any talk of reforms. We have $500 billion in pension debt that grows every day our elected officials ignore it. We have a hostile business climate forcing businesses to flee the state. And the bloated state bureaucracy is riddled with wasteful spending and programs.
Passing this massive tax hike will just encourage our elected leaders to continue to ignore reforms and reward their bad behavior.
They continue to award staff raises and pass sham budgets to protect their paychecks. They cut spending for universities while allowing college administrators to increase their pay. The state spends more than twice as much on the pay and benefits of prison employees than on the entire UC system. With spending priorities like this, the state doesn’t need more money.
The politicians in Sacramento are asking us for more money but refuse to fix the dysfunctional system largely responsible for our fiscal mess. Pouring another $50 billion into our broken government to protect the status quo simply rewards the bad behavior of our elected officials without forcing them to make the tough economic decisions that every California family must make.