Wall Street Journal Takes on Meathead

I've recently recounted the efforts by Rob "Meathead" Reiner to soak the rich in his latest preschool tax scheme, and how he's been taking tobacco tax money and using it to fund his next initiative. Today the Wall Street Journal takes Meathead on and reminds readers how the tax code and political system in California is driving folks out-of-state:

It takes hard work to drive anyone away from California's sunshine and scenic vistas, but politicians in Sacramento have been up to the task.

The latest Census Bureau data indicate that, in 2005, 239,416 more native-born Americans left the state than moved in. California is also on pace to lose domestic population (not counting immigrants) this year. The outmigration is such that the cost to rent a U-Haul trailer to move from Los Angeles to Boise, Idaho, is $2,090--or some eight times more than the cost of moving in the opposite direction.

What's gone wrong? A big part of the story is a tax and regulatory culture that treats the most productive businesses and workers as if they were ATMs. The cost to businesses of complying with California's rules, regulations and paperwork is more than twice as high as in other Western states.

But the worst growth killer may well be California's tax system. The business tax rate of 8.8% is the highest in the West, and its steeply "progressive" personal income tax has an effective top marginal rate of 10.3%, or second highest in the nation. CalTax, the state's taxpayer advocacy group, reports that the richest 10% of earners pay almost 75% of the entire income-tax revenue in the state, and most of these are small business owners, i.e., the people who create jobs.

And things may soon get worse, thanks to Rob Reiner, who played the liberal "Meathead" on the "All in the Family" sitcom in the 1970s and now plays the same part in real life. He and his rich Hollywood friends have put an initiative on the state's June ballot that would add a 1.7-percentage-point income-tax surcharge on "millionaires" with income over $400,000, with the proceeds earmarked for universal pre-school.

The WSJ sums it up this way:

By the way, Mr. Reiner serves on the board of the Children and Families Commission, which oversees the expenditures of the tobacco trust fund. That Commission approved spending $23 million of tobacco taxes to finance TV ads that promote his own new tax-and-spend-on-pre-school scheme. This use of taxpayer dollars to lobby for more taxpayer dollars may violate state law preventing taxes from being used to finance campaign activities. And the Los Angeles Times reports that some $200 million of the children's education fund has found its way into the bank accounts of public relations and advertising firms, some of which are run by friends of Mr. Reiner.

The lesson: Beware liberals promising to tax someone else in the name of helping "children." They'll end up taxing you, while they and their friends benefit. Governor Arnold Schwarzenegger is now under pressure to oust Mr. Reiner from the Children and Families Commission, and it's amazing he hasn't already. While the Governor is at it, how about taking a stand against the June tax-increase initiative? (Yes, Governor, how about it?-HC)

As much as the popular flight from California might be good for some neighboring states, it's very bad news for the entire United States. California continues to account for about one-sixth of the overall U.S. economy, and its competitive decline will inevitably hurt everyone. If the Meathead tax passes in June, the reverse gold rush out of California will surely accelerate. And Hollywood's liberals will discover again that a state with fewer businesses creates fewer jobs and collects fewer taxes.

The left will never understand that when you tax an activity, you get less of it, not more. Tobacco tax revenues may have held up because folks like Reiner know that smokers have a difficult time quitting and will likely continue paying the increased cost (which goes disproportionately toward poorer people since they tend to smoke more), but when you start jacking up taxes on income, smart people can figure out ways to dodge those. Of course, the main dodge is leaving the state, and many are choosing to do just that.