While I know it isn’t pretty, people should take a long, hard look at California and begin wondering what our future holds. Let me summarize a few data points:
- The Proposition 30 tax hike (to the tune of $6B) passed with significant margins.
- The Democrats have supermajorities in both chambers of the California legislature which will allow the Governor and Democrat-led legislature to pass whatever measures they want. The future of the state is solidly in the Democrats’ hands.
- The state’s debt is huge – a $2 Billion deficit and a debt of over $10,000 for every citizen; Each dollar borrowed will cost the state $2; and fiscal year 2012 includes $7.5 Billion to just service its debt.
- Before Prop 30, California had the most progressive state income tax system in the nation (7 brackets) and the 2nd highest top marginal rate. Now it will have the highest top marginal rate and the nation’s highest sales tax. Both still don’t balance the budget.
- 23.5% of the state are in poverty and one-third of all the national welfare recipients live in the state (California only has 1/8th of the nation’s population).
- California 8th graders finished 48th out of 51 (DC included in the list) in reading and math test scores.
- The state has a 10.2% unemployment rate.
- Since 2000, over 2 million residents left California with the low-tax state of Texas being their most popular destination.
So what has higher taxes done for the state? I think the list above shows that it hasn’t done much and hasn’t set it on a course to improve. The reason for the state’s woes is easy for many conservatives to see: spending. Consider for a minute over the last 15 years, California’s population has grown by 15% but their state government spending has increased by 103%.
Let’s compare the points above to the nation:
- President Obama and the Congressional Democrats are poised to raise taxes.
- The Democrats had majorities in both chambers until the GOP took the House in 2010. While the GOP retains the House, the national meme is forming that the GOP is going to “obstruct” any progress that the Democrats want to pursue.
- The nation’s debt is huge – a $1.089T deficit in FY12 and a debt of over $53,378 for every citizen.
- The U.S. has the most progress tax system and efforts are being made to shift that progressivity towards the higher earners.
- The national poverty rate has risen over the last few years, hitting multi-decade highs.
- American students ranked 25th in math, 17th in science and 14th in reading.
- The nation has (roughly) a 8% unemployment rate – which misrepresents the real unemployment rate that is closer to 15%.
- Many states with higher income and other tax burdens have been relocating to more tax-friendly states.
Keep a weather eye on that state in the west – it is a bell weather for the possible course of our nation if we continue following these sorts of policies.