All original content on RickSpeak is the intellectual property of Rickspeak.

Location: La Mirada, California, United States

All original content on RickSpeak is the intellectual property of Rickspeak.

Friday, May 12, 2006

On Taxes and Magic

The Los Angeles Times reported on May 10th, 2006 that because of unexpected windfall collections from stock market and business gains during the month of April, the state of California received $5 billion dollars in tax receipts.

This is nothing new to California. During former Governor Gray Davis’ five years in office, state revenues increased by 25%. The problem was that, in that same time period, state expenditures increased by 43%! This astounding fiscal mess was achieved with the witting help of the predominantly Democratic State Congress. When Governor Davis first came into office, California had a $9 billion surplus. Five years later it had turned into a $22 billion dollar deficit.

Governor Davis’ proposal to compensate for the deficit was a typical Democrat solution to all deficits: increase taxes. This promptly got him re-called by the voting citizenry who installed Republican action-hero, Arnold Schwarzenegger, into office. When the Governator took over in 2004, the whopping $22 billion dollar deficit was facing him like a terminator cyborg.

One year later, without raising taxes (much to the chagrin of the Democratic controlled legislation), Governor Schwarzenegger presented the State Congress with a balanced budget. How was this done? Certainly by paring back programs, forcing the bureaucrats who run them to spend within their financial constraints helped. Just as important, Schwarzenegger did not raise the state personal income tax, to the dismay of the Democrats, who complained bitterly like spoiled kids to whoever would listen to them.

They no longer had the money they wanted to continue to spend on whatever vanity programs they had embraced once the tech boom and stock market bubbles burst, thus the temper tantrums begun:

"The governor has declared war on the state of California," proclaimed Assemblywoman Judy Chu, D-Monterey Park. "He declared war on us, and I declare war on him." (Democracy for America in Orange County, CA 2005)

"No one could have predicted he'd declare nuclear war on teachers and firefighters all in the same year," said Democratic consultant Roger Salazar. (Democracy for America in Orange County, CA 2005)

Attorney General Bill Lockyer, reached for an entirely different weapon, criticizing Schwarzenegger for "the arrogance of power" that comes with "the odor of Austrian politics." (Democracy for America in Orange County, CA 2005)

So, according to the spoiled brat politicians, Governor Schwarzenegger has declared war on the state of California, he has declared nuclear war on teachers and is governing with “the arrogance of power…an odor of Austrian politics.” Lockyer’s analysis is particularly revolting in its insinuating accusation that Governor Schwarzenegger is a Nazi. Adolph Hitler was Austrian by birth.

Under the five years of Davis leadership, the “kids” on Capitol Hill were undisciplined until Super Nanny Governator made them take a time out and insisted that there were to be no more shenanigans about deficit spending and raising taxes on personal income.

What is the lesson to be learned? Not raising taxes on personal incomes actually increase government budgets! This is the second year in a row, under Republican Governor Schwarzenegger's fiscal policies, that California has received "unexpected" large tax collections from businesses and stock gains, according to the mystified Los Angeles Times who, apparently, still do not understand basic Economics. Or, worse, they want to keep the cronies on the liberal left in office who continue to use "Magical" economic plans that always include raising income taxes while using the poor and destitute as pawns in their slimy grab for political power.

There is no magic needed, though, because the economic answer is really quite simple: Low personal income tax fuels businesses, which in turn expands because they invest in ways to grow and maintain the business, including the hiring of more people. When more people have jobs and get to keep more of what they earn, they tend to spend or invest their incomes. With businesses and people prospering, tax receipt collections overflow the government's coffers that finance the public works and public needs of its citizenry. All of this is accomplished without raising personal income taxes. The state of California has proved this two years running.

(Citation of budget figures: http://www.dof.ca.gov/Budget/BudgetDocuments.asp)


Post a Comment

<< Home