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Like Magic, Dem Gov. Jerry Brown Fixes California Budget with Tax Hike
Democratic Governor Jerry Brown fixed California’s deficit via Prop 30, also known as raising taxes even if only temporarily. California no longer has a deficit.
Governor Brown said voters made the budget possible by passing Proposition 30, “California today is poised to achieve something that has eluded us for more than a decade – a budget that lives within its means, now and for many years to come.”
This shoots a hole in conservative talking points that we can’t tax our way out of a deficit, therefore we shouldn’t raise taxes at all. In fact, Brown already made budget cuts in prior years, but it wasn’t enough to avoid a deficit. He needed to temporarily raise taxes in order to avoid a deficit.
The Governor’s office pointed out that the budget still manages to make an investment in education and healthcare reform, “Governor Edmund G. Brown Jr. today proposed a balanced state budget that boosts investment in education, implements health care reform and keeps California on a long-term path to fiscal stability. This budget builds on the work of the last two years to eliminate the ongoing deficit.”
Prop 30 is a temporary tax approved by voters. It increased personal income tax on annual earnings more than $250,000 for seven years and increased sales tax and use tax by .25 cent for four years to fund schools and public safety.
The question at this point is why does it take a Democrat to get a fiscal house in order? Clinton did it, Obama’s doing it, Brown is doing it – meanwhile, Governor Jindal (R-LA) is pushing to get rid of all income and corporate taxes. He wants to rely on raising the sales tax to cover the losses. Libertarians often push for this solution, referred to as a flat tax, because on the surface it appears fair.
In reality, the regressive flat tax hits poor people the hardest. Examples of this were the CBO’s scoring of Herman Cain’s 9-9-9 program (different than Jindal’s proposal but based on the same idea), which it determined according to Robert Reichwould “lower the after-tax incomes of poor households (incomes below $30,000) by 16 to 20 percent, while increasing the incomes of wealthier households (incomes above $200,000) by 5 to 22 percent, on average.”
Furthermore, under Jindal’s free gift to corporations masquerading as a “fair” solution, corporations will just buy less from in state suppliers in order to avoid paying any taxes at all, thus hurting Louisiana businesses. The tax burden will shift to those who make daily, life-sustaining purchases. The rich will go out of state to buy their big ticket items. Most importantly, rich people’s consumption is a much smaller amount of their income than it is for poor people. You can see how a flat tax disproportionately hurts the poor.
This is not to suggest that all are happy with Governor Brown’s budget, which did not address budget cuts made years ago into state programs. In fact, the budget would not be deficit free without those cuts and the taxes. It’s called balanced fiscal prudence.
Republicans say people vote for Democrats because they want free stuff, and yet it is Republicans who refuse to do the hard work of governing, such as telling obvious sources of revenue and users of government services like corporations that they must pay into the system they use. Yes, that would be hard work for Republicans; also known as biting the hand that feeds them. We will never get those corporations to take responsibility for their use of American taxpayer funded infrastructure. They’re always looking for handouts — subsidies, ways to avoid paying their bills (aka; taxes), etc.
We probably could tax our way out of a deficit along with real balanced cuts (not to earned benefits, of course, but to oil subsidies and other government hogs), if only we closed the loopholes and deductions that allow corporations to get away with paying nothing. What Republicans probably mean when they make the claim that we can’t tax our way out of a deficit and therefore shouldn’t bother taxing their precious corporations is they don’t want to imagine a world in which we tax our way out of a deficit. They’d rather keep going on borrowing and spending while claiming, “Deficits don’t matter” until they’re voted out of power.
Where’s the praise for the California voters (aka; “liberal nuts”) who stepped up to the plate to help fund their state via taxes?