The California economy remains on life support. The official unemployment rate, second lowest only to Nevada, is at 11.7 percent. But even this dismal number understates the problem for real people. The unemployment index is based on surveying selected households to determine the numbers of unemployed who have been looking for work in the last four weeks. Not counted are those who work part time but want to work more, or those who have given up trying to find a job. When these are included, the real unemployment rate (also known as the “U-6” rate) is closer to 20 percent.
Compounding the problem, of course, is the fact that the job creators, tired of high taxes and suffocating regulations, continue to flee the state. When was the last time we’ve heard of a major business relocating to California or even an existing business in the state planning a major expansion? (Solyndra and other rent-seeking corporations that rely on government subsidies don’t count as true private sector participants.)
Ignoring this grim reality, the majority of Sacramento politicians, backed by those who rely on government, elect to bayonet the wounded, prostrate body of our economy by pursuing new ways to raise taxes.
When it comes to taxes, California ranks first, second or third in almost every category. Even with Proposition 13, which the political class reviles, the state ranks 14th in its per capita property tax burden. But to those who run government, the paramount goal is for those on the inside to survive and prosper, no matter the collateral damage inflicted on the private sector.
Gov. Brown, Democrats in the Legislature and government employee union leaders are huddling together and drawing up plans for major tax increases that would appear on the November 2012 ballot, when they are expecting a good turnout of “low information voters,” those most easily swayed by simplistic arguments paid for by expensive political ads. They are examining every revenue raising possibility, searching for new taxes against which taxpayers will be able to put up the least resistance. Already being considered are new sales taxes and income taxes, but they know from polling that these are not likely to go over well with voters who must contend daily with the adverse impact of our weak economy. For those grasping for more taxpayer dollars, new taxes on millionaires has allure — the state already imposes a 1 percent surcharge on those making over $1 million — but the state’s most powerful public employee union, the California Teachers Association, has expressed concern that this will not raise enough money. It will not be surprising if the union comes up with a plan to classify average folks as rich so their taxes can be increased along with those of the wealthy.
Regardless of what form of new taxation is cooked up, it is clear the tax takers have no intention of giving the economy any breathing room. If they have their way, they will suffocate it with new taxes that steal much needed job-creating capital from the private marketplace.
Next year promises a political battle royal over tax issues. It won’t be pretty — maybe the Mayans knew something with their doomsday prediction for 2012. Any plan to transfer more money from the private sector into the hands of the state government bureaucracy is certain to be marketed with the same familiar arguments: rich people need to pay their fair share, the state’s budget deficit must be solved with an increase in taxes, critical programs will be cut beyond the bone without higher levies, and on and on.
Every effort will be made to portray those making a good living as “evil,” and undeserving of their incomes. But those to pay higher taxes could well include those making a little over $100,000, meaning those small business owners, who provide millions of jobs for those Californians still working. Nearly 80 percent of new jobs are created by small business. Raise their taxes and “help wanted” signs will disappear from shop and store windows throughout the state.
No matter how tempting it is to increase the tax burden on someone else, it is important not to lose track of the fact that higher state taxes will take precious dollars out of a wounded economy. Those dollars are the medicine businesses need to heal, and healing means hiring in a state where nothing is more important than getting people back to work.
California’s priority must be real jobs for real people, not the care and maintenance of well-fed Sacramento politicians and bureaucrats.
Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.