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Comment by grandalf | Hacker News Reader

Anyone who thinks seriously that California is a failed state ought to consider that states are not allowed to used deficit financing the way the US Federal government is.

Imagine for a moment if a small portion of the Federal taxes paid by California residents could be allocated to fix the state's budget mess. Instead, one of the richest, most productive states sends most of its revenue to DC where it is spent on wars and bailouts.

It is also absurd to blame any of it on California's progressives. The citizens of California pay far more for international wars than they do for a slightly more generous entitlement system.

Personally I'd much rather have progressive policy experimentation happen at the state level (where it can be easily viewed as working or not working) than at the Federal level where a bad idea is likely to remain on the books for decades.

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"one of the richest, most productive states sends most of its revenue to DC where it is spent on wars and bailouts."

This argument is pretty disingenuous. California is a huge beneficiary of defense spending and tax dollars [1] in general and California, San Francisco in particular is a huge beneficiary of federal bail out dollars.

[1] http://www.nationalpriorities.org/publications/what_came_to_... Notice table 4 shows Southern California received nearly 2 dollars for every dollar it's residents paid in taxes in 2005. Also notice that California is the number one recipient in defense related contracts by dollar amount. California isn't the most productive state in terms of tax dollars per capita either in fact it looks like they rank near the bottom in the amount of federal tax paid per capita.

Why is tax dollars per capita a remotely relevant measurement? California is the 5th largest economy in the world and it generates tremendous revenues for the Federal government from businesses and individuals.

Also, your argument is self-contradictory since if you care about per-capita spending, California ranks very low in per-capita spending on DoD contracts.

Tax dollars per capita is relevant because one of your arguments was that people in CA are more "productive" than any other state. If earnings is a measure of productivity and taxes are a reflection of earnings then lower per capita taxes paid is indicative of lower productivity.

It's not contradictory. It follows that if you put the least in per person it's only fair that you get the least out. But, in fact they get about 2 times out what they pay in if those numbers are correct so really I'd say its your argument that is just based on emotion and not backed up by any facts.

Yes California pays a lot of tax in total because it is the largest in population not because there is anything inherently special about it's culture, population, or economy, compared to the rest of the country.

You seem to be conflating the individual statistics and aggregate statistics to suit your argument.

Because of California's high cost of living, a worker in California will make a higher income (but live at the same standard of living) as a worker in another state. This results in the worker paying higher Federal taxes and (often) more Social Security taxes than the equivalent worker in another state (both of which drastically outweigh the amount paid in state taxes -- state and municipal taxes cover most of the ways that people interact with government).

All of these are somewhat tangential points... The bottom line is that California's own budget woes pale in comparison to the massive Federal deficit (which we know will certainly result in drastic cuts to Federal entitlements and increases in Federal taxes in the future).

Well yeah neither is good but you seemed to be arguing that because the federal government is doing something stupid California should be allowed to participate in the stupidity as well.

California seems to be incapable of living within its means. Whatever money it sends to D.C. is simply not germane to the question of it balancing its budget.

The best budgetary policy is to run a deficit during recessions. The fact that this is difficult in is a mistake.

If you want trust the citizen voters (and I don't) I would suggest an independent California Reserve should set property and income tax rates based on spending and the economic cycle.

Wouldn't the best policy be to run a surplus during boom times and save that money for times like this?

Why is balancing a budget important? If it is, then why focus on one state's budget when the Federal deficit is massive and orders of magnitude more costly to the nation (and to California) than California's own state budget issues?

Also, if even 10% of the money sent to DC were used to cover CA's expenses, there would be no budget problem.

> Why is balancing a budget important?

Is this a serious question?

> If it is, then why focus on one state's budget when the Federal deficit is massive and orders of magnitude more costly to the nation (and to California) than California's own state budget issues?

Yes, we're going to feel that pain at some point too, and it will hurt orders of magnitude more than California failed budget pain.

> Also, if even 10% of the money sent to DC were used to cover CA's expenses, there would be no budget problem.

It doesn't matter how much money you take in if you spend more than that amount of money. When an organization is consistently over their budget, the solution is more complicated than "get more money".

I asked the first question rhetorically. I think it's sort of silly for anyone (in any state) to critique California's budget when the Federal budget problems will cause much more pain to Californians than state budget problems.

I think it's generally California bashing... probably fueled mostly by culture warriors.

This is not to say that California has no problems, but I think it's fairly absurd to focus on them when we have such massive Federal problems.

It's at least somewhat germane. California is, I believe, one of many states that sends more to the federal gov't in taxes than its citizens receive in federal benefits. If some of that federal money were turned back to the state, they'd be able to implement their progressive policies without exceeding their budget or raising taxes. Alternatively, if the fed spent more on progressive stuff instead of elective foreign wars, California could scale back their own spending on similar programs and once again be within budget while still retaining the progressive policies they seem to desire.

That'd be a more reasonable argument if say Californians' taxes were used to fund the progressive policies of other states (though it is true that Californians get something like 80 cents per dollar sent to Washington). Californians however at an individual level are subject to the same federal tax rules as people in other states (and if they were poorer I'm sure the pendulum would swing the other way).

This being the case, it is even more remarkable the financial straits that California finds itself in. It has some of the biggest advantages geographically and started with and still generally has a wealthy and high income tax base.

The state of California also chooses to tax well above that of other states - stats here: http://www.taxfoundation.org/research/topic/15.html - and still manages to run a massive deficit.

California state taxes are a small fraction of what most California residents pay in overall taxes.

Plus, because of California's high cost of living, a worker in California is paid more to do the same work as in another state, yet falls in a higher federal tax bracket and so pays thousands more per year in Federal taxes for doing the same work and experiencing the same standard of living as a citizen of another state.

Sure the cost of living might be higher, but the opportunity for making money is also higher - or that's how it's supposed to work. One of the problems in California is that the benefits are now beginning to under weigh the costs which is why you have a outflow of migration towards surrounding states like Texas. Many of the problems are now structural like higher state and municipal taxes - so that despite getting ever fewer benefits, taxes are ever increasing.

I concede that CA has higher state taxes, but I don't see why this is particularly relevant when I and most Californians pay a massive chunk of our income to the Federal government, which spends the money frivolously and doesn't even have a balanced budget.

California could add a few percent to state income taxes and inconvenience its residents minimally in comparison with the high rates of Federal taxation Californians experience (due to higher cost of living).

It's just so far out of proportion that I consider it absurd to spend much time worrying about California's budget.

"massive chunk of our income to the Federal government"

So does every other resident of every other state, you act like this is some problem unique to CA. Not to mention that if the sate did raise it's income tax that would help it's residents pay a lower amount of federal tax because don't you normally subtract your state tax liability from your earnings to determine your federal taxable income? Sounds like you need to write your legislature and beg for an income tax increase.

Well, due to inflated cost of living, Californians tend to be in higher tax brackets than workers in other states, which leads to a disproportionate amount of money being paid into Federal taxes.

> Plus, because of California's high cost of living, a worker in California is paid more to do the same work as in another state

You forget - that worker gets to live in CA. That worker thinks that the cost-of-living premium is worth it because if she didn't, she'd be living somewhere else.

If the benefits that you get from living in CA are less than the costs that you pay, you should leave. Seriously.

What? You like it here and are just trying to reduce the costs? That's not nearly as noble a crusade....

> California is, I believe, one of many states that sends more to the federal gov't in taxes than its citizens receive in federal benefits.

CA elects congress critters that push the programs that do that spending, so CA can't complain that the money goes elsewhere.

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