History has shown us repeatedly that it's a cardinal sin to raise taxes on middle and lower income people during a recession or depression. The reason is simple - you want people to have as much disposable income as possible so they'll spend it and help bring the economy out of the doldrums. But raising taxes takes disposable income away, thereby worsening the economic crisis. This is not a liberal or conservative issue. It's basic Econ 101. That's why no one in the Obama administration or the Democratic-controlled Congress is talking seriously about raising taxes. In fact, they just approved a major tax cut for middle and lower income families. So why the hell, then, are so many Democrats in California and the East Bay bent on doing the opposite? Why do DC Dems and the Obama administration get it and they don't? Taxing the middle and lower classes is just going to make things worse.
Yet today we learn that Democrats up and down the state are proposing a host of new taxes to deal with the state's next budget crisis, which is expected to rise to $6 billion to $8 billion by July 1, according to the Chronicle. Not all of the ideas are bad. We like, for example, San Francisco's Assemblyman Tom Ammiano's plan to levy a tax on marijuana of $50 per once as part of his overall proposal to legalize pot. That makes huge sense. If pot is legalized, it'll be much cheaper to buy, and so the tax won't end up hurting anyone - while raising huge amounts of cash for the state. But another tax on alcohol or gasoline, or raising vehicle license fees? That's just plain stupid. These types of taxes are inherently regressive - they end up hurting lower and middle-income folks the most -- thereby taking away disposable income, and worsening the economy.
If we weren't in a steep recession, some of these tax ideas would have merit. Using the tax code to change bad behavior has always been a good idea - in a decent economy. Another gas tax or higher vehicle license fee, for example, will help discourage driving, a step in the right direction to limit greenhouse gas emissions. But now is the not the time. The only tax that lawmakers should be discussing seriously is an increase to the income tax for California's richest people. Taxing them is the most efficient way to raise significant sums while inflicting the least amount of damage on the economy.
It's also high time that lawmakers get serious about cutting salaries of well-paid state workers. I know it will take plenty of political courage to take on the powerful unions - such as the one that represents prison guards. But in this economic downturn, it makes far more sense to institute salary cuts for state employees than it does to tax the rest of the population. They can afford it, and we can't. It's time that state Dems realize that they represent us -- not state employee unions.