California operates in a Tower of Babel when it comes to discussing the state budget. When one side does not understand the words and phrases of the other the budget mess is impossible to solve.

Yesterday, the Democrats conference committee released a budget plan that proposes tax increases of $8.2 billion. In the press release issued with details of the plan the Democrats claimed:

The Conference Committee budget is a balanced approach. It closes tax loopholes and rolls back tax breaks for corporations and the wealthy.

Balanced? There is nothing about spending cuts in that paragraph, only raising taxes.

The press release talks over and over about education cuts. The governor’s budget proposes an increase for education spending over last year. It may not be as much as the schools hoped for but an increase in spending does not constitute a “cut.”

Further more, there is a clear disconnect in understanding the effects of tax increases on the budget. The Democrats trumpet their proposal of creating two new tax brackets for upper income taxpayers by pointing out that governor Wilson raised taxes to those levels during a budget crisis in the early 1990s.

Nowhere is it mentioned that the upper income tax increase did not bring in the revenue expected. It stymied growth and killed incentive and income tax revenue was flat after the tax increase was implemented. Wilson later called the tax increase a mistake.

It is generally acknowledged that one reason for California’s up and down revenue rollercoaster is because of the tax system’s heavy reliance on upper income taxpayers. This proposal will only exacerbate the problem.

Especially, if a new tax increase encourages high-end taxpayers to get out of Dodge. Californians are leaving the state. Check out Joe Mathews’ piece here on Fox and Hounds.

Increasing the corporate tax rate is another proposal that will end up as being counter-productive to the goal of raising revenue. The press release naively argues that the corporate tax increase will only hit large corporations and manufacturers. There will be a ripple effect. Large businesses contract with small businesses and if a tax increase cuts into the bottom line of those big businesses you can bet small businesses will feel the effect.

I seem to remember California was a leading manufacturing state at one time. No longer, and adding to the tax burden will chase other manufacturers away.

Here’s another curious note in the Democrats press release referring to public sector jobs.

The Governor’s plan would eliminate thousands of jobs at the worst possible time, when the economy is struggling.

Certainly, some public sector jobs are in jeopardy, although nowhere near the number projected when teachers recently received the warning pink slips for example.

However, tax increases will also lead to private sector job loses in this struggling economy. Taxes can’t be increased on businesses without some adjustment being made and jobs will be on the line. That is not acknowledged in the Democrats release.

Without Legislators speaking the same language, it seems this budget crisis is a long way from being solved.