Sunday, February 27, 2011

Tax and Spend Banker

So the solution to Americas deficit problem whether Federal or State government would be to increase taxes...or so says the CEO of JP Morgan bank; Jamie Dimon.

States have a lot of wherewithal, when you talk about this huge deficit, the deficit in California is equal to one percent of the GDP in California, so if they raise taxes one percent, they could pay their deficit. And that's true for some of the other states and they have the wherewithal
This should not surprise anyone, tax cuts and spending cuts are what got California in the mess its in still thanks to Proposition 13 back in the Seventies.

The most significant portion of the act is the first paragraph, which limited the tax rate for real estate:

Section 1. (a) The maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.

And now it has become the clarion call of the American right, reduce government, which means reducing public services such as education, health care, etc.

California public schools, which during the 1960s had been ranked nationally as among the best, have decreased to 48th in many surveys of student achievement.

Which when government can no longer provide them must then contract out the jobs, privatizing them, which leads to private profits at public expense.

And at the root of California's misery lies Proposition 13, the antitax measure that ignited the Reagan Revolution and the conservative era.

Proposition 13 was the brainchild of the late Howard Jarvis. The antitax crusader was a policy genius not unlike Franklin D. Roosevelt. Both shared an affinity for designing deep structural change that, once embedded in the political system, is nearly impossible to alter without a massive change of heart by voters.

Jarvis created a similarly impregnable institution. When he rode the wave of anger over skyrocketing property-tax assessments to pass Proposition 13 in 1978, he included a two-thirds vote requirement for the passage of any new taxes in California — an insurmountable obstacle built on populist allergy to any kind of new levy. Beholden to a tax-averse electorate, the state's liberals and moderates have attempted to live with Proposition 13 while continuing to provide the state services Californians expect — freeways, higher education, prisons, assistance to needy families and, very important, essential funding to local government and school districts that vanished after the antitax measure passed.

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