Jerry Brown: For and Against Tax Hikes At the Same Time

By Tom Del Beccaro, on Oct 2, 2012

Jerry Brown: For and Against Tax Hikes At the Same Time

Jerry Brown, if anything, is colorful.  He always has been and he likely always will be. Economics on the other hand was once dubbed “the dismal science.”  So, where do the two meet? Well, that depends more on where Jerry Brown is at the moment.  You see, while the laws of economics don’t change – Jerry Brown’s views, by contrast, change over time and, lately, at the same time. [Click here for the rest of the article]
For instance, since California voted for Governor Brown 2.0, Jerry Brown has been pushing for tax rate increases.  In 2011, Brown pushed for tax increases and he is doing so again this year.  Specifically, on the ballot this Fall, is Proposition 30.  That is Jerry Brown’s big push for a massive sales and income tax increase – the largest in California history. 
 
That income tax increase would give California the dubious distinction of having the highest income tax rates in the Country.  Keep in mind that California already taxes people with taxable income of $48,000 at the same rate 47 other states taxes people with $1 million in such income.  Read that again.  Jerry’s Prop 30 will only make that worse.  In addition, California already has the highest state sales tax in the Country.  Jerry’s prop 32 will make that worse too.
 
We know, of course, that Jerry Brown wasn’t always for increasing tax rates.  He used to be against it before he was for it.
 
Indeed, when he ran for President in 1992, Brown pushed for a flat tax – in part because he thought special interests were getting preferential loopholes he thought should be closed.  Let’s call that Jerry - Brown 1.0.  He went so far as to meet with supply-side legend Art Laffer who knows that lower rates produce a more vibrant economy and therefore more revenues than tax hikes.  Brown also cavorted with the likes of Steve Forbes who used to “compare notes” with Brown! Horror of liberal horrors!
 
Oh and by the way, Brown’s proposed flat rate back then – for the whole country - was 13%.  Now, under Prop 30, Brown is pushing for a top tax rate of 13.3% just for California!  Horror of economic horrors!
 
Does that mean that Brown – currently - thinks high tax rates are the only way to go?
 
Apparently not. 
 
Brown just signed a bill that provides tax credits, i.e. tax reductions (read loopholes!) for the film industry.  According to the Sacramento Bee, “AB 2026 is meant to persuade California's motion picture industry, which has made Hollywood famous, not to relocate.”
 
In other words, Brown is for tax increases and against tax increases, for tax loopholes and against tax loopholes, all at the same time. So it appears (a) that Brown was against them, and then (b) now he is for them and against them at the same time – and you thought John Kerry was slippery.
 
That, however, is not the end. Please note that California has lost 4.4 million taxpayers since 1998.  Three of the top four states to which they have – relocated – don’t have an income tax.  Of the top nine relocation destinations for California refugees, the average top income tax rate is 3.34%.  So it appears that 2.0 Jerry Brown knows that people are relocating and won’t stop it but wants to stop the film industry from relocating. 
 
Does any of this make sense? Well, when you consider that the laws of economics are a constant and that lower tax rates produce more revenue over time than higher rates, then there is only one explanation.
Regardless of what version you get of Jerry Brown, what matters is what works politically not economically.  So, when Jerry's union friends want a tax hike, they get it.  When Jerry's Hollywood friends (like Arnold) want a tax break they get it. When it comes to economics, however, it's pretty obvious Jerry doesn't get it.
While that may be colorful, for the many Californians out of work, it is hardly amusing.  

~~~

Please vote NO on Prop 30 and 38 and vote YES on Prop 32.  You can make a difference.

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