Last week the Wall Street Journal compared blue state California with Red state Florida on government finances.
“Time and again,” they wrote, “progressives use putative budget emergencies to impose supposedly temporary tax increases that invariably become permanent as the revenue is baked into spending baselines. This is what happened in California in 2012 when Democrats raised the top rate to 13.3%.”
“California’s budget has since become even more dependent on the affluent. The top one-half percent of taxpayers pay 40% of state income tax, and their capital gains have plunged. Income-tax collections in this fiscal year are 34% below a year earlier and corporate-tax revenue is down 33%. Gov. Gavin Newsom last month increased the state’s projected budget deficit to $32 billion.”
“By contrast, tax revenue in Florida is exceeding forecasts. Florida’s corporate-tax revenue—at a 5.5% rate—during the first 10 months of this fiscal year is up 57% year-over-year. States tax corporate income based on the share of business done in their borders. … The opposite may be happening in California, New York and New Jersey.” Florida’s $117 billion budget this year is half as large as New York’s, though it has 2.5 million more people. The Sunshine State lacks an income tax and mandatory government collective-bargaining, which together create a tax-and-spend ratchet. An iron law in progressive states is that when revenue falls, taxes go up.”
With the enactment of the Democratic budget over Gov. Scott's veto, Vermont may soon be another disappointing example.