Roger in WND: California Death Spiral - San Diego, California Talk Radio Station - 760 KFMB AM - 760kfmb

Roger in WND: California Death Spiral

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If you want to experience what it would be like living in President Obama's second term, that nightmare is playing right now in Maryland, Illinois and California.

Tax "fairness," spread the wealth around, deficit-spending tsunami? These three states have it all.

In Maryland, Gov. Martin O'Malley has proposed a gas tax increase at a time when the price of gas is at an all-time high.

The governor has also proposed an increased income tax on the "wealthy" to balance the budget.

Apparently, the income tax increases Gov. O'Malley pushed through in 2007 couldn't match the spending appetite of the governor and his Democratic Legislature.

In Illinois, Gov. Pat Quinn persuaded the Illinois Legislature to pass a 67 percent increase in the state income tax to balance the budget. Illinois boasts an unemployment rate of 9.4 percent, and private business is fleeing the state.

Despite the tax increase, the Illinois state budget is running more than $5 billion in the red and the state owes at least $37 billion more than the value of all its assets.

In California, high unemployment, higher taxes, permanent state deficits, soaring unfunded liabilities and suffocating regulation has become the "new normal."

Gov. Jerry Brown has an answer.

He is proposing to raise taxes on the wealthy to the highest state income tax rate in the country and impose the highest sales tax rate in the country on every Californian.

Under present soak-the-rich California income tax rates, the top 1 percent already pays most of the state's income tax revenue. And that 1 percent is leaving the state.

Approximately 254 California companies moved out of state last year, five times as many as moved out in 2009.

California lost 120,000 jobs last year; Texas gained 130,000 jobs.

Even the high tech and "green energy" jobs that were supposed to replace the "old" economy have not materialized or are moving out of state.

Solar panel maker Solyndra was the poster company for the new green economy. It is bankrupt, and 1,100 Californians are out of work – despite a half-billion dollar subsidy from the Obama administration.

Apple Inc., famously founded in California, is building its next expansion in Austin, Texas, a $304 million campus with 3,600 employees.

California, with 12 percent of the nation's population, has 34 percent of the nation's welfare recipients, 25 percent of the nation's illegal immigrants and an unemployment rate of 10.9 percent.

Even before the governor's new tax increases, existing high tax rates are producing less state revenue.

Compared to February 2011, state tax collections for February 2012 shriveled by $1.2 billion, or 22 percent, more than twice the year to year decline of $504 million posted in January.

Gov. Brown estimates his proposed higher taxes will generate $9 billion in the first year. The governor wants to increase spending by $7 billion.

The Legislature is considering ways to spend the "extra" $2 billion.

But there's a problem. The Legislative Analyst's Office says the governor's new taxes will only raise $2.2 billion the first year, and the State Controller's Office estimates the deficit will exceed $9.2 billion.

The Legislature seems hell-bent again to spend beyond any revenue projection. The deficits just keep getting bigger.

The governor's tax hike plan will be on the ballot for voter approval in November. A majority of 52 percent of likely California voters currently support the plan, down from 68 percent support in January.

Higher taxes are bringing in less revenue in another specific case in California.

On the California June ballot, Proposition 29 would raise the cigarette tax another $1, bringing the price of a pack of cigarettes to $7.

Here again it looks like higher taxes will produce less revenue, validating the famous curve of Dr. Arthur Laffer.

California has sold $16 billion in bonds to be paid back from these cigarette taxes. However, existing high taxes have already reduced smoking and the revenue from smokers.

Today, only 11.9 percent of Californians smoke, a low rate only exceeded by Utah. The state projected a 1.8 percent per year decline in smoking; the actual rate has been above 3 percent.

The consequence is that the tobacco tax revenues are declining and nonsmoking taxpayers are now on the hook to repay the bonds.

The state governments in Maryland, Illinois and California have proven that the Obama formula of high taxes and deficit spending will only lead to bigger government and higher unemployment, meaning higher taxes and even worse deficits.

Call it the California death spiral.

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