According to our own governor’s budget: “The (California’s) tax is steeply progressive, with rates ranging from 1 percent to 9.3 percent…In 2006, the top 15 percent of state taxpayers, those with adjusted gross incomes (AGI) over $100,000, paid 84 percent of the personal income tax. The top 1 percent of state taxpayers, those with AGI over $480,940, paid 48 percent of the personal income tax. Changes in the income of a relatively small group of taxpayers can have a significant impact on state revenues.”
On a per-capita basis, California state government spends $3,519 every year. Santa Clara County spends another $2,509. That’s a total $6,028 per capita. Where does the money go?
- 38.7% for education
- 29.0% for health and human services
- 8.8% for business, transportation and housing
- 7.5% for corrections and habilitation
The state is near bankruptcy. Its credit rating and roads are third world. Unemployment is at 11.5%. While California has the highest paid teachers in the US, the third smallest student to teacher ratio (20.9), and ranks right in the middle in terms of spending per student ($9,539), it is ranked 45th in high school graduation rate. The state is floating several propositions to increase spending and debt which are going to go down in flames by a wide margin according to polls. This despite fear mongering by the special interest groups that police and fire services will be cut severely and your child will not have a teacher or by extension a school to attend.
In the meantime, the federal government has enacted the largest tax increase by any measure ever. Obama’s budget calls for per capita spending of $12,873 in 2009. Where does the money go?
- 21.4% for national defense
- 21.3% for Social Security
- 13.7% for Medicare
- 12.9% for income security
- 9.5% on health
- 4.5% on interest
If you live in Silicon Valley, you are carrying $18,955 (+/- transfers from the feds to the states and the states to the counties) in government spending on your back, or more likely, someone else is carrying it.
In a previous post, I addressed some of the myths about government spending and political parties. I have a few more charts for your consideration below. The sources of the data are the CBO and the approved administration budget. The new budget features the largest per capita spending increase in real terms since the ramp-up to WWII and is more than three times larger than any non-war increase from either party. Compared to spending hikes during the Great Depression, with which politicians and pundits like to compare our current economic situation, the increase is astronomical. There are no surprises in where the spending is growing – entitlement programs and interest – or where it is being cut – defense.
The weight of federal spending however is not being carried by as small a share of the income earners as in California. The top 1% of income earners carries a little less than 40% of federal taxes compared with 48% in California of state taxes. I don’t think progressive taxes are wrong – there is just a limit to what an economy can afford. If California is any indication, I think we know the answer.
[caption id="attachment_1018" align="alignleft" width="906" caption="Real Spending Change per Capita 1929-2009"]
[/caption][caption id="attachment_1019" align="alignleft" width="905" caption="Real Spending per Capita 1929-2009"]
[/caption][caption id="attachment_1020" align="alignleft" width="1024" caption="Real Federal Spending by Function 1962-2012e"]
[/caption][caption id="attachment_1021" align="alignleft" width="710" caption="Share of Federal Income Taxes 1979-2006"]
[/caption]
I keep telling you to come to Colorado. Top tax rate is 4.6%, property taxes (and prices) are half as much and no earthquakes. Of course we don't have a beach, but if the global warming scaremongers are right, we ought to be beach-front in like 3 or 4 years. ;-)
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