Time Blames Calif. Budget Mess on... Low Taxes?

For Time Magazine, Kevin O'Leary has decided that he's figured out why California is in such a budget mess. Is it because the state indulges over generous social programs, or always has some of the highest taxes in the nation, or because the denizens of its capitol in Sacramento are paragons of waste, fraud and theft? Nope. It's because California has Proposition 13, a measure that prevents state government from too easily raising taxes. Yep, O'Leary thinks California is in a mess because it doesn't have high enough taxes. And it's all Reagan's fault.

With some of the highest taxes in America, California is a hard place to make a living. According to the Tax Foundation, on average it takes a citizen 110 working days to earn enough money to pay his yearly tax bill. That is the fourth worst in the country. California consistently ranks in or near the top 10 worst states for its tax burdens from property taxes, to corporate taxes, to individual taxes and fees of all sorts. So, how can O'Leary imagine that taxes aren't high enough in California?

It's an undeniable fact that taxes are higher in California than most other states. A recent report notes, "California has the highest sales tax (8.25percent, plus local add-ons), gas tax (35.3 cents a gallon) and vehicle license fees ($318 on a $20,000 gas-powered car), along with the second-highest top-bracket income tax (10.55 percent; Hawaii is No. 1 at 11 percent)."

It's so bad that in 2008 144,000 people moved out of California, the highest loss of residents of any U.S. state. The Golden State just ain't so golden anymore.

But as far as O'Leary is concerned taxes are too low in one of our highest taxed states and it's all because of Prop. 13 for which he blames the "Reagan revolution." Apparently O'Leary hasn't updated his syndromes. He's still wallowing in Reagan Derangement Syndrome and hasn't been alerted that he's supposed to have Bush Derangement Syndrome these days.

What has brought California to such a perilous state? How did its government become so wildly dysfunctional? One obvious cause is the deep recession that has caused tax revenues to plunge for all states. But California's woes have a set of deeper reasons: direct democracy run amok, timid governors, partisan gridlock and a flawed constitution all contribute to budget chaos and people in pain. And at the root of California's misery lies Proposition 13, the antitax measure that ignited the Reagan Revolution and the conservative era. In Washington, the Reagan-Bush era is over. But in California, the conservative legacy lives on.

Of course, it wasn't Reagan that created Proposition 13. But, whatever.

Regardless, O'Leary moans that it was oh, so grand in the old days. He wistfully informs us that then, back before that nasty, evil, brutish Reagan, "in the 1950s and '60s, California was a liberal showcase." Why it was a nirvana of socialist societal engineering in those golden years. And then came that darned old Prop 13 that "shot the tires out of" the "liberal state."

Amusingly, O'Leary's tax-mongering propaganda casts liberal lawmakers as heros for trying so hard to "live with" the law, even as it supposedly precluded them from being able to supply the state with services.

Beholden to a tax-averse electorate, the state's liberals and moderates have attempted to live with Proposition 13 while continuing to provide the state services Californians expect - freeways, higher education, locking up felons, assisting needy families and, very importantly, essential funding to local government and school districts that vanished after the antitax measure passed.

What tosh. Other states have not had nearly as many problems as California while also having to deliver the same services. So, why is California one of the most bankrupted states in the union?

With such a stark statement as laying the blame for the state's fiscal crisis squarely on Prop 13, one might think that O'Leary might have taken the time to offer some proof or statistics to substantiate his thesis. One would be wrong. After making the claim, O'Leary spends several dense paragraphs offering anecdotal stories about Californians that have been helped by the state's welfare programs, but offers no stats, no comparisons to other states, no investigation of the state's expenditures or anything else to actually prove his claim that Prop 13 is what did in the state's budget. He merely states it as a fact and moves forward with the assumption taken on faith.

It's amazing that Kevin O'Leary's piece was even published it is so empty of veracity. It's so bad that even his very first paragraph contains a factual disparity. (My bold)

The financial crisis in California grew worse this week as State Controller John Chiang warned that if legislators and Governor Arnold Schwarzenegger fail to come up with a budget-balancing package, he would begin paying California's bills with IOUs on July 2. The last time the state did this was during the Great Depression.

As excerpted by CNN, Rhodes Cook/Congressional Quarterly proves O'Leary wrong. (Again my bold)

Times changed and Wilson had to be a "bad times" governor. Defense downsizing has sent the state economy into a spiral at the same time that California has kept growing with immigrants, both legal and illegal. Faced with a series of budget crises, Wilson at one point was forced to issue IOUs instead of state paychecks.

The "Wilson" in the report above would be Governor Pete Wilson. Obviously, Wilson had to pay state bills with IOUs. That was the 1990s. From my calculations the 1990s was a bit after the Great Depression.

Finally, one is struck by the fact that missing in O'Leary's piece is any hint that lawmakers just might be wasteful and that the profligate spending by Sacramento is a bad thing. No, it seems that as far as O'Leary is concerned, any and all government spending is the right move and any law that gets in the way of high taxes and a spendthrift government is a bad thing.

Time files this piece in its "U.S. News" section, but it simply does not stand up to scrutiny and without any pertinent facts to prove his claim, it's hardly "news.".