'Intelligent discontent is the mainspring of civilization.' -- Eugene V. Debs

Sunday, August 15, 2010

The Sub-Proletarianization of California 

As most of you know, California has a substantial budget deficit of approximately 20 billion dollars. A few days ago, the Legislative Analyst published a summary of the combined state and federal tax consequences of the budget proposal put forward by the Democratic leadership in the legislature, Senate Pro Tem Darrell Steinberg and Assembly Speaker John Perez, to address this deficit (if necessary, you can click on the chart to enlarge it): According to the Legislative Analyst, the plan results in a net income tax increase of $1,057 for people who make between $20,000 and $50,000 a year, with a net overall tax increase of $357, and a net income tax increase of $1,886 for people who make between $50,000 and $100,000, with a net overall increase of $643. Increases are much less for people who make income in excess of these levels, with a net overall tax gain in some instances. For those earning between $20,000 and $100,000, the projected overall increases will be higher if the people within these income groups purchase less than anticipated, as the reduction in the overall tax increase is dependent upon people benefitting from a lower sales tax.

Neither Steinberg nor Perez have an answer as to how such regressive tax policy will address the first year over year decline in the income of Californians since World War II. Amazingly, there was a time when political figures like Steinberg and Perez were considered liberals. Maybe, they still are, if one considers the possibility that liberalism as a social philosophy has undergone a fundamental transformation during the years of the Obama administration. Of course, as to this specific issue, the catastrophic consequences of state and local budget cuts around the country, the Obama administration has done little to address the contractionary consequences of such policies as first identified by Paul Krugman over a year ago.

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