Brown’s Tax Canoe Headed For Water Fall

MARCH 23, 2012

By WAYNE LUSVARDI

California Gov. Jerry Brown likens himself to a canoeist who paddles a little to the Left then a little to the Right.  Lately, he has been paddling Left with labor unions to propose a new $9 billion tax increase that supposedly will plug an estimated $7 billion state budget deficit. Brown merged his tax proposal with one by the California Federation of Teachers.

But his proposal will get sucked over a giant waterfall to its doom if he ignores the consequences of the federal government’s extremely low interest rate policy on voters. There can be no real economic recovery without raising interest rates to savers and investors. And without an economic recovery, all tax increase proposals are doomed at the ballot box.

A mild increase in jobs will not be sufficient to pass a $9 billion tax hike. Voters won’t feel there is an economic recovery until interest rates rise at least two points over the current inflation rate of about 3 percent. That is, the rates must be at least 5 percent.

Presently, interest rates are below 1 percent for 82 percent of Treasury Bills.

Piddle Paddling at Tax Increases

Brown also still is working to keep off the November ballot a rival tax increase by Molly Munger, daughter of Pasadena billionaire Charles Munger. The “Munger Tax” initiative would increase taxes on everyone with an income of $14,632 per year or higher. It would apply to about 90 percent of all California households. Munger’s tax would mainly fund public schools and the remainder would go to childcare programs.

Both of these tax proposals are headed for a big fall at the ballot box because of the federal government’s deliberate policy of holding down interest rates.  Abnormally low interest rates for savers and investors are squelching an economic recovery.  This is likely to lead voters to vote “No” on any tax increases at the ballot box in November 2012.

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  1. queeg
    queeg 23 March, 2012, 09:48

    You people are hilarious….it is for the kids..parks…firefighters!!!

    Taxes will pass.

    Reply this comment
  2. cacheguy
    cacheguy 23 March, 2012, 11:02

    queeg, I don’t think so.

    Reply this comment
  3. Bob
    Bob 23 March, 2012, 12:54

    Both of these tax proposals are headed for a big fall at the ballot box…

    I hope you’re right but that could be wishful thinking. Brownie’s may still pass.

    And remember, if they fail you can be assured that these tax mungers…er…tax mongers will be back with ever more tax increases.

    Reply this comment
  4. mcdez
    mcdez 23 March, 2012, 15:40

    The PTA/Molly Munger initiative is by far the best one for education. $20 billion cut from schools over the last four years, money diverted, money deferred. Enough is enough. Who is going to sustain income taxes and help our state function if we have an uneducated and under educated work force? We will remain in our deficit hole as long as funding for education lags. CA has the largest student to teacher, student to administrator and student to counselor ratio in the COUNTRY. We would need to increase funding to each and every classroom in CA by $60,000 a year just to CATCH UP to the national AVERAGE.

    The “Our Children Our Future” initiative calls for a broad based income tax on all by the poorest. A median income of $55,000 would be taxed $250 — you probably spend that on cookie dough, wrapping paper, magazine subscriptions and whatever else the schools are asking their students to peddle these days just to provide the basics.

    Reply this comment
  5. Bob
    Bob 23 March, 2012, 18:19

    Yup mc, the answer is ALWAYS more money for the wretched government schools, never mind the bloated aministration and other insane costs

    Reply this comment
  6. queeg
    queeg 24 March, 2012, 07:45

    Your delusional….taxes will pass…

    They have to pass….jerry will cry!!!!!

    Reply this comment
  7. Chris
    Chris 24 March, 2012, 09:25

    “it is for the kids..parks…firefighters!!!”

    Queeg,

    You are TOTALLY forgetting who is at the head of the payout line! And that is the retired state workers and teachers. That is why the tax increase won’t pass. Entitlement payments are guaranteed first. They get any money first. That is why there are so many cities cutting services and going bankrupt. Nice pipe dream you have, but most people know the truth. New Taxes WON’T PASS until the entitlement problem is addressed.
    “Some 80% of these public employees are beneficiaries of defined-benefit plans under which monthly pension payments are guaranteed, no matter how stocks and other volatile assets backing the retirement plans perform. In contrast, most of the taxpayers footing the bill for these public-employee benefits (participants’ contributions to these plans are typically modest) have been pushed by their employers into far less munificent defined-contribution plans and suffered the additional indignity of seeing their 401(k) accounts shrivel in the recent bear market in stocks.” Baron’s Qoute

    Reply this comment
  8. queeg
    queeg 24 March, 2012, 21:34

    Your giving the voters who hire jerry diane and babs and vote for free train rides to hell and do not pay taxes slack????

    They will raise your taxes like they raised the minimum wage a few years ago.

    Reply this comment
  9. nraendowment
    nraendowment 25 March, 2012, 03:36

    Don’t feed the monster. Any increase in taxes will simply be squandered by our Socialist government which must be forced to make cuts instead. Let’s start with cutting taxpayer financed freebies to illegal aliens, non-citizens soaking us for 12 billion or so every year.
    Until there is adult supervision over spending I won’t give this state one dime if I can avoid it.

    Reply this comment
  10. Rex The Wonder Dog!
    Rex The Wonder Dog! 25 March, 2012, 16:22

    There is NO chance of any tax increase passing, none whatsoever.

    Take that to the bank

    Reply this comment
  11. beelzebub
    beelzebub 25 March, 2012, 19:49

    ZIRP (Zero Interest Rate Policy) is the same as an added tax or plain old theft from the ordinary American who tries to save some of his earnings and provide a nestegg in his sunset years. ZIRP was created to benefit the TBTF banks and large corporations who get 0% interest loans from the government and buy back T-Bills and make an easy 2% in profit for doing nothing.

    Laws and government fiscal policies are not meant to help the little guy. They’re meant to help the oligarchs.

    The entire economy is a sham. The only reason we have a positive GDP is due to borrowing and bailouts. Inflation is MUCH higher than the government reports. The little people are getting screwed left and right.

    Reply this comment
  12. mcdez
    mcdez 30 March, 2012, 11:33

    The Molly Munger initiative, “Our Children, Our Future” has specific language written into it clearly stating that the funds cannot be used to raise current teacher salaries or benefits. It also puts a 1% cap on administrative costs. It also makes it a felony to misuse or misdirect the funds. See for yourself: http://www.ourchildrenourfuture2012.com

    Reply this comment

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