We are pleased to present this exclusive commentary from State Board of Equalization Member Bill Leonard…
Tax Increases are Doses for the Addict
By Bill Leonard
My heart goes out to the current Legislative Republican members as the cave-ins, compromises, squishes, and treasons of the past have all come home. California’s on-going structural financial problems have not been solved by postponing decisions and by papering over the excess in spending over revenue. This has been the solution that has been regularly adopted, usually by picking off a few Republicans with political promises. Even if it might work again, it will not solve the problem. The spending levels are not sustainable. They have to be reduced to a level that can be sustained.
It is worse today only because the problem is now built into state spending and so we are not talking about cutting back on something that was just increased last year but instead cutting back on something that was increased every year since 2001. This may be as serious a financial crisis as California faced in the Great Depression, when it seriously considered bankruptcy.
Any solution that actually results in a long term permanent spending cut is worth considering. We do not have to go back too many years to find a spending level that works. Once we find that year we then must go through each state and local program to adjust the spending level back to that year. No one wants to do it. It will cut into every state program. Nevertheless, it is necessary.
I think we have borrowed too much already. If it is borrowing to tide us over, it is irresponsible. But if it is borrowing in order to take the 12 months necessary to shut down programs or close facilities, then it can be justified. The borrowing implements the cuts instead of supporting spending increases. That is the big difference.
The problem with tax increases is that they are much worse than borrowing because they remove money from the bank accounts of families and businesses that need that money for their survival. The depressing effect of tax increases only adds to the depressing effect on the economy, and thus, depressed revenues. There is no tax that can be increased without suffering negative consequences. And since the problem is out-of-control spending, then tax increases are only like bigger drug doses to the addict. They only make the problem worse.
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