California Dreaming: Governor Moonbeam’s Taxation Nirvana

“There is a certain amount of magical thinking going on under the Capitol dome. And the magical thinking is that the $13.5 billion can be conjured. Poof! Getting that $13.5 billion is going to take some taxes. And if it’s not going to be taxes, it’s going to take a radical restructuring of both public safety and public education. And if there’s a third way, I’d like to see it.”

California Governor Jerry Brown

Well, governor, given the choice, I vote for a radical restructuring of both public safety and public education. On public safety, you can start with pension reform.

Governor Brown and California Democrats are offering California voters a “stark” choice between extending income, sales, and car registration surcharges or enduring “savage” cuts in spending.

For me, the choice is not stark. It is obvious. I vote for savage cuts of $13.5 billion in addition to the Legislature’s already approved cuts of $14 billion (which I haven’t even noticed).

California’s tax burden is already outrageous. According to the Tax Foundation, California has the second worst state business tax climate after New York for FY 2011. The state also had the sixth highest state and local tax burden in FY 2009, which was equivalent to 10.6% of the average Californian’s income.

Source: The Tax Foundation

Yet the services the state provides do not justify the level of expenditures they consume. For instance, according to the 2009 NAEP fourth grade math test, California ranks 46th in the nation. However, the average public school teacher’s salary in California was $64,424 in 2007-08 — the highest in the nation.

Then there are the pensions. In December 2010, a group of 36 employees making at least $245,000 per year threatened to sue the the University of California system if the state reduced their lavish, gold-plated pensions.

They may have an argument for breach of contract. However, my beef is with a state that allows its officials to receive such ridiculous contracts in the first place.

There are still plenty of cuts to be had in California’s budget. I would start first with cutting pension bloat.

I have had enough of California taxes.

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About Sean Patrick Hazlett

Conservative clean energy crusader, national security hawk, financial analyst, engineer, and former military officer.
This entry was posted in Business, Education, Finance and Economics, Healthcare, Investing, Policy, Politics and tagged . Bookmark the permalink.

5 Responses to California Dreaming: Governor Moonbeam’s Taxation Nirvana

  1. Joseph Hartman says:

    Full Disclosure: I’m a former educator and live in California. That being said, I find it hard to believe you don’t know the rebuttals to your arguments:
    California’s low test scores may be explained in part by the facts that our ELL (English language learner) population is almost triple that of the national average and our percent of FRL (free/reduced lunch) program students is about 20% higher than the national average as well. It may also be explained by our high student/teacher and student/administrator ratios (in the bottom 5 on both counts). Also, although you are correct that we pay much more in taxes than the national average, we spend less than the national per-pupil average on education (though I remain skeptical that our educational woes can be solved solely by throwing money at them).

    California teachers are paid the most in the nation to offset a cost of living that is 2nd in the nation.

    There are over 1.6 million California public employees. 36 of them is less than 1/100 of 1%. It may be a travesty, but it’s far from typical and probably unwise to use to justify sweeping pension reform (although there may be plenty of other wiser reasons for doing so). Besides, pension reforms will do little for our immediate budget crisis, although that isn’t an excuse for not addressing them.

    I’d be surprised to learn you didn’t know most of this already, but the main question I have about the Right’s recent fervor over education is how the proposed changes of cutting compensation, reducing job security, and slashing education budgets is supposed to improve student achievement if the source of declining student success is really due to sub par teachers in the classroom (which your post implies by citing teachers’ high pay after citing students’ low test scores).

    Already about half of all teachers quit the profession before their 5th year of teaching, and about 2/3’s of teachers come from the bottom 1/3 of their graduating class (I’m sorry I don’t have links to support either of these statements, but I think the latter makes sense as most of the top graduates will go into investment banking or something instead of teaching).

    Therefore, there doesn’t seem to be a wealth of evidence that the teaching profession in America is a highly desirable or sufficiently rewarding career as it is currently. If the teachers in the system as it stands now are responsible for low test scores due to ineptitude or whatever, how does making the profession less attractive help in recruiting newer, better suited teachers?

    Any insight you can provide on this viewpoint is appreciated.

    We agree that there are still plenty of cuts to be had in California’s budget, but I would start by legalizing pot and taxing the dickens out of it, raising the gasoline tax by $1 per gallon and setting free anyone imprisoned on drug charges (we imprison way too many people and it’s way too expensive to do so). Best Regards, -Joe

    http://www.ed-data.k12.ca.us/articles/article.asp?title=california%20comparison
    http://www.missourieconomy.org/indicators/cost_of_living/index.stm

    • “California’s low test scores may be explained in part by the facts that our ELL (English language learner) population is almost triple that of the national average and our percent of FRL (free/reduced lunch) program students is about 20% higher than the national average as well.”

