The Golden State’s Tarnished Anti-Tax Image

According to the U.S. Labor Department’s monthly household survey released today, unemployment and joblessness in California officially stands at 12 percent. That number is, of course, an underrepresented sample. It counts only those who are actively looking for work and qualify for federal unemployment insurance. It does not count the millions of people who no longer qualify for benefits, and therefore “officially” have “given up” looking for work. Never mind that millions of people need work and are still looking for work without federal assistance, because they are not counted in official unemployment figures.

The Golden State now has the second-highest unemployment rate in the country, following the dismal likes of Nevada, where even the luxury-gaming-entertainment-recession-proof juggernaut called Las Vegas has downsized noticeably thanks to the recession. California’s economic woes are further compounded and prolonged by the political morass in Sacramento. The state’s government has slashed spending heavily over the last year, but it has failed to resolve the biggest sticking point:  an anti-tax bias against balancing budgets sensibly that is crippling the public sector. Then again, the national debate over raising the debt ceiling, and the rather crappy compromise made by Congress, highlights the fact that it is primarily to blame for compounding and prolonging the economic woes of the nation. (Though one would think the Constitution gives the President the duty to run the economy, given the finger pointing and finger wagging of Tea Party and Republican rhetoric.)

States like California face a choice that is unpleasant but also unnecessary. Cutting deficits is unpleasant but doing so without raising taxes is unnecessary. Resolving the state’s $25 billion deficit required a huge disinvestment in the public sector:  education, roads, police and fire services, parks, and public health all suffered deep cuts. The fiscal year began on July 1 and the projected deficit shortfall over the next year will be well-above $10 billion. That means more unilateral cuts hurting millions of Californians unless Gov. Brown and the California Assembly can find a way to bring an end to the anti-tax bias that is enshrined in the State Constitution and hamstrings legislators from raising taxes without a super-majority vote.

California needs a new social compact in which the tax system is clear, fair, and protected from market failures, and where the public sector is transparent, well-funded, and protected from the failure of moral and economic leadership in the private sector. Whether the Assembly gets smart and finds a legislative solution to the initiative-driven policy of direct democracy? Only time will tell, and Gov. Brown has an uphill battle against another looming deadline to convince Californians it is time for substantive reform to the politics of taxation. ::KPS::