Hanson on "Bankrupt California," Part Two
By David Henderson
I promised in yesterday’s post to cover the parts of Victor Davis Hanson’s article that dealt with other aspects of California. Immigration aside, I found myself agreeing with a number of them and wanting to extend some.
1. Gas prices. He points out that gas prices are higher in California than elsewhere, especially now, but only hints at the reason. I discussed the reason here in August and here in July 1999. State regulators and the EPA have made the previously national gasoline market into a series of “boutique” markets. Gasoline produced for Oregon and Nevada cannot be sold in California. So that makes the supply system in California more fragile than otherwise. One refinery goes down and supply falls; you can’t bring it in from elsewhere. Result: gasoline prices have jumped by about 40 cents or so in the last 10 days. I pointed that out on a local TV news show, KION-TV in Salinas, last Friday.
2. U.S. Energy Secretary Chu. Hanson notes that Steven Chu has advocated substantially higher gasoline prices than California has now. When I was talking to the producer of the news show last Friday before going on the air, I mentioned that Chu had advocated prices close to double our current prices. She looked uncomfortable and said, “Well, we can’t get political.” I answered, “It’s not political to point out that someone said something.” Unfortunately, in the short time I got on the air, I didn’t get to quote him.
3. “High-speed rail.” Hanson notes the absurdity of building “high-speed rail,” which I predict will not be, between two relatively small cities in California’s Central Valley. This rail is not cheap and will further stretch an already bloated wasteful government. Which brings me to:
4. Taxes. On the ballot in November is a measure to raise the top marginal tax rate on income and the sales tax. The top marginal tax rate is already a whopping 10.3%. Under the bill, it would rise to 13.3%. The state sales tax rate is a hefty 7.25% and would rise to 7.5%. That means that, combined with local sales taxes, in some parts of California the sales tax rate would exceed 9%.
So, contrary to what I think some commenters thought, I was not dumping on Hanson’s overall article.