California - A Template for America's Future?

Everyone knows about California and its expensive lifestyle.  And, being well known for its ‘liberal’ views, often the decisions they make aren’t a great surprise either.  The two most often topics discussed are money related — home cost or taxes.

Let’s look at taxes.  Currently the state payroll income tax for residents is 13%!  Consider that $100,000 per year is no big status thing there.  In the bay area $60K is near welfare level income.  (The last I heard $56K will get you food stamps.)  So if you do the math, they are bringing in billions of dollars per year with that tax alone.  (40M people with an average income of about $80K * 0.13 = a BIG number!)

Ah, but that is only the beginning.  I recently did some research into their gas taxes — a very scary subject.  Their gas tax before November was 71 cents per gallon.  November 6th it went up another 12 cents — ouch!  So now they’re close to 85 cents per gallon, but what most Californians don’t even know is that the bill which gave them that twelve cent raise is also going to give them another 75 cents of gas tax in 2020!!  They will be paying over $1.50/gallon in taxes!!

But this story gets even worse.  Their roads are in poor condition.  They are so bad that if someone’s car wheel is ripped off their car due to a large rut in the road, lawsuits don’t typically reach a court — they’re paid without argument.

So if this is the case, where did the ‘roads’ money go?  Answer, to the General fund!  “Why did that happen”, you ask?  Because the ignorant/misinformed/apathetic, or takers of that state want it there.  What would give me such an idea?  Proposition 91 in 2008 would have required the state to leave all taxes for roads/transportation within that category of funds.  But noooo, the people of California voted ‘No’ 58.4% vs. 41.6% ‘Yes’.

It’s one thing to point to a bunch of crooked politicians and say that there’s nothing you can do about a situation, but when you knowingly shoot yourself in the foot, that’s another thing.

“So what’s your point”, you ask?  Although as crazy as that state is, it is a leading indicator of the direction of this country.  At some point, the California government will run out of other people’s money.  When that happens, California will be in BIG trouble.  (California is already over $1T in debt.)  Which, to you, means that almost 33% of this country’s economy will be in trouble.

I understand that the new tax bill just signed improves our tax situation.  But will it take us out of our indebtedness?  My guess is that we’re throwing a ‘hail mary’ pass hoping it will generate tremendous GDP, which in turn will generate huge revenue to be used to pay off our nation’s debt.  Ha!  It’s about those politicians we mentioned….

My question is, how bad do things have to get before we wake up??