This is what happens when taxes go up

I suspect that, once Obama starts raising taxes, buyer’s remorse is going to set in with incredible speed.  This article focuses on the local economy, but is a harbinger of what will happen when taxes go up on a larger, national scale:

A temporary 1.5 percentage point sales tax increase proposed Thursday by Gov. