I was surprised when the people of Oregon voted for a tax increase back in early 2010.
Yes, I realize that the politicians and interest groups structured the measure so that the majority of voters would be unaffected. It was basically a class-warfare proposal, with a small fraction of the population being targeted to generate (at least in theory) a bunch of revenue that could be used to maintain a bloated and over-compensated state bureaucracy.
But I was nonetheless surprised because I figured voters would realize that upper-income taxpayers aren’t fatted calves idly awaiting slaughter. They can easily move to other states (particularly nearby zero-income tax states such as Washington and Nevada).
In other words, I thought Oregon voters understood that you shouldn’t drive away the geese that lay the golden eggs. A state isn’t like the old Soviet Empire, with an “Iron Curtain” of watchtowers and guard dogs to keep a population under control.
I was wrong about Oregon, so I shouldn’t be too surprised that California voters basically just made the same mistake.
Yesterday, the looters and moochers of the Golden State voted for Prop 30, a measure to significantly boost both the state sales tax and also hike income tax rates on investors, entrepreneurs, and small business owners.
I’m generally reluctant to make predictions, but I feel safe in stating that this measure is going to accelerate California’s economic decline. Some successful taxpayers are going to tunnel under the proverbial Berlin Wall and escape to states with better (or less worse) fiscal policy. And that will mean fewer jobs and lower wages than otherwise would be the case.
It goes without saying, of course, that California’s politicians will respond to Prop 30 by increasing the burden of government spending. They then will act surprised when revenues fall short of projections because of the Laffer Curve.
The bottom line is that the state will remain in the fiscal ditch and I expect a Greek-style fiscal crisis. When that happens, I’ll be tempted to point and laugh and make snarky comments such as “you broke it, you bought it.” But my long-run worry is that Obama may push for a federal bailout.
Let’s now take a look at the other ballot measures I wrote about on Monday.
I said the two most important measures were Prop 30 in California and Prop 2 in Michigan. Well, we know things went the wrong way in the Golden State on Prop 30, but it seems the voters in the Wolverine State are a bit more rational.
Prop 2, which would have permanently rigged the rules even further in favor of government workers, was soundly defeated by a 58-42 margin. Taxpayers presumably recognized that it wouldn’t be a good idea to dig the hole even deeper.
Here’s a quick breakdown of the other ballot measures. A majority of them went the right way. I’ve underlined good votes.
Prop 38 and Prop 39 – Two additional tax hike measures, the first targeting individual taxpayers and the second targeting businesses. Rejected 73-27 and approved 60-40.
Prop 204 in Arizona – Renewing a one-cent increase in the state sales tax, ostensibly for the education bureaucracy. Rejected 65-35.
Issue 1 in Arkansas – Imposing a half-cent increase in the state sales tax, supposedly for highway spending. Approved 58-42.
Prop 5 in Michigan – Would require a two-thirds vote of both the state house and state senate to raise any tax. Rejected 69-31.
Prop B in Missouri – Raise the cigarette tax by 73 cents per pack. Rejected 51-49.
Constitutional Amendment Concurrent Resolution 13 in New Hampshire – A constitutional amendment to prohibit enactment of an income tax. Received 57 percent of the vote, but needed a super-majority for approval.
Measure 84 in Oregon – Would repeal the state’s death tax. Rejected 53-47.
Initiated Measure 15 in South Dakota – Increases the state sales tax from 4 percent to 5 percent. Rejected 57-43.
Initiative 1185 in Washington – Reaffirms the state’s two-thirds supermajority requirement before the state legislature can increase taxes. Approved 65-35.
Prop 114 in Arizona – Protects crime victims from being sued if they injure or kill criminals. Approved 80-20.
Amendment 2 in Louisiana – Strengthens right to keep and bear arms. Approved 73-27.
Amendment 64 in Colorado, Measure 80 in Oregon, and Initiative 502 in Washington – All of these ballot measures end marijuana prohibition to varying degrees. Approved 55-45 in Colorado. Rejected 55-45 in Oregon. Approved in Washington.
