The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

California:
Tax Breaks for Rich, Cuts and Tax Hikes for Us

Feb 23, 2009

The new California budget is nothing but a big, open attack on working people. It includes 14.8 billion dollars in cuts to schools and colleges, healthcare, transportation and aid for the poor. It also includes a 12.5 billion dollar increase in the kinds of taxes that target working people directly. The sales tax is increased by one%. Car license fees are doubled. There is a flat rate increase in personal income taxes as well. And these come on top of other attacks, such as regular monthly furloughs and the loss of several days of holiday pay, that will result in a 10% pay cut for most state workers.

This budget was bi-partisan. It was put together by Republican Governor Arnold Schwarzenegger and the Democratic majority in the state legislation. A tiny number of Republican legislators got the budget the two-thirds majority needed to pass it. Whatever disagreements they had, one thing was clear: both parties agreed to play their role, making ordinary people foot the bill.

California politicians actually included a new round of corporate tax breaks in the new budget, worth more than one billion dollars a year – which will come out of the extra money workers will pay in taxes.

Huge handouts to corporations in the past are the main reason why California has budget problems. Since the 1980s, state politicians reduced the corporate tax rate twice, from 9.6% to 8.8%. If the corporate tax rate had stayed the same as it was in 1981, the state would have collected 8.4 billion dollars more in corporate taxes for just the one year, 2006. Mutiply that by dozens of years.

Corporate taxes went down – at the very moment that corporate wealth – which goes to big stockholders – grew enormously. Between 2001 and 2005, for example, during the supposed recovery from the last recession, the net profits reported by corporations increased 557% – that is, more than sixfold.

The money is there – to pay for all the services California needs – but it’s all in the coffers of big corporations and wealthy individuals.