NY Times Blames CA's Problems on Taxpayers Who Won't Pay More

Paul Krugman, who writes for the NY Times, has it all figured out. He's decided that California's fiscal problems are the fault of one thing: the taxpayers who refuse to allow their taxes to be raised. Here's an excerpt:

Despite the economic slump, despite irresponsible policies that have doubled the state’s debt burden since Arnold Schwarzenegger became governor, California has immense human and financial resources. It should not be in fiscal crisis; it should not be on the verge of cutting essential public services and denying health coverage to almost a million children. But it is — and you have to wonder if California’s political paralysis foreshadows the future of the nation as a whole.

The seeds of California’s current crisis were planted more than 30 years ago, when voters overwhelmingly passed Proposition 13, a ballot measure that placed the state’s budget in a straitjacket. Property tax rates were capped, and homeowners were shielded from increases in their tax assessments even as the value of their homes rose.

The result was a tax system that is both inequitable and unstable. It’s inequitable because older homeowners often pay far less property tax than their younger neighbors. It’s unstable because limits on property taxation have forced California to rely more heavily than other states on income taxes, which fall steeply during recessions.

Even more important, however, Proposition 13 made it extremely hard to raise taxes, even in emergencies: no state tax rate may be increased without a two-thirds majority in both houses of the State Legislature. And this provision has interacted disastrously with state political trends.

The voters acted in their own self-interest, and there's nothing more American than that. They've told the legislature and the governor that they're going to have to come up with some other solution to their overspending problems.

What Krugman doesn't want to acknowledge is that until Prop 13 passed many older homeowners on fixed incomes were losing their homes to the taxman because the skyrocketing market values were causing skyrocketing property taxes. Older Californians were forced to sell homes they'd lived in for 30 or 40 years because they couldn't afford the climbing tax bills. Prop 13 fixed that, limiting the amount that property taxes could go up each year.

True, if you bought last year and your neighbor has been there for 20 years, you're going to pay higher property taxes. However, that's not a secret that's revealed only after you close escrow. Those are the rules of the game around here and you can either accept them or go somewhere else.

The 2/3rds requirement has saved Californians untold billions in higher taxes that the Democrats would gladly assess if they didn't have to get the approval of at least a handful of Republicans. Dems have tried to put measures on the ballot to change that requirement, usually under highly misleading names, but the voters have shot them down every time. Say what you will about California, but the voters are not completely stupid (just mostly stupid since they keep electing Democrats).

The taxpayers of California have spoken, and the government ignores them at their peril.