A Perpetual Feast--Eating The Rich

Californians continue on the blind path to fiscal ruin. The Republican minority in the state legislature has worked with the once and present Democratic Governor Jerry Brown on cutting costs. But those cuts so far have been a band-aid on an economic cancer. Having gotten these cuts, Brown then told the Republicans that it's only fair to permanize tax increases passed on a temporary basis to make up part of the previous budget shortfall. The Republicans demurred.

And for that reason, California still doesn't have a current budget. I give credit to the Republicans for not being fooled by the minuscule cuts or panicking at the thought that the government of California might come to a halt with no budget and therefore no money to spend. One of the things Brown was trying to do was to get the Republicans to agree to placing a tax-rate extension on the ballot via a referendum. Brown didn't want to take the hit for continuing an emergency temporary tax increase, so he wanted it placed on the ballot at a special election. The Republicans have stood firm for weeks, refusing to go along with that surrender of responsibility.

So, Brown has decided to go to his Democratic base to raise enough signatures to make the tax extension a fall ballot initiative. California is drowning in red ink, but instead of making the draconian cuts necessary, especially public employee pay rates and retirement benefits (now nearly 60% of the unfunded debt, and getting worse), Brown wants to extend a tax that has already driven hundreds of businesses and thousands of individual taxpayers out of California. Like Democrats nationally, California Democrats believe in taxing our way to prosperity. Funny how that never seems to work out.

But wait, there's more. Not only do Brown and the Democrats want to extend current heightened tax rates, but they also are broaching the idea of raising the income tax rate on the highest earners. Like we've never heard that plan before. Raising the top rate (earning more than $500,000 per year) is estimated to raise $2.5 billion per year. California's 2010 budget deficit is $26.6 billion. So in about 11 years, the increase would pay off one year's deficit. Swell program, huh? My sister would have referred to that as a piss in the Pacific Ocean.

The budget deficit reduction estimate is of course already out of date. It assumes the same number of top earners as there were at the end of fiscal 2009. The Democrats have apparently forgotten to check with the border guards who are having trouble counting the number of people fleeing into Arizona to escape California's taxes. It also assumes that small to moderate size businesses which are not corporations will remain in California. The scheme doesn't make exceptions for "wage earners" who are actually small and medium-size business owners being taxed as if their business income is their personal income. Details, details.

But here's the really sad part. It isn't only Democrats and other assorted leftists who think this way. A recent poll shows that 78% of Californians like the idea of eating the rich. 89% of Democrats support such a plan (natch). But so do 79% of independents and an appalling 60% of Republicans. Now the poll was commissioned by the California Federation of Teachers, and conducted by Democratic pollster Ben Tulchin, so it's likely to be about as accurate as the Gallup Poll which skews left and Democratic. But even that built-in error factor is not enough to overcome the fact that a hefty majority of Californians actually thinks that in a time of downsizing, unemployment, uncertainty and a possible double-dip recession, taxing the "rich" into leaving California entirely is a dandy idea.

Taking their cue from Brown, the Teachers Union wants to place the 1% "shame on you for earning more money than I do " tax increase on the November ballot. There's method to their madness. For one thing, members of the union alone would bring sufficient signatures to place the measure on the ballot. It would act as a sweetener for Brown's extension proposal on the same ballot. The more tax increase measures on the ballot bolstered by phony predictions of revenue from those taxes, the more likely the voters are to think that a whole bunch of tax increases could balance California's budget. The Laffer Curve was banished from the public forum in California decades ago.

To "prove" their point that increasing taxes doesn't cause individuals and businesses to leave the state, the Teachers Union cited a study by the nonpartisan Public Policy Institute of California. The study showed that a mere 1.7% of California job losses were the result of business establishments leaving the state. One small problem. That study covered 1992 through 2006. In other words, businesses weren't leaving in droves--yet. Since the end date of that study, California has raised income taxes twice, corporate taxes three times, sales taxes once, and the massive market crash and recession weren't even yet on the horizon.

In 2010 alone, nearly 125 California businesses with revenue exceeding $25 million each and an estimated total work force of 6,000 left for greener pastures across the state line or simply closed their doors permanently. Mega-corporations in Silicon Valley are giving serious consideration to moving out of state, taking their many "rich" employees with them. That stands the earlier study on its head.

All this proves that eating the rich (if you can catch them before they're over the state border) is not limited to Democrats and their socialist base. "They can afford it" sounds nice, but why should they? And what makes those Republicans and independents think that they will stick around to be eaten? Envy is a sin. Theft is a crime (unless you're the government). Eating the rich is not only a truly dumb idea, but if you think about it, eating your fellow human beings is cannibalism. However, in California, cannibalism is considered nothing more than an alternate lifestyle.