Taxes and the Pyrite State


Jerry Brown: California Will Have Surpluses

That’s what he says:

After years of red ink, Gov. Jerry Brown said on Thursday that California’s $96.7-billion general fund is now poised to end next year with a surplus, thanks to years of deep budget cuts and billions in new taxes approved by voters last year.

“We achieved the position we’re in because of tough cuts … and then the people voted for taxes,” he said. “We broke the logjam by going to the people.”

Schools will be the big winner in the governor’s new spending plan, receiving $56.2 billion in state funds, an increase by $2.7 billion over the last year. That funding is set to jump to more than $66 billion by 2016.

The budget also dedicated an additional $350 million to the state’s public insurance program, Medi-Cal, to help implement President Obama’s healthcare law.

Brown’s budget predicts only the second budget surplus in the last decade, with an $851-million surplus projected at the end of the 2013-14 fiscal year — if all his proposals are approved by lawmakers.

Jerry Brown says we will have surpluses. I say we will not.

We’ll see who is right.

The boldfaced parts were by Patterico commenter Taney O’Haley, who said that it sounded like wishful thinking to her.

Donald Douglas referenced an article from Investor’s Business Daily which pointed out that the overwhelming majority the voters gave to the Democrats puts the restrictions under Proposition 13 at risk, and that there are already at least two proposals in the legislature to weaken it:

Already, state Sen. Mark Leno wants to put a measure on the ballot to lower the two-thirds vote threshold for school district parcel taxes to 55%. State Sen. Lois Wolk introduced a bill that would ask voters to drop the vote threshold to 55% for library parcel taxes and bond measures.

In the Assembly, Tom Ammiano plans to reintroduce a bill seeking to revise the definition of an ownership change that triggers a new business property assessment. Voters’ OK isn’t needed. Even if the bill stalls, as it has in the past, business owners fear that its goal — squeezing more tax money from commercial property — will surface in other proposals, some with better odds.

The tax increases approved by the voters in November were temporary increases, adding a 0.25% increase to the state sales tax, and creating three new brackets for the most productive Californians, lasting for seven years. For a single Californian earning $500,000 or more, the new 12.3% marginal rate, combined with the new federal top rate of 39.6%, means that 51.9% of his earnings over the thresholds will be seized just in income taxes alone. If his earning power is portable — and for many of California’s top producers, it won’t be — moving to a state like Texas or Florida, which have no state income taxes, is a completely rational economic decision.

How many will? We can’t know yet, but we’ll see in two more years, when Governor Brown’s projection of a balanced state budget is either realized, or it is not.


  1. This entire paragraph makes no sense because left wing economics makes no sense. Markets make sense. They have to

    In a market transaction, shit-for-brains, you have a buyer, and you have a seller. That’s microeconomics.

    In an economy, shit-for-brains, every transaction (not involving exports or imports) needs both buyers and sellers in the same economy. That’s macroeconomics.

    As a player in a market economy, shit-for-brains, you can try to produce the goods you sell as cheaply as possible. In dealing with a market economy as a whole, shit-for-brains, your demand for the goods produced comes from the payments made in producing them.

    You are bleating about “markets making sense”, shit-for-brains, because you STILL do not understand that a government is NOT just a business or household writ large, and macroeconomics is not just an aggregate of microeconomics.

    If the government could print money out of thin air, there’d be no need for taxes.

    Ok, shit-for-brains, you tell us where that dollar bill in your pocket came from. Did it grow on a money tree? Did a little money fairy wave her magic wand and produce it?

    Or did a government department spend a few cents printing a piece of coloured paper, which it then states is worth a dollar?

    Hey, shit-for-brains, the central bank regularly collects currency and burns it. A person who did that would (literally) be considered mentally unstable – but it’s a routine part of managing an economy.

    Why do you think the government can burn billions of dollars worth of money, shit-for-brains, without it costing them anything more than the price of a couple of security guards and a furnace? It is because, shit-for-brains, the government can print all the money it wants, and money is a tool not a constraint to a sovereign government.

    Do you start to get it yet, shit-for-brains?

  2. Pho, you can post all the jabberwocky you want, but it doesn’t mean you know a damn thing about economics.

    Seriously, if you knew remotely as much about economics as you say you do, you’d be living on your yacht in the Caribbean, not stacking books for a living.

    You know, those that can, do. Those that can’t just run off at the mouth like a rat going endlessly around in circles.

  3. An interesting illustration of both the positing of constitutional questions and the posting techniques of trolls has arisen.

    It comes into view as the New Zealand Neurotic experiences a fit of pique over having posted and then having been been noticed as posting an apparent terminological equivocation – ostensibly in reference to the United States.

    “No, Eric, it isn’t. A sovereign government can print money at will. A household or business cannot. Once again you demonstrate your complete ignorance.”