Prop 1 in Idaho – This measure would overturn recent legislative reforms to end tenure in government schools. Rejected 57-43.
Prop 3 in Michigan – Require 25 percent of electricity to come from renewables. Rejected 63-37.
Question 1 in Virginia – Limits eminent domain to public purposes. Approved 75-25.
Amendment 6 in Alabama, Amendment 1 in Florida, Prop E in Missouri, Legislative Referendum 122 in Montana, and Amendment A in Wyoming – These are all anti-Obamacare initiatives in some form or fashion. Approved 60-40 in Alabama. Rejected 51-49 in Florida. Approved 62-38 in Missouri. Approved 67-33 in Montana. Approved 77-23 in Wyoming.
Is there a single lesson or theme we can discern from all these results? Other than the fact that people in California and Oregon are downright crazy?
Beats me. I think most Americans still believe in the classical liberal vision of a small federal government. But I also think the entitlement culture is becoming a greater and greater problem.
P.S. Speaking of the Iron Curtain, Walter Williams imagines California with a barbed wire fence to stop tax escapees.
P.P.S. This great Chuck Asay cartoon imagines how future archaeologists will view the Golden State.
Dan, always enjoy your comments, but you say we dont have guards at the border to keep us in, we do of course, TSA, Passport control, and the exit tax of 1/3 of your wealth. When I go out of the country I feel much freer then when I am in the States, no police watching my every move. Was just in Stockholm, no police to be seen. regards, Bill
I do believe the only rational choice will be to break up the United States. We are no longer united and, thanks to federal government overreach, the states are becoming less like states and more like different federal districts. Lest this idea is rejected out of hand, I would remind people of the former Soviet Union which went from probably the most powerful (militarily) country in the world to breakup, all within less than 15 years.
william, he meant State borders. But if Obama gets his way state borders wont matter. According to a recent post Obama plans to redistribute wealth from the suburbs to the Cities. I bet a lot of suburbs voted for him. I wont feel sorry for them when he confiscates their wealth, unfortunately, we cannot separate the suburbs that did not vote for him versus the ones that did.
Ronald,
I think you may see states want to break away, especially when the government goes broke (very soon unfortunately). The combination of California going broke, the forthcoming double-dip recession brought on by the EPA’s new carbon tax system (and tax increase on the “rich”) and continued trillion dollar deficits should push us over the edge quickly.
I don’t see any other way to restore America without it blowing up financially. Whether we can keep it one country after that has arrived will be the challenge. I doubt it. The liberals will continue to blame Bush and the conservatives will blame Obama.
Go Galt
If you have rearranged your affairs to minimize your taxes and economic contributions you won’t be hit so hard when California comes begging for a handout.
They can only exist so long as they are able to extort your time, your energy and your wealth; don’t let them have any and they can’t exist anymore
I have a good friend who just finished selling both of his houses in California and is moving out. He’s the sort of person who was consistently paying $2M/yr or so in state taxes. Now, instead of getting $3M our of him, they’ll get $0.
Me? I’m stuck here for several years, so Jerry Brown will get credit for increasing revenue on my back–he won’t be blamed when I move in several years once I can. But they’ve poisoned the business climate in the long term.
And, note, CA has a huge team of investigators that try to hound and sue people who leave CA for tax reasons.
Did the Florida anti-ObamaCare Amendment 1 that lost hurt Romney’s election chances in the state? The 4 states that passed these amendments were all carried by Romney. Coincidence?
[...] via California’s Economic Suicide and other News from Yesterday’s Ballot Measures « International L…. [...]
In New Hampshire: “A constitutional amendment to prohibit enactment of an income tax. Approved 57-43.”
No, the 57% means they failed to muster the two-thirds majority necessary to support the income tax ban.
Yeah, they’re always temporary, aren’t they?
“And, note, CA has a huge team of investigators that try to hound and sue people who leave CA for tax reasons.”
Really? What are they looking for, time spent in CA or something?
We in California are hosed, I don’t know how I’m even going to be able to afford to move when we retire – or if retirement is even possible here. The Sacramento Stupidslature now has a Democrat Super-Majority – first time since 1965 – so welcome to the One-Party State Politburo where there is no opposition except that within the Central Committee.
