How Blue States Can Save Themselves
Actually, Red and Purple states could do this as well, although I doubt they will!
In the forthcoming Trump administration, combined with GOP majorities in both houses of Congress, it is reasonable to expect that we’ll be seeing massive tax cuts along with funding cuts to many services that support the lower ends of our income distribution curve. How can we counteract this locally?
I had this idea two days ago. I’m sure that, from the point of view of many, it will seem quite radical. I want to get this written down – at least the outlines of it – to both gauge reactions to it and to prepare to meet with my representatives in both the Assembly and the Senate (I’m in California). So here goes:
Could California (and perhaps other states) capture this tax reduction in a way that benefits our state?
My answer is: Yes! How? By raising our state taxes by exactly the amount that federal taxes are lowered!
If enabled, this will result in zero net change to taxes paid in California – at least for personal and corporate income taxes and the Estate tax.
California is a “giving” state – i.e. For every dollar we “send” to the Federal government through our taxes, we receive less than a dollar back from the Federal government through subsidies, grants, Federal services, employment of Federal employees, and use of Federal contractors. So if we take the money that is no longer being sent to the Federal government and use it for our own purposes, California will have more money to spend than we do right now!
Why I’m inclined to hope that this can be done in California:
- We currently have Democratic supermajorities in both the Senate and the Assembly, as well as a Democratic Governor. This should allows us to raise state taxes if we can have our Democratic state representatives vote as a bloc. (For those who don’t know, we need a 2/3 majority to raise general revenue taxes in California.)
- California has, in my mind, proven that raising taxes thoughtfully (if managed well) improves the economy, reduces inequality, and increases employment.
- Californians, as a group (with many exceptions), support the idea of good government that has a duty to care for all of our people.
In the interests of brevity (at least as it applies to me), I’m not going to flesh this out any farther. Instead, I’ll just throw it out there, waiting for your reactions!
What do you think? Is is possible? Or at least has enough of a chance to be worth further development? Do you imagine details that would make it easier (or harder) to sell to the California public? What political obstacles to you envision?
Let the brainstorming begin in comments!