"No state's economy, with the exception of Michigan, has careened into a deeper ditch than California in this recession. The state now has the fourth-highest unemployment rate (12.2%), the third-highest rate of mortgage foreclosures, and for two years has had the biggest budget deficit in the history of the 50 states. ... The heart of the new plan is to broaden the tax base and slash tax rates on personal income, business and sales. ... Because about 70% of small businesses pay the personal California income tax, the commission found that California's high rate is driving enterprises to the likes of Nevada, Texas and Idaho", Editorial at the WSJ, 30 September 2009, link: http://online.wsj.com/article/SB10001424052748704471504574443413742032356.html.
Brenda Walker has a 30 September 2009 post about California at Vdare, link: http://vdare.com/walker/090930_california.htm. Way to go Brenda!
B&C are Stanford professors. So? We remember Boskin. He led 1996's infamous "Boskin Commission", my 5 October 2007 post: http://skepticaltexascpa.blogspot.com/2007/10/tip-on-tips.html. As Uncle Miltie taught us 40 years ago, government spending uses real resources. 2009's Boskin Commission is as fraudulent as 1996's. Without spending cuts, California will not balance its budget. Perhaps not then. B&C's article does not mention the "I word", immigration. Hmm. California can shuffle its economic Titanic's deck chairs ad infinitum, changing percentages on its tax forms will accomplish nothing. Have California residents no longer "a rising standard of living"? Compared to who? Oregonians or Mexicans? What happened to California's schools which in the 1950s and 1960s were the US's best? Is "the tax system central to the state's economic woes"? Tax "reform" is a scam. Cut spending. Why is California hopeless? California's gross state product (GSP) is $1.55 trillion; with 38.5 million residents, say $40,000 per capita. Mexico's per capita GDP is about $10,700. Which Mexicans come to the US? Mostly those from Southern Mexico. Mexico's per capita GSP varies from $22,000 to $4,000. Assuming illegal aliens come from Mexican states with per capita GSPs of about $7,000 and their productivity doubles in the US, as the US is "capital deeper", we have 14 million people producing $196 billion in California GSP 24.5 million producing $1.354 trillion or $55,300 per capita. If California's 14 million Hispanics even consume at 1/3 the rate of non-Hispanics, that's $12,400 per capita. There's more. If they produce $14,000 per capita, they likely earn say 67% of that or $9,400 per capita, $12,400 - $9,400 = $3,000; $3,000 x 14 million = $42 billion, the difference between Hispanic consumption in California and income. If the difference is half this estimate, its still $21 billion. This money comes from somewhere.