Friday, July 18, 2008

Taxes & The Peripheral Canal

1) New York is one of the greatest cities in the world and I often look to its leadership in public issues, but it is not necessarily a good model on taxes, as this article from the Wall Street Journal about California’s chase to join it as one of the highest taxed areas in the country.

An excerpt.

“New York City has long been the highest tax jurisdiction in the United States, but California politicians are proposing to steal that brass tiara. California faces a $15 billion budget deficit and Democrats who rule the state Legislature have proposed closing the gap with a $9.7 billion tax hike on business and "the rich." There's a movie that describes this idea: Clueless.

“The plan would raise the top marginal income tax rate to 12% from 10.3%; that would be the highest in the nation and twice the national average. This plan would also repeal indexing for inflation, which is a sneaky way for politicians to push middle-income Californians into higher tax brackets every year, especially when prices are rising as they are now. The corporate income tax rate would also rise to 9.3% from 8.4%. So in the face of one of the worst real-estate recessions in the state's history, the politicians want to raise taxes on businesses that are still making money.

“This latest tax gambit was unveiled, ironically enough, within days of two very large California employers announcing they are saying, in the famous words of Governor Arnold Schwarzenegger, "hasta la vista, baby" to the state. First, the AAA auto club declared it will close its call centers in California, meaning that 900 jobs will move to other states. "It costs more to do business in California," said a AAA press release, in the understatement of the year.

“Then last week Toyota announced it is canceling plans to build its new Prius hybrid at its plant in the San Francisco Bay area because of the high tax and regulatory costs. Adding to the humiliation is that Toyota will now take this investment and about 1,000 jobs to a more progressive and pro-business state: Mississippi.”

2) A new report, Comparing Futures for the Sacramento-San Joaquin Delta, from the Public Policy Institute of California concludes that we need to build the peripheral canal.

A summary.

“For over 50 years, California has been pumping water through the Sacramento-San Joaquin Delta for extensive urban and agricultural uses around the state. Today, the Delta is ailing and in urgent need of a new management strategy. This report concludes that building a peripheral canal to carry water around the Delta is the most promising way to balance two critical policy goals: reviving a threatened ecosystem and ensuring a reliable, high-quality water supply for California.”

The Dan Walters column in the Bee also comments on the report.

An excerpt.

“With the courts severely restricting water exports from the Delta because of declining fish populations, there has been renewed interest in a peripheral canal, although that term is largely banned from official discourse. But fierce opposition persists, mostly from Delta farmers concerned that a canal would isolate them from public money to fix their deteriorating levees (although they rarely admit to that motive) and from environmental groups that want to use restricted water supply as a tool to curb development in Southern California (although they are equally reluctant to admit that).”