The first question that makes me ask is “why not a tax cut for everyone?”. Obama answers this simply, by saying that Bush’s tax cuts for the wealthiest Americans (actually it was a tax cut for darn near everyone), put our Country into the hole it’s in now.  Of course, a tax cut can’t cause a recession or make poorer people not pay for their mortgages, so we’ll dismiss that as more partisan blathering from our “hope and change” President.

Since Obama is bound and determined not to provide for JFK or Reagan style across the board tax cuts, we’re left with “targeted tax cuts”.  This has two problems: 1) The government is once again in the business of picking winners and losers (“working” families with  lots of kids benefit the most, while people who invest in our businesses and have no kids are led to the slaughter), and 2) It causes uneven, unpredictable, tax revenues.

Let’s follow Obama’s tax policy to it’s logical end.  Say that everyone decided to stop having children, and stopped meeting Obama’s definition of “working”…well in that case people would end up paying a lot more taxes for no apparent reason, and Uncle Sam would be living high on the hog.  That’s not good policy for us, it’s good policy for a statist who loves power.  Progressive tax policy is rightly accused of providing for penalties to politicians’ enemies, and favors to their friends.  Targeted tax cuts take these issues to a new level.  But progressive Democrat liberals are all about creating uneven tax code.

Why shouldn’t someone who has buckets and buckets of money and chooses to finance businesses with their money count as “working”?  Sure, these people don’t slap on an orange vest and go pick up trash but aren’t they working? If they invest foolishly they may loose everything they have, in other words, they are taking on risk you and I don’t (and can’t).  That’s “work” in my book.

Why are kids special?  I have no kids, so I get none of Obama’s tax kickbacks.  Is that fair?  Is Uncle Sam telling me there is an unwritten law of the land, that my wife needs to be pumping out lots of children?  Why?  Is the U.S. underpopulated?  Do we need hands for the farm?

When you target tax cuts instead of providing for a level, low tax base that’s even for all people, you are picking winners and losers.  The progressive tax system has made this silliness a mainstay of American tax policy.  We are taught from birth that rich people are ‘unfairly’ wealthy and that they don’t work like you and I do.  They need to pay a little extra.  But is that true?  Do rich people “use more government” than poor folks?  Of course not.

The argument that gets pulled out over and over to support the progressive tax is the “regressive” nature of flat taxes. This is the idea that if everyone pays a flat tax, it’s harder on poor people than rich people.  To that, I say a giant “So what?!?!”. Poor people pay a higher percentage of their income for groceries, clothing, transportation, satellite TV and anything else.  That’s not a social statement, it’s a numerical fact.  When you have less money, static costs we all pay seem bigger.  That’s supposed to be motivation to get a better job, in a free market.  It isn’t perfect but it’s good enough to encourage many Americans to provide the best possible living they can for themselves.

Swiss cheese tax code does little more than make the President look good in front of crowds who aren’t educated enough to understand what he’s suggesting.  It doesn’t jump start anything in the economy and it provides little in the way of actual relief for most Americans.  The 40% tax on top earners, however, will do exactly the opposite.

California’s adventures into socialism and high taxes teach us a good lesson so that other States can avoid the mistake, and perhaps even save our Country the agony of living through it.  California ranks 48th in terms of its business tax climate.  I prefer to say it this way: California is the 2nd most punitive State to run a business in. I’m sure many of California’s leftists (and there are many), do not see this as a problem.  However, when businesses run away to other States that’s fewer jobs (and yes, evil Republican business owners) that the State can rely on.

Excessive social spending doesn’t help matters either.  It’s a massive drain on the already suffering economy and it does nothing to encourage people to move to the State.  When times were better, California should have been building up a cash reserve to deal with rainy days like today.  Instead, the legislature totally leveraged the State to win leftist voters.  Worse, the response to the recent economic crisis by the legislature was to raise taxes even further.

With a progressive tax code that essentially begs millionaires to leave, and a corporate income tax that ranks 6th highest in the nation, it would appear that California has done everything it can to chase money out of the State.

Tax budgeting is counter-intuitive by nature.  It requires legislators to often do exactly the opposite of what would seem logical to the uninitiated.  Raising taxes always discourages an activity.  Raising taxes on rich people and businesses encourages rich people and businesses to find a new place to live…and find a new place is exactly what they’ve done.  Until California reverses course on tax policy and social spending policy, they can expect more of the same results they have been getting.