January 12, 2010
Wall Street Journal Cites Tax Foundation State and Local Tax Burdens
"On California, Don't Believe the Hype"
By Brett Arends
It now costs more to insure Californian municipal debt against default than it does bonds issued by the government of Kazakhstan. The central Asian country satirized in "Borat." ...
As for taxes: According to The Tax Foundation—a conservative-leaning, but non-partisan, think-tank in Washington, D.C.—Californians pay about 10.5% of their annual income in state and local taxes. It's above the 9.7% national average, but hardly stratospheric. Suggestions that the state is collapsing under a Soviet-style system are somewhat exaggerated.
Meanwhile California taxpayers have been subsidizing the rest of America for decades. The federal tax code is progressive, taxing highest earners most. And those are more likely to be found in Silicon Valley than in, say, the Tennessee Valley. Highest-earning states like California, New Jersey and New York only get back in federal spending a fraction of what their taxpayers are paying in. The difference goes to pay for schools and highways and even, sometimes, pork projects in lower-earning states. Governor Arnold Schwarzenegger mentioned this when asking for more federal money this month, but he probably didn't go far enough. The Tax Foundation suggests the cumulative subsidies paid by Californians, during the quarter century through 2005, ran to hundreds of billions of dollars.