San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Tuesday, October 6, 2015

Ripping Off The Rich In California

According to a story found here, California is a sterling example of how career politicians and bureaucrats can use fiscal policy to manage a state economy into a condition of prosperity for all.
"California was hit hardest by the recession, but the Golden State has come roaring back with a vengeance. A new tech boom, the housing recovery and a temporary tax increase approved by voters under Proposition 30 have led California out of a deficit and into a budget surplus. Unemployment has fallen from a peak of 12.4 percent to 6.1 percent.  Under Prop 30, the highest tax bracket in the state moved to 13.3 percent, and capital gains are taxed as regular income. The state says an estimated 10 percent of total personal income tax revenue comes from capital gains, or about $12 billion this year. 'So far we have not seen a big drop (in tax revenues), but there's a real risk,' said Jerry Nickelsburg, senior economist for the UCLA Anderson Forecast. He added that the risk could increase if Prop 30 is extended past its 2018 expiration date, 'because it extends this extraordinary dependence that we have on high-income earners.'  H.D. Palmer of the state Department of Finance said tax revenues in the fiscal year that started July 1 are 'so far, so good.' However, he is keeping an eye on the stock market: 'Just 1 percent — about 150,000 of the returns — are responsible for more than 45 percent of all the personal incomes taxes paid in California.'"
So let me get this straight.  A career bureaucrat believes California is a beautiful example of how career politicians can manage an economy to stratospheric heights of prosperity and growth.  As evidence for his position he points out that California had a public vote about whether to confiscate a significant portion of the politically unprotected top 1% of the income population in the state.  To nobody's surprise the final result of the democratic process ended up forcing the top 1% of the income population of California to pay almost half of all state income taxes.  Since there are a lot of wealthy people in California, like movie stars, musicians and athletes, the state is experiencing a windfall of revenues as the new tax rate kicks in.  As further evidence for his position that stealing huge amounts of income from the politically unprotected top 1% of the income population by means of the democratic process is a dandy way to conduct government business, the career bureaucrat cites the rate of economic growth in California as proof for his position.  Here is a graph of the real gross domestic product for California since 1998:

Since recovering from the Great Recession California has experienced a rate of growth of about 2.5% annually.  Proposition 30, which was unconstitutionally enacted retroactively, began on January 1, 2012 and is set to expire at the end of 2018.  Does anyone really believe it will expire?  Neither do I. Regardless, do you see any evidence in the GDP graph shown above that economic growth shot upward starting in 2012?  Neither do I.  In fact, the initial impact of the new tax was a very small decline in the rate of GDP growth.  That hardly constitutes a smashing success, unless you are a career bureaucrat seeking to justify your paycheck.  The only thing the tax increased accomplished was to transfer enormous sums of money from rich private citizens to the government of California.  In case you are not aware, giving large sums of money to career politicians never ends well. 
The graph below shows the real gross domestic product for Texas for the same time period.  Texas does not have a state income tax.  It does not take a statistical genius to see that Texas is growing much faster than California, without the alleged benefits of a state income tax stuffing the state coffers.  Is it possible that taxation actually retards growth?  Is it possible that the best thing the politicians in California could have done would have been to reduce taxes?   Is it possible that the career politicians in California are really only concerned with saving their own salaries and pensions?  Me thinks so.

Jerry Nicklesburg (I wonder if he is counting his nickles?) admits that there is a "real risk" that rich folks in California will get tired of paying the entire bill and move elsewhere.  Ya think?  He thinks that is especially true if the tax gets extended, as it inevitably will.  Ya think?  How can these people be so amazingly stupid?  Answer:  they are career politicians pandering to the sinful envy of the majority of the citizens in the envy-filled state of California.  They are not really stupid, they are heroes who deserve the praise of the public.
The top 10% of the income population in California now pays 80% of all state income taxes.  Please explain how that is fair.  Please explain why that is not theft.   Please explain why it is moral when the majority of the people living in an arbitrary geo-political zone make the decision to take away large amounts of money from the minority of people living within the confines of that zone.  Please explain why that is not simply theft by majority vote.  Please explain why the God of the Bible should not bring judgment upon the thieves responsible for this state of affairs. 
California is one of the most socialistic states in the Socialist Democracy of Amerika.  As such it has been leading the way in theft, destruction of private property and expansion of government for many years.  This latest grab on the part of the career politicians, despite their present beliefs and assertions about its ignominious success, will end in miserable failure.  Mark my words, California will sink again. 


  1. Dear Welshy,

    You're on the bulls-eye once again. I used to live in California ... in Muir Woods. Working for the government agency A.P.E, I make a ridiculously good living. I hardly ever work but yet get paid truckloads of bananas. When Prop 30 went into effect, government tax agents took an additional two bananas out of every bunch I received. When I initially refused to be stolen from, revenuers actually showed up at my tree house and threatened to throw Mata, my hairy little wife, to the ground far below. Needless to say, since I couldn't stand living without Mata, I acquiesced to their immoral demand.

    Given the standard of living we were used to, this additional tax placed a heavy burden upon us. As a result, we moved to Texas. I'd like to say we are living there happily, but we haven't found a tree over eight feet tall to swing from. Now, instead of feeling the wind blow through our hair as we gracefully swing for hours from one tree to another, we have managed to find satisfaction in watching reruns of The Partridge Family and Have Gun Will Travel. At least we have plenty of bananas to eat.

    Lancelot Link

  2. Mr. Link:
    Good to hear from you, as always. I hear the banana crop was especially good this year. Congratulations to you and Mata. I would recommend you add "Man From U.N.C.L.E." to your television view list. "Get Smart" is also a good choice.
    You are in good company as a California ex-pat. Professional golfer Phil Mickelson, whom I have never met, once said that he would be forced to leave California because of the tax. Predictably, he was ripped by the press and the public as a greedy, evil monster who is unwilling to pay his fair share, whatever that is. Maybe you two can get together down in Texas and play some golf. I hear Jordan Spieth and Jimmy Walker both hail from the Lone Star state.