Schwarzenegger: tax the poor!

After increasing spending a shocking 45% in just four years, Arnold Schwarzenegger refuses to roll spending back to reasonable, pre-bubble levels. And he can't really raise income taxes, because with the highest taxes in the country, California is already driving businesses and high-earners out of the state. His solution: tax the poor!
Gov. Arnold Schwarzenegger on Thursday proposed $4.4 billion in new taxes and a similar amount in spending cuts to deal with California's worsening fiscal crisis, saying, "We must stop the bleeding."

Much of the new revenue would come from a 1.5-percentage-point increase in the sales tax [on top of the already highest in the nation 7.25 percent]; the Republican governor described the hike as temporary but did not say how long it would last.

[...]

"Many Californians have lost their homes, they've lost their jobs ... and everyone is worried about their future," Schwarzenegger said.

And taxing the poor is the way to create jobs and save people's homes!

Sales taxes are known to hit the poor much harder than the rich, as the poor have to spend a much larger percentage of their income on necessities such as clothing, gasoline, and household supplies. As we know from the federal stimulus discussion, marginal dollars given to (or taken from) the poor have a greater effect on the economy than dollars given to the rich, because the rich will save them while the poor will spend them. So Schwarzenegger's plan to tax the poor will reduce consumption, slow the economy even more, and cost more jobs.

On the other hand, sales taxes are a good way to tax illegal aliens and the welfare class who don't otherwise pay taxes but consume significant state resources. If we make it too expensive for the poor to live here, maybe they will move to Arizona, Nevada, or Mexico.

Comments