Friday, March 26, 2010

So Goes America...

In the late 20th century California turned from a paradise to a purgatory

Today California is a mess. How the "Golden State" devolved into a basket case of welfare and high taxes should serve as a lesson for all of us. This lesson if not heeded will result in a cascade of California's across the nation until America is just a temperate version of Mexico.

There are those who would site the enactment of Prop 13 in 1979 as the beginning of California's decline and they just might be right, but to make it the cornerstone of California's troubles may be taking it too far. Prop 13 was ratified by the good folks in California ostensibly to cap property taxes. It was a tax revolt that seemed quite justified at the time when long term residents were being forced out of their homes as rising property values raised their tax levy beyond their meager incomes. Since then the state's entire tax system has become a monster. Prop 13 and property tax issues are only a part of the ugly picture. Just like the Federal government it's spending that has gone out of control California.

As of 2001 California had the highest individual income tax rate of the 8 states with more than 10 million residents. It has the third highest corporate income tax rate and the highest sales tax rate. Only their property tax is ranked below average at 6th among the eight. Rates are one thing, but tax dollars are another. Since California homes are more expensive, when factoring their actual property tax we'd be likely to find it is actually at the top of the list. Also, none of this includes any side by side comparisons of so-called "fees" where California leads the nation.

How was this shining example of America's excellence allowed to self destruct? Who was minding the store?

Was it the state's easy plebiscite system known as initiative and referendum? Was it ever rising taxes? Was it strong public employees unions like those that have crippled many state and local governments? Was it a social justice based legislative, academic and elitist mentality the turned the "Land of Opportunity" into a European-style crippled social state simply limping along from one crisis to another? Yes!!!

Voters and citizens were so fed up a few years ago they (literally) threw out Governor Gray Davis and replaced him with a Hollywood actor who promised fiscal discipline and a return to the Golden Days. In that Arnold Schwarzenegger has failed - miserably so. He never imposed any of the measures that would have hurt for a while but would have began to set the ship of state upright. Instead he caucused with the liberals, the same liberals that would be called leftists in any other state. The voters' sour mood conjures complaints about the way state government operates. Understandably 71 percent of likely voters polled in 2007 believed the federal government wastes a lot of the money that's paid by state residents, while 55 percent are convinced that much of California's own tax money is being squandered. Nearly 2 in 3 Californians say state government is largely run by a few big interests. The biggest interest of all is the 800 pound gorilla no one wants to talk about... The unrelenting illegal immigration and the vast resources devoted by social justice advocates in Sacramento to feeding, teaching and treating non citizens. A remarkable eighty percent of Californians think that the state is on the wrong track.

The illegal immigration situation only compounds notion of the state's inability to govern itself. What ought to be done can never be done out of fear of reprisal at the polls. The state budget is clearly out of control. The deficit, now $26 billion, grows every day by nearly $25 million. Much of that money goes to aide for a growing Mexican underclass blanketing the low income sections of every major California city.

In reality California is bankrupt. Worse, its prospects are bleak for economic recovery and especially job recovery. Silicon Valley has moved away and other high-tech companies have essentially given up on California. California is often ranked at the bottom of all states in the polls as a place to do business. Put it this way and the reason becomes clear: 38 million people live in California yet a mere 144,000 pay one half of all income taxes. Yes, that's right, just 3 tenths of 1 percent of the population pays half the income tax recipients. These are the people that build the businesses and create the jobs. The so-called rich are fleeing California in droves.

The worst is yet to come. Up and down the coast are international shipping docks where billions of dollars of Chinese made goods come in and billions of dollars of raw materials go out. Currently the industry that controls these shipyards is under the thumb of the longshoremen and their powerful (expensive) unions. However, when the Panama Canal upgrade now under way under Chinese supervision is completed ocean going container ships will no longer be forced to stop in California. East coast cities and more likely Mexican port cities on the Gulf of Mexico side will service the huge population east of the Mississippi instead of having imported goods trucked all the way from California. This will mean even more job losses for California.

California will be left with a dichotomy of poor and failing urban centers and wealthy productive rural sectors. Eventually the tax burden will affect the food producers to the point of losing market-share to cheaper imported produce and meat. California will have nothing left but it's fine weather.

It's a sad story, but it's story that doesn't have to be repeated nation wide. Only strict immigration enforcement, sane tax laws and the support of free market policies can rescue California. Unless sanity prevails and the leftists that have been allowed to run the state house in Sacramento are shuffled out California is literally doomed. Worse yet is that the same sort of leftists are now in charge of Washington DC where they so conveniently rely on the major media to blame free market capitalism for their policy failures.

As California goes so goes America...



Anonymous said...

At least income tax taxes money you actually have. Property taxes ignore your ability to pay. The seem to attack property rights.