How much worse can it get in California? The Left Coast is entering a Greece-style spiral of high unemployment, anemic growth, expanding welfare rolls, high taxes, and declining prospects:
Spending has more than doubled, from $45.4 billion in 1996 to more than $92.5 billion today. Income, sales and car taxes have all been hiked. As a result, California has the most progressive income tax system in the nation, with seven income tax brackets, and the second-highest top marginal rate.And now America's largest pension fund - California's CALPERS - announced the fiscal 2012 return on investment was...1%. Since CALPERS calculates pension obligations based on a 7.5% rate, this means the contribution rate for California public workers will have to go way, way up to cover the shortfall.
Even with all those tax hikes, California's 2012 budget is still $15.7 billion in the red. So what does Gov. Jerry Brown want to do? Raise taxes again, of course. He has proposed a ballot initiative that would: 1) raise sales taxes on everyone and 2) raise incomes taxes on those making more than $250,000 a year (like Obama has proposed to do nationally). But even this $8.5 billion tax hike would still leave the state $7.5 billion short. Where will California get that money? Who knows?