Do you believe what politicians tell you? For most Americans, it’s unlikely they would say yes – and that has been true for a long time. After all, according to Mark Twain, “Looking for an honest politician is like looking for an ethical burglar.” Recently, however, the California Democrats honestly made it very clearly to every Californian what they want to do: raise their taxes.
The Sacramento Bee headline nearly said it all: “California Democrats debate how to raise taxes at statewide convention.” How very up front of the Democrats. Inside the story, you find out that from their leaders to their protestors, taking from some to give to others was a rather pervasive theme among them.
Indeed, that scion of economic theory, Van Jones let it be known that “a tax on top earners would motivate young voters facing large student loan debt and dismal job prospects in a down economy.” More than that, he thinks such income redistribution politics should be used “to electrify that generation.”
All of that may come as a surprise to Ronald Reagan who warned that Democrats campaign to the center but will govern to the left. So we should give the Democrats credit for their honesty. It was also honest of them that there was no meaningful discussion, at their convention, of government reform or finding ways to save Californians money through government realignment.
The problem for Democrats, of course, is that Californians have turned down the last 8 statewide tax/fee increases. They will likely turn down each of the 3 competing tax increases headed for the Fall ballot as well. Losing $2 trillion homeowner equity over the last 5 years and having 8 of the 10 worst foreclosure areas in the country along with 25% of the Nation’s foreclosures – not to mention we are already have 6th highest income taxes and 3rd highest corporate taxes. Amidst all of that, voters are hardly sympathetic to bailing out Sacramento.
That will be a political problem the Democrats this Fall.
The economic problem for us all is that that there are a million less people working today, in California, than a decade ago and what of the fate of those paying taxes? Their lot is in the decline as well. According to the SacBee again, “the number of Californians with $500,000-plus annual incomes declined dramatically from 2007 to 2009 as the state’s economy stagnated, leaving fewer to tax.” Overall, the number has dropped from 146,221 in 2007 to 98,610 in 2009 – the latest year from which such statistics are available.
You see, it’s a basic rule of economics that the more something costs the less of it you get. That’s why Honda outsells Bentley. It’s also why John Maynard Keynes wrote that: “High taxes defeat their own object,” and advocated tax reductions in order to balance budgets as opposed to tax increases.
Honestly though, that’s economics… not politics.