History has shown us repeatedly that it's a cardinal sin to raise taxes on lower- and middle-income people during a recession or depression. The reason is simple — you want working-class folks to have as much disposable income as possible so they'll spend it and help bring the economy out of the doldrums. Raising taxes, on the other hand, forces people to spend less, thereby worsening the economic crisis. It's a vicious, negative feedback loop.
So at this point, you might be thinking, "Who stole my Express and turned it into a right-wing rag?" Actually, raising taxes in a recession is not a liberal or conservative issue. It's Econ 101. No one, for example, in the Obama administration or the Democratic-controlled Congress is talking seriously about increasing taxes right now. In fact, the president just approved a major tax cut for lower- and middle-income families as part of the national stimulus package. So why, then, are so many Democrats in California and the East Bay hell bent on doing the opposite? Why do DC Dems and the Obama administration get it and they don't?
The simple answer is that state and local politicians appear to be less afraid of the electorate than they are of powerful public employee unions. That's why instead of seeking pay cuts and concessions from well-paid bureaucrats, Democrats up and down the state are proposing a host of new taxes to deal with looming budget crises. The state's projected deficit is expected to reach $6 billion to $8 billion beginning July 1.
The bad ideas include raising taxes on alcohol and gasoline, and increasing vehicle license fees. It's not that these proposals have no merit; they're just counterproductive in a steep recession. In fact, we're all for using the tax code to change undesirable behavior. It makes for good public policy — in a decent economy. Another gas tax or higher vehicle license fees, for example, will help discourage driving — a step in the right direction to limit greenhouse gas emissions.
But you don't rob people of their disposable income when the economy is starving to death. Plus, these types of taxes are inherently regressive because they end up hurting lower- and middle-income folks the most. The only tax that lawmakers should be discussing seriously is a state income tax increase on the wealthy. Taxing them is the most efficient way to raise significant sums while inflicting the least amount of damage on the economy.
Unfortunately, local Dems seem to be just as clueless. Last week, an Oakland City Council committee revived an $8 million annual parcel tax proposal to pay for park maintenance and tree trimming. What's not on the council's agenda? A plan to ask well-paid city workers to give pay concessions. The same with our local bus agency. Last week, the AC Transit board of directors voted to break its promise to customers and taxpayers by voting to raise basic fares by 14 percent from $1.75 to $2.00. Last fall, board members told riders and voters that a fare hike would be unnecessary if they approved a $15 million annual parcel tax. East Bay voters overwhelmingly approved the measure, but then when the economy tanked, the board quickly did an about face. As for demanding that highly paid management employees take a salary cut of their own, you guessed it, not even on the radar.
A's to Oakland: Buzz Off
If there was any question as to whether the A's plan to stay in Oakland over the long term, team co-owner Lew Wolff made his intentions crystal clear last week. In a tersely worded statement, Wolff summarily rejected Oakland's latest attempt to stop the team from leaving, saying: "We have fully exhausted our time and resources over the years with the City of Oakland, dating back to previous A's ownership. ... We have no interest in covering old ground again, as we need to move forward in finding a future home for our team." Wolff's Dear John letter came in response to a request sent by city leaders to Major League Baseball, asking for help in keeping the A's in Oakland, now that the baseball team's plans for a Fremont ballpark are dead.
More Signs of the Apocalypse
Journalism took another body blow over the weekend when reporters, photographers, and editors at the San Francisco Chronicle voted to allow the company to lay off 150 people — mostly from the newsroom. The union rank-and-file did what it had to. If they had rejected the deal union leaders made last week with company negotiators, the result would have been worse — 225 layoffs. Nonetheless, it'll be sad to watch so many journalists get the axe. A lot of good people will be out of jobs soon, and that's not a positive sign for watchdog journalism. Fewer reporters mean fewer stories will be uncovered. The decline of journalism, in short, will surely give rise to more corruption and ethical lapses in government and business. Wrongdoing thrives in the shadows.
Finally, some good news in Oakland: Crime is on the decline, at least for the first two months of 2009. Homicides were down a whopping 50 percent. ... In Berkeley, however, students are taking it in the shorts again — another 10 percent fee hike for undergrads at the University of California starting this summer. It looks like an affordable public college education is close to becoming just a distant memory. ... Ah, well. We're all going to be screwed anyway. A new report shows that sea levels are expected to rise much more rapidly than previously thought — up to five feet this century because of global warming. As a result, most California coastal communities, and much of the inner San Francisco Bay, will be under water. Giant seawalls, anyone?
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