Liberals/Democrats/Progressives The Left simply refuse to accept an eternal truth about human nature:
People are neither stupid nor passive. They will change their behavior when government policies become oppressive and inimical to their interests.
This dictum is especially true when it comes to Americans who are successful by virtue of their hard work, smarts, and frugality. If they are punished for their success with punitive taxes, they will change their behavior either by working less (thereby reducing their income and taxes) or they will simply pack up their belongings and their businesses and move.
That is why when government raises taxes beyond a certain point (33% according to one study), government revenue actually goes down instead of up. (see “At what point does taxing more actually reduces govt revenue?“)
Here are the ugly numbers for California:
Yesterday, Dec. 7 2012, California State Controller John Chiang released his monthly report covering California’s cash balance, receipts and disbursements in November 2012, showing total revenues were $806.8 million below (-10.8%) projections contained in the 2012-13 State budget.
- Income tax collection is DOWN 19% ($842.5 million below).
- Sales tax collection is UP 3.8% (up $99 million).
- Corporate taxes DOWN 213% ($187.8 million below).
“The State ended the last fiscal year with a cash deficit of $9.6 billion. As of November 30, that cash deficit totaled $24.9 billion and is being covered with $14.9 billion of internal borrowing (temporary loans from special funds), and $10 billion of external borrowing.”
Recovery? What recovery?
H/t Stephen Frank’s California Political News & Views
California’s economy will only worsen further post-election, with the cumulative tax rate of the state’s “rich” (those making $250,000 or more a year) now going up to 52%. See “50+% tax rate for “rich” in Calif, New York, Hawaii.”