04/10/2017

Taxifornia Does It Again

Investor’s Business Daily

Taxation: California's far-left government has done it again. Not realizing its real problems are excessive spending on misplaced priorities, excessive taxes, too much debt and a far-too generous welfare state, its legislature working in cahoots with Gov. Jerry "tax-and-spend" Brown has pushed through the largest tax hike in state history.

In California's one-party state — everything in the state, everything, is controlled by the Democratic Party and its union allies — the governor and legislature rushed through a massive tax hike on gas and diesel fuel along with higher car registration fees with hardly anyone realizing it.

The state's already highest-in-the-nation gasoline tax will rise 19.5 cents a gallon, while diesel will go up 20 cents. Meanwhile, car owners will also see their registration fees rise from $25 to $175, depending on vehicle value. Electric car owners get hit with a special $100 tax, since they don't use gasoline.

All told, the new taxes are expected to collect $5.2 billion a year.

Hand it to Gov. Brown: With talk of $120 billion in badly-needed transportation infrastructure improvements in the state, he got the legislature to propose and pass the biggest tax hike ever in just a week. Pretty impressive for a guy who has jacked up state spending by 53% just since 2010.

The problem is, the state has known about these problems for years, and collected taxes to pay for them. The problems didn't get fixed. Instead, the legislature diverts more than $2 billion a year to other things. That's called fraud.

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Thanks to "bracket creep," the inflation of the 1970s pushed millions of taxpayers into higher tax brackets even though their inflation-adjusted incomes were not rising. To help offset this tax increase and also to improve incentives to work, save, and invest, President Reagan proposed sweeping tax rate reductions during the 1980s. What happened? Total tax revenues climbed by 99.4 percent during the 1980s, and the results are even more impressive when looking at what happened to personal income tax revenues. Once the economy received an unambiguous tax cut in January 1983, income tax revenues climbed dramatically, increasing by more than 54 percent by 1989 (28 percent after adjusting for inflation).

 

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