Have Californians finally had enough?

[K-Mac]

California voters defeated all five tax raising ballot propositions yesterday, with four out of the five tax hikes failing by 2-to-1 margins.

[khaight]

California voters defeated all five tax raising ballot propositions yesterday, with four out of the five tax hikes failing by 2-to-1 margins.

I'm Californian, and the results exactly match how I voted. Sadly, I think a lot of this is simple populist outrage at the political class. California is politically schizoid in the same way as the nation at large, but at a more advanced stage -- the voters want the state government to provide lots of free stuff, but don't want to pay the high taxes required to fund it because then the stuff wouldn't be 'free'. This causes persistent deficits and budget crises, which are becoming more severe and more frequent. The reality that one cannot consume more than one produces over the long run is sinking its teeth in. This will eventually force a choice -- either spending goes down a lot or taxes go up a lot. Back in 2005 the governor pushed a slate of reform initiatives that would have been the first steps down the 'spending cuts' branch of the road. They all failed. This set of initiatives would have been the first steps down the 'higher taxes' branch of the road. They all failed too. The public doesn't want to make either choice. The want the political class to make the impossible work 'somehow'. In a way, it's kind of amusing. The public is pulling a "you'll do something, Mr. Rearden" on the *politicians*.

[Thales]

I'm Californian, and the results exactly match how I voted. Sadly, I think a lot of this is simple populist outrage at the political class. California is politically schizoid in the same way as the nation at large, but at a more advanced stage -- the voters want the state government to provide lots of free stuff, but don't want to pay the high taxes required to fund it because then the stuff wouldn't be 'free'. This causes persistent deficits and budget crises, which are becoming more severe and more frequent. The reality that one cannot consume more than one produces over the long run is sinking its teeth in. This will eventually force a choice -- either spending goes down a lot or taxes go up a lot. Back in 2005 the governor pushed a slate of reform initiatives that would have been the first steps down the 'spending cuts' branch of the road. They all failed. This set of initiatives would have been the first steps down the 'higher taxes' branch of the road. They all failed too. The public doesn't want to make either choice. The want the political class to make the impossible work 'somehow'. In a way, it's kind of amusing. The public is pulling a "you'll do something, Mr. Rearden" on the *politicians*.

Thanks for the description, Kyle. There is just a lot of non-thinking going on in California and the country generally. I see many examples of it on the web.

I've got to tell you, though, when taxes are raised things get worse, not better. Raising taxes only works to a certain point when you're trying to pay for things. Raising taxes lowers incentive to be productive and there is a point of no return. So, people say "You've got to be willing to pay more taxes", when the fact is statism just doesn't work, iows, it's not true.

[khaight]

I've got to tell you, though, when taxes are raised things get worse, not better. Raising taxes only works to a certain point when you're trying to pay for things. Raising taxes lowers incentive to be productive and there is a point of no return. So, people say "You've got to be willing to pay more taxes", when the fact is statism just doesn't work, iows, it's not true.

You don't have to tell me -- I've been an Objectivist for over 20 years. You can already see the signs of the economic destructiveness of increased tax rates in some other states. I saw an article a few days ago about Maryland, which recently jacked up its top tax rate to try to address its own revenue shortfall. They estimated the new tax rate would bring in an additional $330 million; instead tax receipts are down around $100 million. Even leaving aside the fundamental immorality of taxation per se, higher tax rates do not equal higher revenues.

[K-Mac]

I just made a post related to the economic destructiveness of taxes... http://forum.ObjectivismOnline.com/index.p...c=16438&hl=

[MichaelH]

It's going to be fun/scary watching how this pans out.

Witness the reaction to this article suggesting CA is going to go bankrupt:

http://meganmcardle.theatlantic.com/archiv...big_to_fail.php

The comments show everything as viewed through special interest group politics. Why is California having budget problems? It's old people. It's young people. It's immigrants. It's other states sucking up our federal tax money. The question seems to not be how do we solve the problem, but rather, what group receiving government funds do we blame?

[Markoso]

I'm actually a new resident of California (as well as a newly minted Objectivist), and I'm in agreement with Khaight on this one. Though I really can't help but wonder if the woes that are plaguing California are going to act as precursors for the national stage (assuming foreign investors ever get too skittish).

[khaight]

I'm actually a new resident of California (as well as a newly minted Objectivist), and I'm in agreement with Khaight on this one. Though I really can't help but wonder if the woes that are plaguing California are going to act as precursors for the national stage (assuming foreign investors ever get too skittish).

The federal government has an option available that state governments do not. State governments have two sources from which they can finance their activities: taxes and borrowing. The federal government has three: taxes, borrowing and printing more money. I expect that when the structural problems currently expressing themselves in California become apparent at the federal level the response will be to paper them over with new currency. Arguably this is already happening. This is why I anticipate inflation in the medium to long term. (In the short term, the government has screwed up the banks and credit markets so badly that a reduction in lending and money velocity has so far largely compensated for all the extra money they've created. But that can't last forever.)

[Thomas M. Miovas Jr.]

Some members of the California government, including The Governator, have come to a proper conclusion regarding this budget crises: Drastically cut spending. If this pulls through, it might start a wave of other such moves on the part of state government that might lead to a similar thing happening on the Federal level.

And this only goes to show that if the people speak out in a strong manner, then a turn-around can be made, since California is seriously thinking about cutting many welfare programs they can no longer fund.

[Myself]

I predict a bailout from Washington. Obama will point his finger and watch an entire state green with the munificence of his increasingly worthless dollars. He'll sort of be like that other Messiah, Paul Atreides, making it rain on Arrakis (in that crappy Lynch Movie). Oh well -- things turned out alright for Paul though, didn't it?