Your eyes on California Government

6:39 am, Nov. 7, 2012

By John Seiler

California should change its name to Unionifornia. The public-employee unions won everything yesterday. They beat Proposition 32, which would have curbed their ability to siphon money directly from employees’ paychecks. They won Proposition 30, the $6 billion tax increase pushed by their kept governor, Jerry Brown.

They even defeated Proposition 38, the rival tax-increase initiative by lawyer Molly Munger, which would have plunked the added tax money directly into schools. By contrast, Prop. 30 has no real constraints, so the money can be siphoned off to union pensions.

The unions also re-elected Dianne Feinstein to the U.S. Senate. And their candidate for president, Barack Obama, won not only California, but the national election.

The problem for the ultra-powerful unions now is that the state and national economies are headed for breakdowns. Socialism never has worked.

For California, the millionaires hit with the new tax will start leaving. Brown, in the last days of the campaign, cited a study by two Stanford “poverty” professors (who themselves make huge salaries). We debunked the study here on CalWatchDog.com. But few California voters read CalWatchDog.com, only the smart ones.

By leaving, millionaires immediately avoid paying the state’s tops-in-the-nation state income tax of 13.3 percent. If they move to Nevada, Texas, Washington or other states with no income tax, they pay no state income tax at all.

But there’s more. Even if the millionaires stay, Prop. 30 grabs another $5 billion from them. That’s money they won’t have to invest in business and jobs creation. So the tax will hit all of us. Maybe a millionaire won’t buy the Rolls Royce he’s been ogling. But that means the minimum-wage mechanic at the Rolls dealership will be laid off and start collecting welfare.

The income tax increase also is retroactive for 2012. That means it will cost millionaires $5 billion now, and $5 billion in 2013. The giant sucking sound you hear is the California economy imploding.

Prop. 30 also increases sales taxes $1 billion. Meaning you and I will pay it. And it will kill more businesses and jobs — $1 billion worth.

More taxes

And Prop. 30 wasn’t the only tax increase to pass. Proposition 39 also passed, raising taxes $1 billion on out-of-state businesses that had created jobs here, but now might leave. It’s hedge fund manager Thomas Steyer’s initiative to funnel tax money into his favored investments. Expect other rich people to sponsor initiatives in 2014 that will do something similar: grab tax money to pad their own portfolios.

Brown and the unions don’t realize it, but they won’t get the money they want. The state’s anti-business climate is so penalizing, and made so much worse by the passage of Prop. 30 and Prop. 39, that tax revenue will decline faster than those initiatives can bring it in.

With Obama’s re-election, the national economy will start nosediving (not that Romney would have done any better). Another $166 billion in tax increases will hit the middle class on Jan. 1 when the payroll tax cut expires. Neither Republicans nor Democrats wants to keep the tax cut. That will hit middle-class American families with $1,000 in higher taxes in 2013.

We’re overdue for a recession anyway. They hit every four to six years. The last one hit in 2007. Add six to that and you get 2013.

The recession will bring more municipal bankruptcies throughout Unionifornia. The pension systems will keep teetering into insolvency. Unemployment will rise, and welfare rolls along with that, increasing the strains on the state budget.

The unions now own Unionifornia. And along with Brown and Obama, they’re going to have to take the blame for the crash.

When the crash happens, the time for reform will have arrived. In 2014, the reform movement should put on the ballot something like Proposition 75, the 2005 initiative that simply banned unions from directly extracting dues for politics from members’ paychecks. It got 47 percent of the vote even during the time of the booming economy (due to the phony real-estate boom that soon turned into a bust).

In 2012, Prop. 32 was much more complicated, including corporations in the paycheck protection, and got just 44 percent. Reformers need to make the 2014 decision simple: The ripped-off citizens vs. the ultra-powerful government-worker unions. People love a story about David (us) vs. Goliath (unions).

In two years, Unionifornia’s economy will be faltering badly, and voters will be in the mood for real reform. The time to plan is now.

Tags: Jerry Brown, John Seiler, Prop 39, Prop. 30, Prop. 32