Welcome to the Hotel California

Raising taxes on the so-called rich is all the rage these days, ever since the Marxist in the White House succeeded in persuading large numbers of invincibly ignorant voters that the wealthy are not paying their fair share – and you might be surprised at how little you have to have in order to be considered “wealthy.”

California is leading the crusade to punish hard work and success, thanks to Proposition 30, a ballot initiative to increase sales and income taxes in what was already one of the most highly taxed states in the union. Prop 30, which was enthusiastically supported by California Governor Jerry Brown, was approved by California voters on November 6 at the same time they were handing their state’s 55 electoral votes to Barack “At-a-Certain-Point-You’ve-Made-Enough-Money” Obama.

No surprises there: California, with less than an eighth of the nation’s population, contains a third of all welfare recipients — not to mention more than a third of all illegal immigrants — and the large segment of the population that depends on free services and handouts from the government naturally favors the government fleecing individuals and businesses that are actually engaged in productive and profitable work.

What’s so fascinating about the notion that states can solve their budget woes by the simple of expedient of soaking the rich is that so many folks actually believe that rich people are idiots who will just sit back and allow their hard-earned wealth to be confiscated and redistributed. But people generally don’t become rich in the first place by being idiots. And successful businesses aren’t generally inclined to stay in a state whose business climate has ranked dead last in the nation for eight years running.

Matt Blumenfeld of Americans for Tax Reform comments:

One of the more egregious aspects of [Prop 30] is the retroactivity of the income tax increase, which would apply to all income earned after January 1, 2012. Brown’s effort to impose this retroactive tax hike makes it clear to businesses that if they want some semblance of certainty in tax planning, they must leave California. Campbell’s Soup, Comcast, and Samsung have been the latest to come to this realization; either shutting down facilities in-state or moving operations outside of California.

Well, darn it all, if rich people and successful businesses can just pack up and leave the state to escape confiscatory taxation, that kind of throws a wrench in the works, doesn’t it? How will California deal with this? Economics professor Walter Williams suggests a couple of ways:

They can simply stop wealthy people from leaving the state or, alternatively, like some Third World nations, set limits on the amount of assets a resident can take out of the state. This would surely be within their jurisdiction and would not raise any constitutional issues, because it would serve a compelling state purpose. In other words, if California were to set up border controls to stop people, as East Germans did at Checkpoint Charlie, before they cross the state line, such action would be protected by the 10th Amendment.

The fact that many Californians have managed to get their assets out of the state complicates the issue. Article I, Section 8, of the United States Constitution authorizes Congress “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” This is known as the commerce clause. There’s no question that people who pull up stakes and leave California affect interstate commerce; California has less tax revenue, and recipient states have more. What California Attorney General Kamala D. Harris might do is sue Nevada, Arizona, Texas and Oregon in the federal courts for enticing, through lower taxes and less onerous regulations, wealthy California taxpayers.

As The Eagles sang back in 1977, “Welcome to the Hotel California… You can check out any time you like, but you can never leave.”

For further enlightenment:

It’s Hard to Screw Up California — But We Try Our Best, by Victor Davis Hanson

One Response to Welcome to the Hotel California

  1. I especially like the Moses cartoon. Oh yes, we are screwed.

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