Prop 30 Proof: Taxes Don’t Kill Jobs

CALBUZZ-You’ll recall that in the fall of 2012, as Jerry Brown campaigned for Prop. 30, his tax-hike plan to balance California’s budget and boost school funding, right-wingers argued vociferously that the measure would be a disaster. 

“It allows the politicians to take money currently earmarked for education and spend it on other programs. We’ll never know where the money really goes … it gives the Sacramento politicians a blank check without requiring budget, pension or education reform … it hurts small businesses and kills jobs,” cried Joel Fox of the so-called Small Business Action Committee (otherwise known as Joel’s Special Interest Laundry), John Kabateck of the alleged National Federation of Independent Business and Kenneth Payne of the Sacramento (We Don’t Like Being) Taxpayers Association. 

And yet. After Prop. 30’s passage, California’s budget is balanced (with a surplus, thank you very much, Gov. Gandalf). And as our old friend David Cay Johnston found, in a terrific special report for the Sacramento Bee: “Last year California added 410,418 jobs, an increase of 2.8 percent over 2012, significantly better than the 1.8 percent national increase in jobs. California is home to 12 percent of Americans, but last year it accounted for 17.5 percent of new jobs, Bureau of Labor Statistics data shows.”  

So much for the contention that raising taxes on rich people kills jobs. 

While raising payroll taxes might hurt job growth, raising income taxes does not reduce hiring, David Neumark, professor of economics and director of the Center for Economics & Public Policy at UC Irvine, told Johnston: 

“What firms care about when deciding how many workers to hire is the marginal product of workers and the marginal cost of those workers. So if you are an employer and your personal income tax rate is increased, that does not raise the marginal cost of your workers, but it may encourage you to work a little less hard.” 

Johnston, a California native whose first reporting job was at the San Jose Mercury News when he was 19 years old, won the Pulitzer Prize in 2001 for his coverage of tax policy. These days, he teaches the tax, property and regulatory law of the ancient world at Syracuse University College of Law and writes for several publications. He recently completed two years as president of the 5,000-member Investigative Reporters and Editors association. 

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We’re sorry to report that David’s fine piece has gotten almost no pickup from other mainstream media types around the state. Which is too bad because, as Johnston told Calbuzz: 

“Comparing election claims to actual performance is one of the most crucial duties for journalists, even if they have to wait years for the results to become known.” 

The only other writer to take note of the wrongheadness of the Cassandras on the right that we’re aware of is Paul Krugman of the New York Times, who weighed in after Johnston’s piece (without crediting it – c’mon man) last week with an op-ed titled in typical NYT derision toward California: “Left Coast Rising.”  

 

Jerry Roberts and Phil Trounstine publish the award-winning CalBuzz.com) 

-cw

 

 

 

 

 

 

CityWatch

Vol 12 Issue 61

Pub: Jul 29, 2014