There was some Assembly-drone mouthpiece going on about “Education,” and how Proposition 30 will help it – but actual funding for “Education” is already BIG stupid-money, and totally irrelevant. It has always been a red-herring, since the money doesn’t even get down to the classroom level, it only flows UP out of the pockets of our inept, low-quality, and ideologically blinkered Union-Teachurz to the state Democrats.
Now the Stupidslature desperately needs the Teacher’s pocket-dollars since they have campaigned waaay beyond their limited means, and so they will get it (the money) since Proposition 32 to prevent Union Political Takings was blatantly lied-about and entirely mis-characterized as some kind of scary Big Bizness swindle.
Money being the mother’s milk of politics (thanks, Jess Unruh), now the Democrats need to re-fund and reward their enablers and cronys, there are countless Union palms to re-grease, and they must cover the costs of advertising and campaign brochures.
Either you missed the 2 pro-union proposals in Michigan that were soundly defeated, or you’re saving that for another article? ‘CAuse those were huge HUGE votes.
There is no doubt Washington is irretrievably corrupt. The Constitution is compromised beyond repair. If the Republic of Texas rightly decided to form it’s own constitution and leave the U.S. it would be logical that all the central (red) states would join them. After all, they have most of the food, fuel, minerals and nukes. All the Blue States now have is the ability to suck the fiscal life out of those states.
Of course Obama will bail out California. But it will be with a currency debased by high inflation.
The racists and moochers won this round. But the winning is what will kill them. Hopefully the rest of America will survive.
Seeing that the takers have taken over the electorate and the politicians are only too willing to be “givers”, this will all eventually end unwell. So I have decided, and I am a staunch neocon, to become an Uber-taker and get as much as possible before the others do. Once it collapses there will be none for anyone and it is now survival of the fittest. I am going after every handout program the government has from free cellphones to huge business subsidies and try to accuulate as much as I can. I want disability, food stamps, healthcare and whatever else I can get to supplement my current income.
“Is there a single lesson or theme we can discern from all these results? Other than the fact that people in California and Oregon are downright crazy?
Beats me…”
Yeah, sadly, there is. Our current crop of countrymen will raise taxes if they think it will fall on somebody else. But, damned if they’ll raise them on them. Things that smacked of a universal burden got shot down. Things that could be palmed off as “soaking the rich” got through.
It is even more than passing around the blame game. If you go to San Francisco or L.A. or Seattle or Portland, you will probably find that most of the people there do not have the same set of core beliefs as those in the Midwest or the South. I just don’t see how this can continue much longer. We are two different countries and diversity does not create unity, identification does.
One of the most disappointing things about this election was California. I thought there was a chance, a chance, Romney would have told Brown to pound sand when he inevitably comes asking for a bailout. Obama will come running to give one.
My best hope for the Golden State is the possibility that it would go into receivership. My personal wish was for a scenario where bondholders agreed to a haircut with the provision that they would have veto power over California’s Governor and Legislature in exchange for continued credit and an interest rate tied to California’s GDP growth. As far as I can tell, that aligns the incentives in just the right way (California’s government and the bondholders are both incented to leverage the things that really make California special.)
To the Californians here, please understand, I find temporarily limiting your democratic rights a regrettable option. From what I’ve read, you’re the kind of folks I really want to see being able to run with your state. But, please, try to understand, this is the policy that I think would help reinculcate (is that a word?) the political habits of mind in the Golden State that I see you as representing.
ronald richards/jason,
If you find yourselves in need of someone “behind enemy lines” in support, I’m in NYC and I’m in agreement. Just remember, the moochers and looters won’t go gently into that good night.
Bill – As a California resident, I would jump for joy if the state went into a receivership that subordinated the state’s political machinery to the approval of a federal bankruptcy judge. My fellow Golden State residents have amply demonstrated that they are utterly incapable of responsible self-governance; by all means, take away the car keys.
This quote from H. L. Mencken kept going through my head today: Democracy is the theory that the common people know what they want and deserve to get it good and hard.
