Recent editorials from Grover Norquist and Michael L. Marlow remind us taxes are too high, and people are apparently leaving California in droves because of its high taxes and burdensome regulations. Unfortunately these observations are more propaganda than fact.
Norquist is a well-known anti-tax “crusader” and Republican operative who even worked to support Col. Oliver North’s illegal efforts with the Nicaraguan Contras. Michael L. Marlow is less famous, but was on Phillip Morris’ payroll when the tobacco industry manufactured junk science and disinformation to resist anti-smoking laws. In other words, Norquist and Marlow are as much partisan “hired guns” as they are disinterested pundits. Apparently, since the tobacco industry lost its lawsuits, Marlow is looking for a new gig.
Their editorials’ repeated point: California has high taxes, ranking sixth in the nation according to the right-wing Tax Foundation. Never mind that the Tax Foundation’s methodology is as questionable as Marlow’s and Norquist’s sincerity (see centeronbudget.org’s “Caution: the Tax Foundation’s State and Local Tax Rankings are Unreliable“) …those high taxes and regulations are driving people out of the state! Why it has the second highest unemployment in the nation!
Not surprisingly, these folks completely ignore the private sector fraud and public sector deregulation that led to “liar loans” and a burst housing bubble (and no, FNMA, FHLMC and Barney Frank were not behind that). That housing bubble and greedy banksters are really the origin of most of our current economic distress, not taxes or the burden of regulation.
More objective observers like the Center for the Continuing Study of the California Economy say “California’s state and local tax ‘share’ of 11.5% of income is slightly above the national average of 11.0%….California is a moderate tax state. In 2008-09, California ranked 21st among the 50 states with respect to state taxes as a percentage of personal income. The state also ranked 19th with respect to total ‘own source’ revenues – the broadest measure of state and local revenues – raised by state and local governments in 2006-07….
The real story: “Over the past two decades, the cost of funding state services has shifted from corporate to personal income taxpayers….New, increased, and expanded corporate tax breaks and the 1996 corporate tax rate reduction are responsible for the decline in the share of state revenues provided by the corporate income tax. Additional corporate tax cuts were included in the September 2008 and February 2009 budget agreements that will result in a loss of nearly $2 billion per year when fully implemented.”
The California Budget Project notes that, in addition to corporations, even wealthy individual taxpayers continue to be the beneficiaries of Norquist and Marlow’s efforts:: “The number of high-income “no tax” returns more than tripled between 1997 and 2007,”
For the picture nationwide, USA Today adds, “On average…the tax rate paid by all Americans — rich and poor, combined — has fallen 26% since the recession began in 2007. That means a $3,400 annual tax savings for a household paying the average national rate and earning the average national household income of $102,000….Taxes paid have fallen much faster than income in this recession. Personal income fell 2% last year. Taxes paid dropped 23%.”
The anti-tax whining of these hired guns is nothing new. They announce that the Republican “Starve the Beast” strategy is in its final stages. After having reduced taxes without reducing spending, the Republicans can now get Jerry Brown and the California Democrats to do the politically unpopular work of terminating programs that would otherwise be too popular to touch. It’s clever, but hardly non-partisan.