Dumb and getting dumber in California

According to the article below:

California's deficit has exploded in the face of a worsening recession that has seen the state's unemployment rate rise to 9.3 percent, a 15-year high. Sales, property, capital gains and income taxes have plunged in recent months.

Now, if tax revenues have fallen in sunny California, does it not follow that there is less economic activity to tax--fewer jobs, fewer sales, fewer profits, less income, etc? Taxes are costs that businesses and individuals incur, so would it not follow that raising costs during a recession/depression when businesses and individuals have less income to meet their expenses is counter-productive (unless, of course, you are perversely trying to make the recession/depression worse) because imposing more costs requires businesses and individuals to reduce their spending and reduced spending means that tax revenue that could have been realized from this spending will not be realized. In other words, raising taxes in a recession/depression means that the state will get less tax revenue.

This seems logical to me. In Sacramento, it's an insoluble paradox. Governor Arnold and the Democrats insist on raising taxes by $14.4 billion in their attempt to deal with the $42 billion budget deficit. That's not actual money; that's merely an estimate of what they hope to raise by imposing these new taxes. How much will these taxes actually raise? Who knows? In a state that is suffering radical declines in property values, huge layoffs, bankruptcies, and serious increases in demands for public assistance, it's perfectly conceivable that the net effect of these new taxes will be negative--that the state will lose money by trying to impose higher costs on businesses and individuals who simply can't pay them. All the state may succeed in doing is to drive productive business and individuals out of the state. Or drive productive business and individuals out of business altogether. One thing's for sure: increasing the cost of doing business (a.k.a, increasing taxes) will not encourage more economic activity, which is California's only hope for survival.

But Governor Arnold and the Democrats think that somewhere out in California there's a giant cache of bucks just waiting for them to raid. They're focused entirely on solving the budget problem and have given not a moment's thought to the effects that their actions are likely to cause. The budget deficit is all they know; coming up with $42 billion is all they care about; screwing the citizens of California is the only "solution" they can think of.

And what is happening in California is also happening in Washington, D.C.

Read about the antics here