Thursday, February 19, 2009

The Man Who Just Killed California

See the man on the right in the photo below? That's California State Senator Abel Maldonado, a Republican from Santa Maria. He just provided the final vote needed in Sacramento to pass the budget package that will increase taxes in California by more than $12 billion.

He's probably smiling because he got open primaries in return for his vote. Except he didn't. Because open primaries still have to be approved as a constitutional amendment by the voters. So in exchange for killing the already faltering economy of California -- not to mention his own political career -- he got a ballot initiative, and nothing more. (Maybe he can be a consultant for his next career, and advise people on how to negotiate the best deal.)

My current political depression has had two sides. The first has been Washington, DC. The second has been Sacramento.

You have to wonder what they were thinking. California already has the sixth highest state/local tax burden in our nation. Our unemployment rate is above 9%. More people are leaving California each year than are moving to the state. In fact, more people left California last year than left any other state. And in this situation, Governor Schwarzenneger, the state legislature, and Abel Maldonado feel the intelligent thing to do is raise taxes.

And just which taxes are they raising?

Vehicle license fee nearly doubles to 1.15%.
That's a percentage of the value of the car, by the way. And if anyone ever needed proof that Arnold Schwarzenegger has failed not just as a reformer but even just as a caretaker governor, this is it. Because one of the issues that gave him the governor's office in the first place was the increase in the car tax that his predecessor, Gray Davis, had put in place.
Sales tax rises 1 cent.
We already have a base sales tax of 7.25%. With the additional local and supplementary additions that vary throughout the state, it can already reach 9.25% in some areas.
Gasoline tax rises 12 cents a gallon.
The gasoline tax in California is already 45.5 cents per gallon -- the highest in the nation.
Surcharge on income taxes of 2.5% to 5%.
Again, we already have one of the highest and most progressively structured state income taxes in the country, but this surcharge is on everyone. Not just the billionaires. Not just the millionaires. Not just the "wealthy." Everyone. So whatever your state income tax bill, just add another 2.5% to 5.0% onto it.
Dependent care tax credit reduces by $200.

This is the most amazing thing to me -- and the one that infuriates me most. It's also the most politically stupid tax increase imaginable. Because this is not a deduction against income. This is a credit against your actual taxes owed. So everyone who has a child in California now owes an additional $200 per child. Not just the billionaires. Not just the millionaires. Not just the "wealthy." Everyone.

And don't forget the 2.5% to 5.0% surcharge on top of that extra $200 per child.

Thanks, Abel.

Really, thank you. Because not only does this wipe out any tax relief from the federal stimulus package, it leaves us in even worse shape now in terms of taxes overall. And that means less money to spend, less money to save, less money to pay off debt, and less money to invest. Which means more and more of our best and our brightest fleeing for other states, eroding the California tax base still further, which in the end will mean less tax revenue flowing to Sacramento.

Like the federal government, California had a chance to face up to the task, to get serious, and to finally do something substantial and worthwhile. And like the federal government, California just blew it.

So thanks, Abel. I hear Arlen Specter wants to buy you a drink...

UPDATE: So is the title of this post my own bit of political hyperbole? Ask me again in a year or so, because at this moment, "The Man Who Just Killed California" accurately reflects how serious I believe the damage from this budget deal will be. Even the Democrats in Congress, for crying out loud, still had enough remaining sense not to raise taxes in the middle of an economic crisis...

UPDATE II: The Los Angeles Times is now reporting that the 12-cents-per-gallon increase in the gas tax "was eliminated in the final hours" and will be "replaced with federal economic stimulus money."