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Originally Posted by WarrenC12
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Yes I agree that sometimes it works sometimes it doesn't. In the end it really depends on how good the government, policies, and laws are.
I will point out that California has run its economy into the ground (which isn't the fault of high taxes but instead short-term feel-good spending rather than investment in infastructure).
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How much in debt are the California governments? That’s hard to know too. According to a January 2017 study, “California state and local governments owe $1.3 trillion as of June 30, 2015.” The study was based on “a review of federal, state and local financial disclosures.”
In other words, that $1.3 trillion in debt is the amount to which California governments admit. Other studies believe it to be more. Indeed, one study says it is actually $2.3 trillion and a recent Hoover Institute stated that there is over $1 trillion in pension liability alone, or $76,884 per household. Incredibly, there are 4 million current pension beneficiaries, a number that continues to grow and which exceeds the total population of 22 states.
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On the other hand, for more than a decade, less than 150,000 of California’s 35+ million people pay half of all of its income tax – a highly imbalanced system.
Now, many might think California needs all of those taxes given its infrastructure deficit and debt. The problem with that notion is that those prolonged high taxes, debt burden and regulations limit California’s economic future. After all, why would businesses locate in California in the future with the impending tax-aggeddon that must be in the offing?
Also, California’s middle class has been hollowed. A recent CNBC headline read: "Californians fed up with housing costs and taxes are fleeing state in big numbers." Where are they going? Many have left for low tax states offering more jobs than California.
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Gavin Newsom, Kevin de Leon, Xavier Becerra and Kamala Harris also support some form of significantly expanded healthcare benefits if not universal healthcare – which is estimated to cost as much as $400 billion a year (that is not a typo). All of them support the California magnet policies that attracted so many of those in California illegally. In fact, there is no indication that the next generation has any concern for the future debt. Instead, they support higher taxes.
What taxes will those be? Within a decade you can expect higher income taxes and sales taxes. There is always a movement afoot to do away with California’s landmark property tax protection known as Prop 13. You also can expect a service tax – a tax on lawyers and accountants as well as hairdressers and gardeners. That service tax would be on top of the existing income tax. Beyond all of that, sooner or later an asset tax will be proposed. California counties already collect an asset tax on businesses. Look for that to be proposed statewide as California lurches ever farther to the Left and if forced to confront future debt.
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https://www.forbes.com/sites/thomasd.../#614156f73a23
The problem with California is faced with the prospect of going bankrupt, they raise taxes rather than reign in spending. And its an endless cycle just like in Canada where more people rely on that spending which means they all vote for more taxes which means more spending and even higher taxes until the rich give up or leave.
California could indeed be successful with high taxes. But its not because it also has high, short-term minded spending.
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