Legislative Democrats have proposed another one of their goofy tax swaps in an effort to lessen the gaping $19 billion budget deficit. Oh, pardon me, did I say “goofy.” Well, what else would you call a proposal that increases state income tax by 1% and lowers sales tax, claiming it will lessen the tax burden on Californians yet increase revenues by $1.8 billion?
I’m unclear on how you can lower taxes yet increase revenue at the same time. Besides, it only raises $1.8 billion (assuming their numbers are accurate) and the deficit is $19 billion. It’s nowhere near enough.
At least this plan isn’t as wacky as their previous proposal to raid the state soda bottle fund for the next 20 years, and use the projected income to get Wall Street to float bonds partly financed by an oil severance tax, and then swapping state and local taxes. This was so bizarre and convoluted that I doubt anyone actually understood it, and it has died a merciful and well-deserved death. I wonder how many bong hits that one took to dream up?
Seriously though, there is an air of unreality emanating from Sacramento. Like if we put on a happy face or ignore the problem or make rosy predictions for the future that somehow the deficit will magically go away. It won’t, and in the meantime, among other things, California’s credit rating continues to drop. That means borrowing money becomes harder and more expensive to do.
Republicans in the meantime are building the stone wall to end all stone walls and refusing to budge an inch on taxes. “No new taxes, at all, ever” is their motto. “Grow the economy not reduce it with extra taxes” say their leaders in a YouTube interview, along with imposing bludgeon-like spending cuts. This is as equally unrealistic and fuzzy-minded as Democratic plans.