Actually, now that they're not going to have gridlock and passed Gov. Brown's tax plan, I think you're going to see California performing much more like she has historically done. It will take five or six years to dig out of the hole, but it will happen. Investment in public goods like education and transportation infrastructure are what drove growth in California and it will again. I have many friends who live in Calufornia (SFO Bay Area and Silicon Valley) and all are now much more optimistic.
Originally Posted by TexTushHog
The fact that the California Legislature's big-spending majority has managed to blast away any semblance of gridlock means that it has
no chance of even coming remotely close to pulling the state's fisc out of the abyss within "five or six years." Those political hacks are completely beholden to public-sector unions, radical environmentalists, and other expensive-to-placate special interest groups.
And do you understand what Jerry Brown's tax "plan" is? One main element is an increase in the state sales tax of 0.25%. But that will be more than offset by California's continuing job losses to other states and to the increasing income inequality that the state is experiencing as its welfare rolls rapidly swell. The other primary element is the increase in the state's top-bracket income tax rate to 13.3%. Add that to the planned federal income tax rate increase to 43.4% (including the new 3.8% health care surtax) and you'll see a marginal income tax rate of 56.7% for Californians. If you think that won't cause some taxpayers to shift their activities in such a way as to avoid some of the additional burden, you don't understand how the real world works. Much of the anticipated additional revenue will simply pull a disappearing act. And even if the state manages to pull in
some additional revenue, it won't even come remotely close to covering the rapidly ballooning costs arising from promises made to public sector unions.
And if that's not enough, California's "leaders" have decided to further reduce the state's economic competitiveness (relative to other states) by imposing a carbon cap-and-trade regime. That will significantly drives up costs for businesses, consumers, or both. Nothing like stacking failure atop failure.
If you were to scale up California's model of governance and blanket the entire U.S. with it, we'd soon be running annual deficits of at least $2 trillion.
And the
trajectory would be scarier still.