    In response to Dana and explicating the left’s context rigging engagement in circular argument, I later wrote,

    Your question, and the neurotic’s terminological stupidity regarding “sovereign” government answer the question. In fact the link to the “impossibility” of social security ever going broke does the same thing when it lays out explicitly what the implicit premises are … a no-exit room, non-cooperation disallowed, and eternal growth.

    Of course it may have escaped the notice of many, including many economists, that our government is not sovereign. Nor is “the state” except in relation to foreign states. The correct constitutional answer is that it is the people of the states who are when acting through their states, and that our system is not a unitary but a federal system.”

    … after which the New Zealand Neurotic attempted to get back ‘some of his own’ by remarking:

    “And I see DNW is nearly as retarded as Eric in his confusion on “sovereign”.”

    The Neurotic is apparently insinuating that he meant only, and precisely, “monetary sovereignty”, which is a conditional – if government power is ever viewed by collectivists as conditional – kind of sovereignty. Whether he meant to categorically and unconditionally apply the term to the U.S. he doesn’t say. He merely insinuates it through using general language directed at Eric.

    However in following The Neurotic’s links over to Wiki we find that he is referring to the money power and that this particular definition of “sovereignty” is conditionally stated according to his source, to be contingent on its meeting three multi-part conditionals; one or more of which are not applicable as exclusive disjuncts (PvQ but not both) in the instance of the United States:

    the rights of legal tender, the right of issuance and retirement, and the right of currency monopoly.


    In the “same” source, Wiki, the term currency, as used in currency monopoly is given several somewhat related medium of exchange definitions:

    - “A currency … in the most specific use of the word refers to money in any form when in actual use or circulation, as a medium of exchange, especially circulating paper money.

    - more general use of the word currency is anything that is used in any circumstances, as a medium of exchange. In this use, “currency” is a synonym for the concept of money

    - A definition of intermediate generality is that a currency is a system of money (monetary units) in common use, especially in a nation.”

    Now, if sovereign government qua monopoly implies the disjunctive exclusion of all competing currencies from use as media of exchange among business or private persons, then our Federal government has apparently no such monopoly power. It has the power to coin money and to regulate the value (“thereof”) of that money, and by statue to do a number of other things. But to describe that as a monopoly as a question of law which excludes all other currency fails on its own Constitutional terms.

    In fact there are several interesting questions that have come up recently regarding just this matter. Seth Lipsky, writing in WSJ in March of 2011 comments,

    “So alarming has been the collapse of the dollar that the legislatures in as many as a dozen American states are considering using their authority—under Article 1, Section 10 of the Constitution—to make legal tender out of gold and silver coins.”

    When Private Money Becomes a Felony Offense
    The popular revolt against a declining dollar leads to a curious conviction.

    Lipsky further notes a peculiar assertion on the part of the Federal Government prosecutors in a case which went to trial, ostensibly on a counterfeiting predicate:

    ” … the indictment handed up against Mr. von NotHaus in a courtroom at Statesville, N.C.”, contained a certain paragraph number 33 with asserted:

    “Article 1, Section 8, Clause 5 of the United States Constitution delegates to Congress the power to coin money and to regulate the value thereof. This power was delegated to Congress in order to establish a uniform standard of value. Along with the power to coin money, Congress has the concurrent power to restrain the circulation of money not issued under its own authority, in order to protect and preserve the constitutional currency for the benefit of the nation. Thus, it is a violation of law for private coin systems to compete with the official coinage of the United States.”

    Yet a curious thing happened in the courthouse on the day before the jury went to deliberate. According to Aaron Michel, Mr. von NotHaus’s attorney, the judge granted Mr. Michel’s request to delete paragraph 33 from the indictment. ”

    MSN, April 4th 2011 characterizes the same issue thus:

    Feds go after wacky ‘Liberty Dollars’. Prosecutors argued that the privately produced coins were too similar to legal US currency.”

    and thus

    “Private currencies are fine, but Liberty Dollars skirted too closely to the edge of legality.”

    Robert Murphy, of the Von Mises Institute, in his “Keeping Us on the Fiat Dollar: More than Just Legal-Tender Laws” … has a more cynical view, saying that the government’s actual policy amounts to an attitude of ‘constitutional provision and law and statute be damned‘, but that technically,

    “As a college professor and lecturer at the Mises Institute, I have always had some difficulty explaining exactly how the government kept everybody using fiat money. Students would often think that legal-tender laws explained everything, but I would point out that they weren’t the whole story.

    It’s true, legal-tender laws mean that nobody can refuse to accept Treasury notes (and coins) as payments of dollar-denominated debts. But legal-tender laws per se wouldn’t prevent merchants and their customers from using precious-metal coins issued by a private mint.”

    In fact there are private currencies circulating in the United States, despite Murphy’s view that the Federal Government bureaucracy and current placeholder’s aim is to employ extra-legal methods to effectively suppress them.

    Clearly, the New Zealand Neurotic has misgauged both the applicability of the term sovereign as it relates to our polity, and the meaning and implications of what “monetarily sovereign” government implies socially, politically, and economically, in a federal republic of constitutional form like ours.

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