You may have heard that the State of California is facing a monster deficit. Figures bounce around a bit, but most estimates have the shortfall at or near $28 billion, and the mess has Gov. Jerry Brown pondering Armageddon: enough posturing and arguing – he seems prepared to let the citizenry see how it feels about the reality of shutting it all down. Don’t want to pay for schools? Cool – we won’t have any.
One sympathizes with the people of the Golden State. They do contribute more in federal taxes than any other state, and the ideology of our times has us all convinced that paying taxes is the same thing as flushing perfectly good cash down the toilet. We’re encouraged, at every turn, to think of taxes as pure cost instead of as investment. It’s as though we don’t get anything in return for this money. So we understand that many Californians feel a bit put-upon when the taxman cometh.
Still, you can’t help thinking that there has to be a better solution than closing schools, which are the lifeblood of any society’s future. Where might the state find enough cash to cover its deficit without savaging the fabric of its vibrant culture?
I was thinking about this problem when it occurred to me that I had seen some other interesting numbers on California’s tax situation. As it turns out, Cali is what we call a “donor state”: they contribute more to the federal government than they get back in services. Specifically, Washington, DC only returns $0.78 for every dollar that California pays in taxes.
78 cents. Hmmm. So I grabbed my calculator and did some basic math. Using the latest available numbers, California is paying roughly $314 billion in federal taxes. They’re getting back approximately $245 billion. That’s on the order of a $69 billion loss.
Expressed another way, that’s the deficit California presently faces plus a tidy $41 billion surplus. Does anyone besides me see a financial incentive to revisit the state’s relationship with the federal government? More to the point, wouldn’t it be perfectly responsible for Gov. Brown and the state legislature to take up deliberations on the possibility of secession?
Some caveats are in order, I suspect. First, I’m abstracting a complex issue in order to suggest a point. Second, I’m no math and economics genius, so I invite those of you with better number skills to double-check my calculations.
That said, though, a smart citizen of California who feels overtaxed ought to be asking a different set of questions, including things like why am I subsidizing schools in all the red states and closing them in my own state?
Thinking slightly bigger, I might notice that California sits in close proximity to some other donor states: Oregon, Nevada and Washington. I admit that, as Republic names go, Nevorewashifornia lacks a certain gravitas. But with $41B in cash on hand, you can surely hire a branding firm to come up with something that soars…