Tuesday, January 8, 2013

From The "Progressives Don't Learn
Anything From Experience" Dept:

California Jacks Up The Tax Rates
Again, Sees A $1 Billion
Decline In Revenues


Alternate Headline: Dems In CA Raised Tax Rates In 2011, Saw Their Revenues Plunge, So...Raised Taxes Again In 2012.  Unexpectedly....Revenues Plunged Yet Again. 

Now I blogged on this back in May of 2012 when Governor Moonbeam & the Dems in charge in Sacramento suddenly discovered their projections about their state deficit was off by over $7 billion.  They had jacked up their tax rates the previous year and expected a lot of new revenue out of it.  Fully expecting that new revenue to materialize, they went ahead and increased their spending in anticipation of it.  

So what was their solution to the huge drop  in revenue of $7 billion+ due to their latest tax increase?

YOU'LL NEVER GUESS: 

Progressives Shocked - SHOCKED!!!11! - To Discover Jacking Up Tax Rates....

So they went ahead and jacked up the tax rates......again. 

And now the results are starting to manifest themselves, surprising only...the people who run the state of California. 

CA Sees $1 Billion Drop In Tax Revenue Since Passage Of Prop 30


After Proposition 30 passed on November 6, 2012, the State of California experienced a decline in the total state revenue for the month of November. California State Controller John Chiang reported that the total revenue for the month of November declined by $806.8 million, which is 10.8 percent below budget. 
The State of California experienced a decline in its revenue as several of the high income earners have relocated to other states, and have also relocated their businesses out of state. This led to a decline in corporate and income taxrevenues by more than $1 billion. 
With the expected increase in revenue to be derived from the passing of Prop 30, state bureaucrats increased deficit spending beyond the state’s $6 billion annual tax increase. The Department of Developmental Services and the Department of Health Services increased its spending in November by over $1 billion in comparison to its spending last year. 
As a result of the decline in tax revenues collected, and the increase in spending, California’s deficit increased to $27 billion for the first five months of this fiscal year.
I suggest the Dems in CA go  ahead and jack up the tax rates AGAIN.  By golly, this thing HAS to work sooner or later, right? 

Most kids will learn not to put their hand on the hot stove after doing it once or twice.  What is Liberals in CA's excuse for not being able to figure out the Laffer Curve?  It boggles the mind. Just the previous year they had passed a tax increase, spent all the new projected revenue they figured they'd get, then found themselves staring at a $16 billion budget deficit.  So what did they do?  

THEY WENT OUT AND DID THE EXACT SAME THING ALL OVER AGAIN.  
Since January of 2012 Jerry Brown has grown CA's budget deficit from around 9 billion to an astounding $27 billion.  

And remember - this is just from the first couple of MONTHS of this fiscal year.   The full amount of lost revenue won't be known until later.  But thus far it's over $1 billion.  

In contrast to the absolute fiscal insanity of California, let's take a look at Texas: 

Texas Starts Budget Debate Flush With Cash

Two years ago Texas faced what many other states faced - a huge budget deficit due to a national recession.  But instead of following the blue-state prescription of simply jacking up the tax rates, increasing spending and then borrowing to make up the difference, which is exactly how CA ended up in it's present mess, Texas Gov. Rick Perry vowed to balance the budget without raising taxes or  borrowing money.  

That meant doing something that's nearly impossible in many states - cutting the spending.  Republicans in the state legislature cut spending to the bone for a 2 year period.  Even public education - which had only seen it's funding grow for 50+ years - was cut.  

Now the results of both approaches is evident. Texas might have a budget surplus of as high as $10 billion this year, while California staggers under a $27 billion deficit.  Making tough choices and doing some tough sledding for a year or two DOES pay off.  

Will CA learn from Texas' example?  Probably not.  But there's always hope.  

hat tip to @iowahawkblog's David Burge for the link, and some great Twitter snark: 

https://twitter.com/iowahawkblog/status/288674239500918784


Thanks to @rdbrewer4 for the sidebar posting at Ace of Spades, and welcome, Moron Horde! 

If your not reading Ace of Spades everyday, perhaps it's time to ask yourself: Why not?

http://ace.mu.nu/

UPDATE:  It was brought to my attention that Texas is booming DESPITE the fact drought is costing the state billions in lost agricultural revenue the past couple of years - over $7.5 billion in 2011 alone.  

Texas Agricultural Drought Losses In 2011 Top $7.62 Billion

So  yes, Texas is essentially doing this with one hand tied behind it's back.  

280 comments:

  1. There is NO Hope for Cali,its done,cooked,smoked over an open fire,dead as a sewer rat in a flood,ready for grilling over an open flame,pasted to the wall with super glue,boned,fubar.
    The only saving grace is; I DON'T LIVE THERE,YEEHAA!

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  2. The new numbers are out for December (just published today) and are available here:

    http://www.sco.ca.gov/Files-EO/01-13summary.pdf

    Income tax collections rose and for the year to date are about $650.4 million above expectation but corporate and sales taxes are way down. This is probably due to people pulling income from things like capital gains into 2012 to take advantage of better federal tax treatment.

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  3. Used to be politicians doing do the 'raise taxes and then spend all the new money' shuffle would WAIT UNTIL THEY ACTUALLY HAD THEIR HANDS ON THE NEW MONEY before raising their spending.

    This is twice in two years the CA gov't raised taxes, then PROJECTED what the new taxes were SUPPOSED to bring in, went ahead and increased their spending before the new revenue came in, and then found themselves staring at an overall revenue drop.

    Will they do this a THIRD time? It's very likely. Twice it was obvious that what they needed to do was implement SPENDING CUTS. And yet both times spending cuts were shunted off to the future.

    Demographically CA may not be able to survive. It's voter base is now so much comprised of people who will vote for politicians who won't display any sort of fiscal sensse, killmenow is probably correct - it's too late to right this ship.

    Unfortunately, CA's leaders aren't REALLY insane. Sure, they added to their state deficit by over 20 billion in the last 2 years, but they appear to be confident they'll get a federal bailout before falling over the cliff into the abyss.

    It is infuriating that states that won't practice fiscal sanity expect to be bailed out with tax $ from states that took care of their fiscal business. When/if a bailout happens for CA, that'll be your tax $ and mine going to prop them up for another few years.

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  4. Some people make a comparison: If the US is like the EU, then California is Greece to Texas's Germany. I'm curious to see how it all plays out. In particular, I'm wondering what kind of conservatorship California would be placed under in exchange for the bailout.

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