Economy

California Experiences Record Revenues; Passes More Taxes

Written by Nicholas Vetrisek

California’s Democratic leaders want more! More taxes, more revenue, more spending, more programs. If they don’t already have it, they want it—and if they have it, they want more of it. Nothing has shown this more clearly than the new round of tax increases.

Last year, California approved more than $4.4 billion in higher taxes while having a $7 billion operating surplus and $26 billion in reserves. In other words, California is flush with money but insists on bleeding us dry anyways.

This would likely baffle most economists given how unnecessary it is due to record high revenues, but it makes complete sense if looked at from the right angle. Socialist governments are not allowed to run out of other people’s money. In order to redistribute in great numbers, they need to take in greater numbers.

The state may be sitting on a mountain of cash, but they certainly don’t make a thing of spending it. Whether it’s having the most generous welfare state or having the highest-paid politicians and teachers, the California government is not afraid to pick up the tab, no matter how large. They are, in fact, so carefree with their spending that they can spend $30 billion on education, not know where it went, and not care!

Democrats love the unexamined financial life, so as a result, they need a constant flow of revenue. This time, the cash flow sources are cellphone and electricity surcharge increases and a renewal of the California Managed Care Organization tax.

They fail to realize that tax increases often reduce revenues as displayed in the Laffer Curve, but it’s unlikely that they would care anyway. That’s a problem for another day and not their problem, as far as Democrats are concerned. They have money now and that’s what’s important—those Democratic votes won’t buy themselves.