Thursday, November 8, 2012

Post-Election: Will California Lead the Nation?

For good or bad, California has been the trend-setter of things to come for the rest of the country.

This time, post-election, California has:

Passed Proposition 30 to raise tax on California residents supposedly pay for "education":

A frend was in a gathering at a public school yesterday, where the educators and administrators and well-wishing moms and dads were gloating over the passage of Proposition 30 which will tax every California residents extra so that California schools have "enough" money to "educate" children. Knowing how these school administrators earning 6-figure salaries have squandered money that was borrowed on the back of the California taxpayers in the past, she wondered how they would justify burdening their fellow Californians for more waste. Well, the cure-all slogan is the same after all: "It's for the kids!" This particular school hopes to use the new-found money to purchase tissue paper boxes, among other things.

Prop 30 will not only raise taxes on the income of more than $250,000 (which in California is not that rich, particularly in Bay Area) for seven years, but also hike the already high sales tax by a quarter percent for four years. However, nowhere is it said that the money raised will be definitely used for schools. Minor details for these educators.

Handily defeated Proposition 37 that would have required labeling of GMO food:

Flawed as it may have been, Californians overall were easily persuaded by the coalition of big ag and food businesses in the US with a ton of money (Monsanto, whose ex-VP advises Obama on food safety, alone spent $8 million to defeat the Proposition 37) not to require GMO labeling because "it will hurt small farmers and retailers". Eat GMO and support small farmers! (Oh wait, have I heard that before somewhere else?)

Handily voted in Proposition 39 on "green initiatives" (supposedly):

The proposition was bankrolled by a hedge fund manager to the tune of 32 million dollars. Prop 39 will requires multistate businesses to pay income taxes based on percentage of their sales in California, and dedicate revenues for five years to clean/efficient energy projects. After that, the money may be used for schools. Sure.

So who is this hedge fund? Farallon Capital management LLC is based in San Francisco, catering to high net worth individuals. Mr. Thomas F. Steyer, who generously "donated" 32 million dollars to his campaign for Prop 39, is the Co-Senior Managing Member of the firm.

Let's see, which companies will be the first to simply pick up and leave California? Oil and gas companies are my guess.

And most importantly,

Handed Democratic "super majority" in the State Assembly:

What does that mean? It means the Democrats in the Assembly alone can amend the state constitution, override the governor's veto if they are so inclined, pass anything including raising taxes without Assembly vote or public vote. I'm sure it will be either "for the kids" or "for the environment" or "for stopping global warming". Or better yet, "for fiscal responsibility". The easiest target will be Proposition 13. The next easiest will be to charge sales tax on food, with a promise that low-income families will be exempt.

Overall, rent seekers' victory over the productive class that is getting smaller almost by the hour.


JAnonymous said...

That means Arnie will be the next president ?

Then after he's gone you have to do a garage sale of state assets to raise some cash when the printers run out of ink ?

Eventually, you'll find out that he fathered a few dozen kids here and there with various nannies and gardeners, without affecting his president performance that much.

Idea for NYC: instead of banning large sodas, why not tax them 300% ? It's all about the freedom of choice.

Anonymous said...

"the productive class" includes the people who pick melons in California for a few dollars a day. It includes people who used to assemble electronics in California but whose jobs have been sent abroad. Investors that destroy indigenous businesses, hide their assets in Swiss and Caribbean bank accounts, and build Southeast Asian sweatshops can hardly be called "productive" forces in the U.S. economy.

Anonymous said...

Anon above, yes, the productive class people get taxed (a higher sales tax), even when they don't pay income tax. Businesses are not charity, and if you expect them to stay in such a hostile environment like CA and employ workers, I guess you're wishing for the socialist utopia which even the Russians has had enough after 70 years or so.

Anonymous said...

Sales tax is about 8% in California. 250,000 might not be that high in the bay area but the Japanese tax office thinks that whatever you earn above 225,000 deserves the highest tax rate in Japan (50%).
Just to put things in perspective.

Anonymous said...

US is surely not Japan. Yet.

arevamirpal::laprimavera said...

Sales tax in CA depends on a county or a city.

Anonymous said...

For some reason, many Japanese on Twitter seem to think it's wonderful that the so-called "rich" are taxed to pay for "education" in California. Ah ignorance is bliss. If I point out that this will also raise sales tax so that everyone including the poor get to hand over their money to the state, they go silent, pretending they don't hear it.

Anonymous said...

In year 2005 tax revenues in the OECD countries were 36% of GDP. Sales tax in Europe is around 20%. Marginal tax rate in Germany is 45% above 250,000 EUR.
This is to add a little more perspective for the US readers.
Seriously, whenever I hear folks from the US complain about their taxes (or the price of gasoline) I can't refrain from thinking they live on another planet. True that US education and health systems are in a pitiful state and there is no public transportation worth the name but then again, if you pay half the taxes and spend on weapons as much as the rest of the world you can't complain too much.
Sales tax in CA depends on the county indeed but those I looked up seemed to hover around 8%. Seen from the 20%+ viewpoint in Europe 7.8% or 8.1% does not make a big difference.

Anonymous said...

Anon above, the whole point of the US was to avoid being like Europe, until O'Bummer came strutting.

About sales tax in CA, your argument is like "People live in areas with natural radiation exceeding 10 millisieverts/year. So why are you complaining about mere 5 millisieverts/year added radiation? Big deal. I really don't understand."

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