Monday, November 10, 2008

Sales Tax Hike in California

To close the state of California’s large budget deficit, Governor Arnold Schwarzenegger has proposed a combination of spending cuts and a (temporary) increase in the sales tax of 1.5 cents. Without new tax revenue, the state cannot meet its proposed budgetary expenditures.

This situation raises the question that few public officials are willing to confront. How can the people meet their budgetary commitments if the state takes more money from their pockets? Homes are being foreclosed, wages and benefits are being frozen or reduced, workers are being laid off or having their hours reduced, medical and food costs are rising, yet the governor’s solution of higher taxes would put even greater stress on strapped household budgets.

Before we ask how the state and local governments can get by with less money, we first need to ask how the people can get by with less money.

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