From the beginning of his time in government, California’s Democrat candidate for Governor, Phil Angelides has never met a government program he didn’t like, or tax that he thought was too high.
In the midst of the energy crisis, he proposed a complete government takeover of the electricity system. During the budget crisis, his contribution to the spending problem was to renegotiate state bonds to obtain a payment holiday. In other words, for two years we did not pay off any of the principal while interest accrued. That is Phil Angelides way of “saving” the state money. In the end, state taxpayers ended up spending more money, and getting no relief, as Angelides tried to paper over the state’s deficit. You and I are still paying for his ill-considered solution to the deficit.
During his primary campaign against State Controller, Steve Westly, he proposed tax increases to close the deficit he worked so hard to create and perpetuate. He claimed that the state could not cut any government programs, and that the only way to solve the state’s continuing fiscal crises was to raise taxes on you and me. Even though state spending was $57 billion just seven years ago, and $79 billion just two years ago, State Treasurer Angelides believes our $101 billion general fund budget is not adequate enough to deal with the state’s problems.
For example, when I joined the Legislature 14 years ago, the state spent approximately $6,000 per student in 2006 inflation adjusted dollars to educate our children. This year, we are spending well over $10,000 per student, over 70% increase in spending per student in the last 14 years. Angelides believes that 70% more is not enough.
In 1998, the state was spending approximately $20 billion on health and welfare. Last year that number was $34 billion. Another 70% increase.
Then he did a poll. Tax increases are not popular. Angelides said he only wants to tax the rich, not the middle class, but most people are smarter than that. They know that if a politician is eager to raise taxes on one group of people, it is only matter of time before their taxes will go up as well.
What is a big government liberal to do, when the old liberal line of “tax the rich” is not working? Resort to the old Bill Clinton line—tax cuts for the middle class. So, this week, Mr. Angelides proposed an increase in the deduction for dependents; a whopping $200 for a middle class family with kids. See, he says, “I’m not taxing you. I am cutting your taxes. It is safe to vote for me.”
Except it is really bad fiscal policy. If the state increases taxes on the rich, they move to Florida or Texas, or some other state where they don’t tax income. Since rich people pay over 30% of our taxes, government revenue will go down and if these rich folks move to another state. Their employees pay income taxes and they pay thousands in sales taxes that are not directly attributable to them. In addition, most of these rich people own businesses that have employees who pay income taxes.
If these rich people start moving out of California, and taking their money and their businesses with them, the state will never be able to give anyone a tax cut. The Angelides budget will look an awful lot like the Davis budget; lots of red ink and a fiscal crisis of epic proportion.
He thinks it is good politics though. We all hate rich people. So, if he punishes rich people for being rich, Angelides thinks, we might actually vote for him. Good pandering, bad policy. It’s not worth the risk.
Reprinted with permission from CaliforniaRepublic.org.
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