California Government Breaks its Social Contract with Rich Liberals
Conservatives often wonder why California’s 13.3 percent top marginal income tax rate has not driven out more of its affluent residents. Indeed, a family earning $10 million annually stands to save over $1 million each year by moving to Texas, Florida, or another state that does not levy an income tax.
But many high earners are willing to pay that price for California’s mild weather and natural beauty, to network in Silicon Valley or Hollywood, and to support a progressive government that aligns with their values. Although $1 million seems like a steep price to pay for these benefits, it’s worth remembering that the added happiness provided by each additional dollar of income generally falls as we become richer. In some sense, there’s not much difference between taking home $9 million or $10 million: you’re doing really well in either case!
For these residents, living in California is like buying a luxury good or dining at an expensive restaurant. But buying such goods and services brings with it a quality expectation that California’s premium tax rates are failing to deliver.
California’s rich are often able to insulate themselves from the state’s poor governance. For example, they can live in gated communities that are difficult for criminals to access, so they are insulated from the breakdown in law and order impacting urban residents and business owners.
But the January wildfires did not discriminate by income, and, as a result, many affluent homeowners were exposed to the impact of incompetent government. Despite politicians’ insistence that nothing could be done, and the fires were the inevitable result of climate change, many Palisades residents are not buying it. The empty Santa Ynez Reservoir, the disabled fire trucks, and the failure to preposition enough firefighters are too hard to ignore. It appears that, for some, an implicit social contract between California government and affluent taxpayers was broken.
Liberal comedian Bill Maher said the quiet part out loud on the January 17th episode of his HBO show, Real Time:
Axios ran a story on how getting the water out of the hydrants in Pacific Palisades was more complicated than it seems. I’m sure it is. I’m sure it’s very complicated. That’s why I pay 13 percent of my income in this state every year to people who I assumed were working on things like this. When asked why so many of the hydrants in the Palisades ran out of water, Gov. Newsom said, ‘The local folks are trying to figure that out.’ Yeah, you got to do that before the fire. At least, in the Palisades, the hydrants were still there. Three hundred other ones around the city are just gone, stolen for parts. One of the three reservoirs for the Palisades was offline at the one time of year when it was most needed.
Rather than develop and implement effective plans for addressing wildfire emergencies, California state and local governments have been spending billions to fight climate change. Given the severity of January’s wildfires, it is impossible to conclude that these climate efforts have been insufficient at best.
But it was easy to reach that conclusion before the fires broke out. First, since California accounts for only about 0.7 percent of global greenhouse gas emissions, there is literally nothing state and local government can do to meaningfully impact the trajectory of climate change.
Second, some of California’s expensive climate policies are not even having the desired impact. Take California High-Speed Rail for example. Sixteen years after voters approved the project, and with over $13.6 billion spent, the project has not taken a single gasoline-powered car off the road; nor will it do so until at least 2031. For now, the project has added greenhouse gas emissions as concrete is poured to build structures and trucks transport construction materials to job sites.
While the fires are a terrible tragedy, perhaps one good thing will come of them. Rich California liberals may finally realize that they are paying champagne taxes for soda pop public services. Hopefully, they will begin demanding meaningful efforts from the public sector in return for their hefty tax bills.
Marc Joffe is President of the Contra Costa Taxpayers Association and a visiting fellow at California Policy Center
