| As the shock doctrine attack on California unfolds, members of the Schwarzenegger Administration are signaling their long-term plan to radically remake California as a Randian paradise for the rich and a desperate hellhole for the poor and the middle-class. Arnold's budget plans are all designed with one purpose in mind - to make rich pay less and everyone else pay more.
We've been over his completely insane budget cuts proposals, which are all focused on taking away the safety net for the poor and the middle class and making them spend more money on vital services.
Now, in an interview with Carla Marinucci, Susan Kennedy reveals the other half of the "screw the poor" strategy - an overt call for an even more regressive tax structure:
She appeared particularly upbeat on the prospects and potential impact of the bipartisan Commission on the 21st Century Economy headed by Gerry Parsky, the former assistant Treasury Secretary and current UC Regent who is a partner in the Los Angeles-based Aurora Capital Group.
The Parsky commission, made up of a dozen individuals, has been charged with studying ways to remove the volatility from California's tax system.
"If they're bold and fearless..it could tackle one of the most significant issues we face..the volatility of our revenue stream,'' she said. "I'm actually really excited (about the outcome)''.."I haven't seen this level of willingness and urgency" in a long time on that issue.
Asked what she'd like to see from the tax commission, Kennedy didn't hestitate. "Flatness,'' she said. "Our revenue stream is way too progressive.'' But no matter how you slice it, she said, changes that come out of it may be seen as "a tax increase to the middle of the structure.''
There you have it - Arnold's plan is to cut the services the middle-class needs while raising their taxes in order to give the wealthy and even bigger tax break. In that sense his higher ed funding plans are perfectly sensible - by planning to eliminate Cal Grants and jack up fees even further, he's foreshadowing California's future, where the dream of prosperity and economic security is enjoyed only by the top 5%. It's a recipe for the Brazilification of California.
The Parsky commission, as I have explained before, is rigged to produce this very outcome. They are part of a concerted effort to use "volatility" as a kind of concern trolling to suggest that wealth taxes, a proven and effective method of taxation, are bad - and that we need to sock it to the poor and the middle class, even though numerous examples from history prove that when you shift the tax burden onto those least able to pay, social collapse follows.
In that vein it's worth noting some pushback against the "volatility is bad" nonsense that Kennedy and Parsky are pushing. Bob McIntyre of Citizens for Tax Justice, in his testimony before the commission, slammed the idea as making the system more regressive and doing nothing to promote economic growth:
Over any reasonable time period, a progressive income tax, including taxes on capital gains, has been by far the most stable, most growing source of revenues for states. One reason why this is true is that at least since the late 1970s, the rich have been getting much richer, although not by the same amount every year. In addition, even without changes in the
distribution of income, a progressive income tax, even one indexed for inflation, rather naturally keeps up with the economy....
So if the income tax, and particularly the capital gains tax, is the one bright spot in California's long-term tax picture, why would anyone want to cut it? I have no doubt that for many who favor eliminating or sharply reducing California's income tax on capital gains, the real motivation is that they simply favor lower taxes on the rich - even if that means higher taxes on everyone else.
And that's the real issue here. The concerns about "volatility" are really just neoliberal economics phrased in another way. The belief that if we cut taxes and regulations on the rich, everyone else will benefit. We're experiencing an economic crisis that is directly caused by, and proves the failure of, those asinine policies.
McIntyre explains that the "volatility" of taxing the wealthy is overstated, especially in the longterm. But is "volatility" even a problem? As the California Budget Project notes quoting Board of Equalization chair Betty Yee, "tax volatility is a good thing":
As Yee mentions, if Californians want to avoid exacerbating the income gap between high- and low-income Californians, any discussion of tax fairness must also include a consideration of another kind of volatility: the daily uncertainty many low- and middle-income Californians are experiencing about their jobs, their houses, or the choice to put food on the table or pay the energy bill.
"Volatility is what they're experiencing day-to-day," Yee said.
As far as I can tell, this whole concern trolling over "volatile" revenues is merely an excuse to produce a more regressive tax policy and worsen the actual volatility problems, which is the boom-and-bust cycles of economic security and public services for the working Californians who should be the focus of our tax and spending policies.