California budget fraud

In response to a question from Mr. Juggles of Long or Short Capital, I found this summary of the California budget plan in the San Jose Mercury News.
Here are the specific taxes:

— Increases the state sales tax by 1 cent on the dollar, generating $5.8 billion through the next fiscal year.

— Raises the fee for licensing vehicles to 1.15 percent of market value, up from the current .65 percent. The move is projected to generate $1.5 billion. A portion of the fee will be dedicated to local law enforcement.

— Adds a 12-cent gasoline tax, raising $2 billion.

— Imposes a one-time, 5 percent surcharge on people who owe personal income tax at the end of 2009 to generate $3.2 billion. If the state receives more than expected from the federal government, the surcharge would be reduced to 2.5 percent.

— Reduces the amount taxpayers can claim on a dependent care credit to the federal level of $100 instead of $300, adding $1.4 billion.

Note that even with huge tax increases, the budget is not even close to balanced and relies on borrowing from next year and beyond and on a big federal bailout. There is very little in actual spending cuts, and we are left spending at far higher levels than the bloated budget Schwarzenegger inherited from his predecessor Gray Davis, who was recalled for fiscal irresponsibility. What happens when we get to next year and the economy hasn't miraculously bounced back? Are we going to get another federal bailout and borrow even more from the future?

As to the status of the budget vote, there is still no deal but the Democrats and Schwarzenegger are going to keep legislators in session and keep beating on Republicans until one more of them folds.

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