Living in California has many benefits: good weather (except the summer), nice surroundings, fun places to visit, a generally laid back lifestyle. But there are some serious negatives, the most notable of which is wondering just how long it will be before the entire system collapses. Rising debt, rising taxes, crumbling infrastructure and utterly inept politicians are just a few of the many problems we must deal with.
Whenever this topic is up for discussion the speaker frequently refers to the fact that ‘back in the 50?s and 60?s’ California was the envy of the world, with top notch schools, solid infrastructure, growing businesses and so on.
The question that never seems to be asked or answered is how we moved from there to here. Although I have not been able to dig up specific numbers it does not seem that income was much higher back then. To be certain there was no Proposition 13 limiting property taxes but neither was there a soaring real estate market. That came in the 1970?s and was what prompted the passage of 13. Income tax rates were probably higher on some incomes but the overall burden was not too high.
So why is it that we were able to pay for things back then and we are unable to pay for them now ?
Perhaps part of the issue was taxes but given the burden that increasing taxes are placing on people and businesses today it doesn’t seem likely that they were much higher then.
We also don’t seem to be getting as much out of our spending, even though it seems to be much higher now that it was back then. Indeed looking at historic budgets our deficits are now higher than the entire budgets used to be, and adjusting for inflation isn’t going to fix that.
So my admittedly armchair economist guess is that the problem has to stem from a couple of propositions.
1) Fewer people are paying taxes now than were paying taxes then. If you have the same basic tax rates but only 5 out of 10 people paying the taxes, that could be part of the problem.
2) We are spending money on many more things than we used to, and thus there is less left for schools and roads.
I’ve discussed before the reality that in order to balance these budgets we will need to increase taxes and lower spending, but I think a broader view would be we need to figure out a way to get more people to be paying, rather than making those who are paying already increase their contribution. Similarly, I think we need to accept that while it is a great idea to spend money on good things, there are just some areas that we can’t afford to put money in to.
I’m going to open up the discussion for you good readers to offer thoughts on how we got here and how we might get back. California may be the big boy in trouble today but this is a path the whole country seems headed down