Back in February California’s legislature passed legislation that helped cut $8 billion from the projected $16 billion budget deficit. That’s good. Unfortunately, the deficit is growing as the state’s revenues aren’t. The San Francisco Chronicle has a story on the issue, and they think the deficit might now be as high as $14 billion.
Democrats are pushing for tax hikes while Republicans are now saying they may allow some fee increases. I know I’ll be a voice in the wilderness but what California really needs are tax cuts.
Are you nuts, Russ, suggesting tax cuts when California is in dire financial straits? No. California cannot get out of this mess by increasing taxes. The state must fundamentally reform spending, and this will be painful. Cuts will have to be made—significant cuts in programs that many legislators will consider their “pet projects.”
But as the Democrats state this might not be enough. So instead of increasing tax rates we should cut them. Cutting tax rates leads to increased tax revenues. This has been shown time and time again (the Laffer curve). California needs to do everything in its power to cause businesses to relocate to the Golden State. If the Democrats in Sacramento had their way every business that could would relocate.
It is time for a change.