Cancel the kitchen scraps for Republicans

by Katy Grimes | November 14, 2012 2:00 am

Nov. 14, 2012

By Katy Grimes

It appears that the majority of California voters are getting even. But this begs the question: With whom?

[1]

The 2012 election was disastrous for Californians who support a free market, private-property rights, limited government and individual liberties. Labor unions won nearly everything they wanted. Now it appears that the “fix” is in on California, and the thugs and zombies are in charge.

“How many tax increases will ‘fix’ California?”, I asked[2] in my column last week, just in time for the general election. Californians were faced with 240 state and local ballot measures to increase taxes, “fees” and school bond measures. Most of them passed, including Gov. Jerry Brown’s Proposition 30[3], which included a hefty sales tax increase on everyone in the state, and a retroactive income tax increase on those earning more than $250,000 annually. Proposition 39[4] also passed. It’s a $1 billion tax increase on out-of-state businesses.

As Robin Hood’s Sheriff of Nottingham said, “That’s it then. Cancel the kitchen scraps for lepers and orphans, no more merciful beheadings, and call off Christmas.”

Taxes, fees, taxes and more taxes

Californians, gird your loins in anticipation of the tax onslaught.

Because most California politicians are in denial about the upcoming inevitable insolvency of the state, they continue to put forth policies as though it’s the 1980s all over again, when growth seemed infinite.

Passage of the tax increases in Props. 30 and 39 will only expedite the state’s chronic budget deficits and inevitable ruin. Small and large businesses will flee the state, shrink or close. Food production and manufacturing, already shrinking, will fight to survive. The wealthy can live anywhere, and more will choose to establish residency in lower tax states.

California’s real deficit

California’s sham “balanced” 2012-13 budget[5] already was upside-down within weeks of passage. The state had to borrow billions of dollars almost immediately, adding to the skyrocketing debt — a debt that is always understated.

Last May, I wrote about the state’s real budget deficit[6] totals, noting how state Controller John Chiang parsed words by only detailing the status of the general fund.

“The state ended last fiscal year with a cash deficit of $8.2 billion,” the controller reported. “The combined current-year cash deficit stands at $21.5 billion.  Those deficits are being covered with $15.1 billion of internal borrowing (temporary loans from special funds) and $6.4 billion of external borrowing.”

But the controller neglected to say that California owes the federal government nearly $10 billion[7], money that was borrowed to keep joblessness benefits coming to the state’s legions of unemployed; and that it owes $313 million to the state disability insurance trust fund after taking the money to pay for the debt service on the federal loans.  Chiang also neglected to include the billions in health care obligations, or the public pension obligations of CalSTRS and CalPERS, the state’s teacher pension and state worker employee pension systems. The pension funds are covered by internal borrowing from special state funds, and more than $6 billion in “external borrowing,” money the state has to pay hefty interest on.

Bottom line: California’s deficit is really more than $35 billion, and that number does not include the more than $500 billion in unfunded pension liabilities.

[8]

So Brown’s Prop. 30 tax increase, which is estimated to only raise $6 billion, will not go to schools as advertised, but will instead be fed right into the current deficit trough.

What’s ahead?

A series of federal tax breaks are about to expire at the end of December.

The Bush tax cuts[9], payroll tax cuts and child tax breaks will end. Unless the tax cuts are extended by Congress, 2013 will usher in higher estate taxes, income taxes and capital gains taxes. And the alternative minimum tax which will slam 26 million households with an average tax increase of $3,700, according to the Chicago Sun-Times.

The Bush tax cuts slashed the top income tax rate of 39.6 to 35 percent, and the bottom rate of 15 percent to 10 percent. Estate taxes currently allow a couple to give a gift or leave an estate worth up $10 million tax free. That $10 million limit will drop to $2 million. It is estimated that nearly 10 times more estates will be hurt by this insidious tax.

The other insidious tax is the payroll tax; 120 million households are estimated to be facing a 2 percentage point increase in the payroll tax, according to the Congressional Joint Committee on Taxation[10].

The “fix” is in[11]

Californians are not only facing a Democratic supermajority in the Legislature, we are staring down the barrel of new state and local taxes, expiring federal tax cuts, upcoming cap and trade taxes on carbon emissions, higher fuel costs, energy rate increases, higher university tuition costs, the worst Standard & Poors credit rating of any state in the nation, an oil-severance tax, continuing double-digit unemployment, adding a sales tax to services, more state and federal regulations, attempts to weaken the state’s ballot initiative process and changes to the state Constitution[12].

Democrats even plan to make it easier for cities to increase taxes.

As I write, I am in Florida[13], a state with zero state income tax and more realistic property taxes. Florida is filled with former Californians who fled the high-tax state for sunshine and reality. I am not advocating a repeal of Proposition 13[14], California’s 1978 initiative limiting property taxes, because it is the only tax relief that some California residents get.

With all of this bad news, there is good news for some: Union members will enjoy pay and pension boosts paid for by the rest of us.

Cancel the kitchen scraps for everyone else.

Source URL: https://calwatchdog.com/2012/11/14/cancel-the-kitchen-scraps-for-republicans/

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