The good and hard part is coming up soon enough.
Thanks Bill. We may have need of your knowledge of the terrain in the coming years when things start to get serious (at least more serious).
I sympathize with the Californians. I too live in a deep blue state as a red voter. What drew me to NYC is the pace of the market. More than anywhere I’ve ever been, NYC offers me the the feeling of being alive that is the market. From the energy of going into the office the laughs shared over the gallows humor of taders,I live in a world that belies my state politics.
[...] DAN MITCHELL: California’s Economic Suicide and other News from Yesterday’s Ballot Measures. [...]
California is past the slippery slope. Our last election is going to enable the Democrat legislature to pass any tax measure they want, so we are circuling the drain. I would leave tomorrow if it wasen’t for my kids and grandchildren being here. California died back during Governor Brown’s first term when he agreed to allow Public Unions. Since then we have become the Zombie State. We don’t want your Brains, but we sure are going to be coming after your tax dollar.
I couldn’t vote this year (I am 17, 18 in April), but as a resident of Idaho, I have to say that it makes me sad to see Props 1 & 2 defeated (pay-for-performance and getting rid of tenure). We sorely need the power to fire poor teachers that, through no value of their own, have been awarded tenure (especially in the Meridian School District). More than that, it is asinine to pay teachers based on their length of time at a school rather than how good they are at their job.
It looks like, though ID went wholly for Romney, we still have our educational boards manned and ruled over by leftist union members who don’t, despite what they say, give a darn about the students. As a student there, I know that the administration knows what side their bread is buttered on.
Bill,
I’m a CA resident and I would also welcome receivership as I would a liberating army!
Right now I’m only here because of my job, but if I lost that I’d been off to a red state.
[...] California‘s economic suicide. [...]
It is not only California that voted for economic suicide. AMERICA voted for economic suicide by voting for OBAMANOMICS.
[...] California’s Economic Suicide and other News: MitchellPaul Ryan’s Next Move: Hot AirIf The Archangel Michael Were On The Ballot, Beelzebub Would Still Have Won: RS [...]
I am Massachusetts so I laugh at the thought of a “temporary” tax. It will be there for ever. Secondly, people talk of needing tax increases to fund services. When will people start saying that the government has enough funds, it is the proper allocation of those funds that needs examining.
And don’t forget, we in CA also voted down a measure that would have ended the paycheck deduction of public employee dues that then go straight to Dem campaign coffers. The conveyor belt of money continues: from taxpayer to employee to union to Dems.
Yes to receivership!
The California tax increases are a good thing. Now that the actual costs of the services are directly funded by state taxes, the real cost of the services can be assessed. Normally this cost is offset by borrowing. The voters will have a chance to determine which services are desired and how much they are willing to sacrifice for them.
Not all tax increase propositions passed. But what is the tally of propositions to increase taxes vs propositions to decrease taxes?
Anyone question the trajectory is irreversible?
When you are a voter of the most prosperous nation in the world, “not-so-bad” choices are not good enough. You need to make the best choices to stay on top.
The needy and under-priviledged may eventually get their redistribution ( and their numbers will greatly increase since insulating them from the consequences of mediocrity, even if temporarily so, will make lifetime choices of mediocrity more palatable in the first place and trigger a new cycle of redistribution and disincentivisation at both the high and low end of the productivity scale) but the ensuing lower growth rates will relentlessly compound until the socially supported under-privileged of the welfare state are worse off than the poor of countries that have chosen to leave incentives to produce more untouched. These countries will be few, but they WILL eventually come forward. Cultural natural selection will continue. Too bad the current lions of the world seem to have chosen an irreversible path to extinction. It won’t be the first time that a once sucessful culture steps on the banana peel of trying to force people to work for distant others – and declines.
The nemesis of redistribution totalitarianism by majority will be the new emerging mobile global citizen. The person who using modern remote communications means can do high value work for anyone in the world from anywhere in the world. The more you try to hopelessly restrict this mobility through exit taxes and immigration barriers, the less competitive you make your country and the faster you decline.