      That tells you something about California, doesn’t it? The state provides incentives (as do private businesses who ignore the law) for illegal immigrants to work and remain in California (de facto free medical service when they get sick, etc.).

      “There are over 1.6 million California public employees. 36 of them is less than 1/100 of 1%. It may be a travesty, but it’s far from typical and probably unwise to use to justify sweeping pension reform (although there may be plenty of other wiser reasons for doing so).”

      Take a look at what the average prison guard makes in California (I believe it is something like $100k per year), and you will find further evidence of this point on a much larger scale. Admittedly, I did pick the most egregious example. But you have to admit, it is insane.

      “I’d be surprised to learn you didn’t know most of this already, but the main question I have about the Right’s recent fervor over education is how the proposed changes of cutting compensation, reducing job security, and slashing education budgets is supposed to improve student achievement if the source of declining student success is really due to sub par teachers in the classroom ”

      I actually have slightly different views than many on the right about education. My main point of citing teaching statistics was not to lambast teachers, but to simply select an example of a government service that I could easily find data showing that the service was failing even though the expenditures were higher than in most of the country.

      I did not mean to imply that teachers were the primal cause of that failure, only that the government system in general was failing.

      Believe it or not, my brother and I are the only two people in our immediate families who are not teachers. My mother and father were both teachers as is my sister. Having grown up in that world, my view is that parents are the primary reason for poor education. However, when you put a lot of bad parents in one school district even the children of good parents suffer. This is why, I have removed my children from public schools and my wife teaches them at home (after all, private schools are way too expensive in California). What is sad is that my wife and I are not some radical right wing bible-thumpers. We are well-educated professionals, who think the system is broken and are willing to take the risk of educating our children ourselves (until high school, of course).

      The problem with the Right’s view is that it disproportionately assigns blame on the teachers and it relies far too much on testing (although I do have my children take the STAR test each year to make sure they remain several grade levels ahead of their peers and won’t be in any danger of falling behind.).

    • Joe,

      I missed your point on pot. I used to be against legalization. However, given California’s massive problems, there may be something to legalization and then taxing the Bejesus out of it. The state should also legalize gambling for everyone (not just Indian reservations) and tax the heck out of that too.

      I wouldn’t raise the gasoline tax. Gasoline prices are too high in California as it is. Plus, it would raise the cost to do business in this state and hurt the economy.

      However, I would overturn prop 13 and have some means-test for the elderly who couldn’t afford massive property tax increases. In California, the young are subsidizing the old way too much. Why should I pay 10x the property taxes as my neighbors, when I can pay 7x and they can raise theirs to 7x and thereby the state gets a 27% increase in revenue.

      Anyway, lots of improvement for California…

      • Joseph Hartman says:

        Hi Sean,

        I guess I didn’t have a point on pot, so I don’t think you missed anything. I suppose I feel much the same way you do though. The war on drugs is getting pretty indefensible as a sensible policy and besides the potential revenue it would hopefully cut down on enforcement costs and trafficking a bit as well.

        I like the gasoline tax b/c it would encourage innovation in alternative fuels and public transit and decrease our dependency on foreign countries. Ultimately I’d just like to be able to tell Saudi Arabia and their fundamentalist Wahabi madrassas to go screw themselves without causing a global financial panic in the process. I guess I’d settle for just ending the subsidies on oil, but that money wouldn’t go straight into California’s coffers like a state tax would.

        We agree on Prop 13. I like your means test idea, and would definitely support a tit for tat Prop 13 for lower income/sales/capital gains taxes. I understand that property taxes are very stable while the others are very volatile, which is one reason we’re in such a pickle now that nobody’s earning anything, buying anything, or investing anything. Besides, I think taxes should ultimately be used to discourage socially damaging behavior as much as possible (thus the support for a gas tax and marijuana tax). So why an income/sales/capital gains tax? Making money, buying things, and especially saving money are all good things in a capitalist economy. Taking up lots of space with a big expensive house doesn’t necessarily benefit the economy in the same way, so a property tax strikes me as more appropriate. Thanks as always for your replies. Cheers, -Joe

        • “Ultimately I’d just like to be able to tell Saudi Arabia and their fundamentalist Wahabi madrassas to go screw themselves without causing a global financial panic in the process.”

          You and I are on the same page on this one. In fact, I am writing a book about how to achieve energy independence (and it is ultimately why I started this blog).

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