City Journal Spring 2014

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Spring 2014
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Troy Senik
The Tax That Dare Not Speak Its Name « Back to Story

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This is not related to California alone. Isn't the current problem, that the West is in a fiscal whole, weighed down with debt, ageing fast and concentrating on domestic services, as the striped out economies are largely not globally competitive enough to run trade balances?
There are three solutions, one do nothing and just keep borrowing (1990's and 2000's), two print money and raise taxes living hedonistically for today and let trade and fiscal balances just get worse and worse or three repay debt, cut taxes and welfare, push up exports and import substitution. The third option is twenty years of hard slog, to get out of this mess, the second is more fun and games now, while knowing one day it will end. In democracies, based on mass marketing, spin and public make work programs, too few will vote for pulling their weight.
i left California years ago and i do not even make enough to pay taxes but the reason was i was just tired of the moronic politics and even more so, the general population
The continuing, unstoppable tax trainwreck of California's economy is a terrible thing to watch.
Mr. B. Samuel Davis:

If you wanted to stop with your comment: "If the California voters are dumb enough ... .", you could have. They are.
Lefties on the Left Coast never tire of devising new ways to increase funding for the socialist Shangri-La they have fashioned for themselves. By imagining ten impossible things before breakfast, they are able to avert their gaze from the inevitable end game: a horrific crash that will swallow up the state like Godzilla. This will be the whole enchilada, with social and city services disrupted, food shortages, power outages, civil disorder, and lots and lots of urban violence.

The social contract crafted by our founding fathers was conditioned on an honest (or at least relatively honest) and godly electorate. The people of California, who kid themselves every time they go to the polls and leave the details of governance to others, are neither. Their house will fall, and great will be the fall of it.

I am a Californian, but, because I don't have a death wish, have moved out of the state. I see that many of my fellows have done likewise.
Authors and pundits love to portray Californians as demented twits who fall prey to every Pie in the Sky proposal which comes along – and given our electorate’s history maybe they have a valid point. But a Proposition 666 titled: “Take Enormous Amounts in Taxes from Californians and Give the Money to Friends and Family Members, While Keeping Some for Ourselves” Act would garner only a paltry 2 million supporting votes during a future California election and fail to pass. The trick to these scams is centered around the marketing. Take, for example, Prop. 71 titled: “California Stem Cell Research and Cures Act”. $3 billion in taxpayer funding was raised as a result of this swindle and the marketing sophistication used to put this over on the state’s voters is a marvel of political manipulation.

California’s leading scientists, such as the esteemed Michael J. Fox, Brad Pitt and Christopher Reeves, were recruited to publicly back this scam. A straw dog controversy was manufactured to create the necessary drama – namely, that embryonic stem cell research was being deliberately thwarted by Neanderthals who opposed scientific progress. Diseases like Parkinsons which afflict much loved celebrities such as Michael J. Fox could be easily cured but heartless individuals and organizations were stymying such legitimate research efforts – what a delightful fairy tale.

The Roman Catholic Church, along with other organizations, was duped into publicly opposing Prop. 71, thereby adding legitimacy to the Hollywood drama surrounding the “ban stem cells” myth. Most of the $3 billion has been doled out to insiders within private industry and public universities, while political patronage jobs going for $250,000 per year were created left, right and center. To date, not one single cure derived from embryonic stem cells has been developed – ask your own physician if you doubt that fact.

But Prop. 71 accomplished every one of its goals – the actual and unstated goals, not the Hollywood drama the voters were treated to. Money leading to development of private patents and marketable medical techniques was awarded to designated recipients. Public universities within California also fed off the carcass and received their share of the bounty. There won’t be a Son of Prop. 71 leading to another $3 billion medical research giveaway however, even Californians aren’t that gullible.

So, of course, the next swindle within the batter’s on deck circle must bear an innocuous title like: “Clean Jobs and Energy Act”. But authors and pundits seldom stop to consider how much money it takes to market one of these scams – or where that money is coming from and exactly why it is being donated. Will publicly spirited individuals contribute large sums of their own and raise millions more for political advertising solely to benefit all Californians without a single self-serving motive – sure, that brand of altruism is boringly commonplace. And who would dare oppose jobs and clean energy – most likely no one, which is exactly the point. And authors stop short of digging into the details of why Tom Steyer is leading the charge – what exactly is in it for him? We won’t know the answer until Prop. 39 passes and we learn how this scam plays out, who gets the money, which friends of which politicians benefit, what favors are traded or political paybacks awarded, what the actual motives truly are.
I agree with the commentator below - if California voters are dumb enough to keep electing these people, and adopting these tax measures, then a pox on them - they made their bed, they can sleep in it.

But, what also comes with this is that when it does fall apart, California will come begging to the rest of us. That is a problem.


Hard as it is, maybe we are coming to the point where we simply write off California. The voters clearly want to try the blue state model of governance. As painful as it is to watch, what else can we do?
Wonder what Steyer's number-crunchers came up with when trying to figure out what his up-front $21M investment in pimping Prop. 39 (Clean Energy Job Creation Fund for a green energy investor proposition)would pay off at.
Maybe I'm missing something here, but as an out-of-CA vendor, I can readily set up a distribution shop in Reno or Vegas and make all CA-customer sales FOB Nevada. UPS or FedEx can deliver stuff on a separate basis. Only retail or end-user sales will be affected by prop 39. Coincidentally, AMZN has a big facility in Reno, but that was intended for sales-tax-collection avoidance, an issue now moot.

Tom Steyer is profiled in "The Yale Men" chapter of Simon Mallaby's MORE MONEY THAN GOD (2010). Amusingly enough, on p281 there's a story about a botched Farallon adventure in Colorado to pass an aquifer initiative - it cost ~$20M, and failed at the election, in 1998.

Think of these initiatives as mass-IQ tests: any citizenry stupid enough to buy the arguments is too dumb to be worth the effort of hiring. Troy Senik's closing comment rephrased into street-level realpolitik parlance.
I do not know why you ascribe "business acumen" to someone who runs a hedge fund. Hedge funds are in the main parasitic--in the productive sense they are not "businesses" at all. Perhaps somewhere along the line Steyer managed to get some real business experience, but none of that is evident here.

I am sure that Steyer cannot image that his political project, vile and loopy as it is, would have any impact on California at all. It certainly will not for Steyer: he merely makes bet on what real business do.

I imagine that the melt down of the state will not affect him much at all. If anything he and many other of the rich and elite Establishment Left will be in better shape: The social pyramid will be that much steeper to climb for the rest of us.

California will fall; let us hope that the political winds have changed nationally such that the rest of the nation will not have to bail them out.

California may in fact never recover from its folly on its own. I imagine that this initiate will pass.