Earlier this week, my beloved state of Madness California reached a budget deal that ostensibly closed for this year the 26 billion dollar deficit — you know, the one that the last budget deal was supposed to close. (But I digress). Amid much wailing and gnashing of teeth about cutting programs that we were foolish to fund to such an extent in the first place, our Governor emphasized that this deal was reached without raising taxes. If there’s one thing Arnie likes, it’s being popular, and the crushing defeat of four tax-raising ballot measures in the last special election by 2-1 margins drive home to him just what the popular (and populist) position would be. So, read his flexing biceps: No. New. Taxes.
Rather than raise taxes, the state will simply take more in withholding:
The plan also raises $4 billion in part by accelerating personal and corporate income tax withholdings and increasing income tax withholding schedules by 10 percent.
Get that? Rather than raise the tax rate, they’re simply going to take your money at the current rates, only faster. No problem, right?
In case you’re still boggled by the “We’re going to take more of your money without raising taxes” magic trick, let me list some of the problems:
- In the end, we’re still left with less on payday. That’s bad at any time, but to do so when so many state and local workers are facing pay cuts is adding insult to injury. It’s already tough to get by; this will make it worse for many, many people.
- Corporations will be left with less money to pay workers and hire new employees. With a state unemployment rate hitting 11%, that’s just insanity. You can expect the exodus of businesses from California to accelerate, not slow.
- Because the state is taking this money via accelerated withholding, they will quite likely owe more in refunds next year. This is, in the end, an interest-free loan on our part. Trouble is, the money they’re taking now is being used now to cover shortfalls. Where will the money come from for those even-greater refunds? Anyone whose memory stretches back to just last winter will remember that the state was having trouble meeting refund requirements even then. Typical of Sacramento, the state apparently prays expects the recession to end soon, bringing with it a flood of new revenues to cover their continued profligacy.
And Minerva will descend from our state seal to do a pole-dance in the capitol rotunda, too.
Remember this next election day.