Tuesday, May 19, 2009

But Think of the Children! (No on Prop. 1A)

California voters are voting today on whether to "fix" the budget by extending the "temporary" tax increases imposed in the latest budget—of course, tax increases are rarely temporary and hardly ever fix anything.

But the tax issue always incites from the usual suspects the same indignant response that we are letting our children down by failing to increase taxes, which is the purported panacea for our poor education system.

The first problem with this theory is that raising taxes does not necessarily increase revenues.

Dr. Arthur Laffer and Stephen Moore recently wrote in the Wall Street Journal that punitive state income tax schemes fail because Americans are inherently mobile creatures---we know how to move. They pointed out that between 1998 and 2007, "more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states . . . and relocated to the nine tax-haven states with no income tax . . . ."

These individuals tend to be job creators. Over that same period, the no-income tax states "created 89% more jobs and had 32% faster personal income growth" than the high tax states. 'Taxing the rich' may seem like a good idea, but you can't tax them once they move to another state. To the contrary, this scheme deprives California of vital economic productivity, including tax revenue and job creation.

Second, even if raising taxes would solve the situation, are the taxpayers really at fault?

Education spending within the budget increased by over a third between 2003 and 2008, keeping pace with the overall budgetary increase. Are our schools 35 percent better off today than they were in 2003? Why should we believe that throwing more money at the problem will work any better than in the past?

Perhaps the problem isn't a lack of resources, but misallocation of those resources. California is already one of the highest taxing states in the country; rather than blame the greedy taxpayer, perhaps we should ask why we're receiving so little for the money we already spend.

So, where does the problem lie? Maybe with the bureaucrats who misallocate the money budgeted by the legislature, or perhaps with the legislature for sacrificing education spending in favor of their own legislative agendas. Most likely, it is all of the above, plus any number of rules and regulations that diminish the level of service our students receive.

Let's make the money we already spend work more efficiently; until then, don't ask me for another dime, because I don't feel the least bit bad about saying no.

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