Tax Threats Loom Large on Golden State Horizon - Again

They're baaaack - calls for tax hikes in California that is.  Last month all California Democrats and 6 Republicans passed a budget that raised taxes on Golden State taxpayers by approximately $70 billion.

But now it seems, according the legislature's budget analyst, Mac Taylor, that the state is still going to out spend its means by $8 billion - shocker.

Taylor was quoted in today's Sacramento Bee saying the following:

"Even in the few weeks since the budget was signed, there have been a series of negative developments. Our updated revenue forecast projects that revenues will fall short of the assumptions in the budget package by $8 billion. Consequently, the Legislature and governor will need to adopt billions of dollars in additional solutions in the coming months to bring the 2009-10 budget back into balance."

California legislators don't seem to comprehend one of the few things that economists of all political stripes agree on - raising taxes during a recession is disastrous policy.  Furthermore, the deleterious effect caused by doing so is exacerbated by the fact that the state had the highest tax rates even before the increases signed into law last month (click here for ATR's commentary in the Sacramento Bee on that agreement).

As ill-advised as it may be - in terms of both policy and politics - smart money is on California Democrats coming back to demand more tax increases. The stage may finally be set for a serious taxpayer revolt in the Golden State.

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