This is the twenty first century and things are moving faster than ever, and accelerating. Rises and declines that used to take centuries will now come and go in a few decades and conclude ever faster. Those who think that there is still time, those who think its mostly their children’s problem are fooling themselves.
The only “good” thing I see from 30 is that since my company has lost customers over the last three years, my income is now too low to be affected (yet).
[...] [...]
[...] http://danieljmitchell.wordpress.com/2012/11/07/californias-economic-suicide-and-other-news-from-yes… [...]
[...] The election California voters helped accelerate the state’s economic decline. [...]
[...] After all, that’s the most logical interpretation of the election results in California, where voters approved a referendum to rape and pillage upper-income taxpayers. [...]
[...] After all, that’s the most logical interpretation of the election results in California, where voters approved a referendum to rape and pillage upper-income taxpayers. [...]
[...] Actually, it’s not just that he’s part of the problem. He’s making things worse, having seduced voters into approving a ballot measure to dramatically increase the tax burden on the upper-income taxpayers. [...]
[...] Actually, it’s not just that he’s part of the problem. He’s making things worse, having seduced voters into approving a ballot measure to dramatically increase the tax burden on the upper-income taxpayers. [...]
[...] Actually, it’s not just that he’s part of the problem. He’s making things worse, having seduced voters into approving a ballot measure to dramatically increase the tax burden on the upper-income taxpayers. [...]
[...] wish I could be a fly on the wall when this moment of truth happens to California politicians. They convinced voters in the state to enact Prop 30, a huge tax increase targeting those evil, awful, bad rich [...]
[...] Was it the delusional decision by 54 percent of California voters to impose a big, class-warfare tax hike? I thought the vote for Prop 30 was a very troubling development since it signaled that voters [...]
[...] Was it the delusional decision by 54 percent of California voters to impose a big, class-warfare tax hike? I thought the vote for Prop 30 was a very troubling development since it signaled that voters [...]
[...] wish I could be a fly on the wall when this moment of truth happens to California politicians. They convinced voters in the state to enact Prop 30, a huge tax increase targeting those evil, awful, bad rich [...]
[...] I stated in the interview, his success would show that Obama’s class-warfare agenda may have some appeal in basket-case states such as California, but it doesn’t have much support among people who understand that growth is the only [...]
[...] as I stated in the interview, his success would show that Obama’s class-warfare agenda may have some appeal in basket-case states such as California, but it doesn’t have much support among people who understand that growth is the only effective [...]
[...] Was it the delusional decision by 54 percent of California voters to impose a big, class-warfare tax hike? I thought the vote for Prop 30 was a very troubling development since it signaled that voters [...]
[...] already condemned the foolish people of California for approving a referendum to raise the state’s top tax rate to 13.3 [...]
[...] already condemned the foolish people of California for approving a referendum to raise the state’s top tax rate to 13.3 [...]
[...] already condemned the foolish people of California for approving a referendum to raise the state’s top tax rate to 13.3 [...]
[...] via California’s Economic Suicide and other News from Yesterday’s Ballot Measures « International L…. [...]
[...] since California voters approved a new 13.3 percent top tax rate last November, I expect the gap to become even [...]
[...] since California voters approved a new 13.3 percent top tax rate last November, I expect the gap to become even [...]
[...] California’s Economic Suicide and other News from Yesterday’s Ballot Measures [...]
[...] This cartoon about California tax hikes would be near the top of the list, except taxpayers were tricked into voting for the referendum. I very much like this fiscal cliff cartoon, this Keynesian economics cartoon, and this one about [...]
[...] And he’s not overly happy about California raping him with a new top tax rate of 13.3 percent. [...]
[...] taxpayers of California are being stretched beyond the breaking point – especially now that the looters and moochers have imposed a new 13.3 percent top tax rate on the state’s dwindling supply of high [...]
[...] taxpayers of California are being stretched beyond the breaking point – especially now that the looters and moochers have imposed a new 13.3 percent top tax rate on the state’s dwindling supply of high [...]
[…] After all, that’s the most logical interpretation of the election results in California, where voters approved a referendum to rape and pillage upper-income taxpayers. […]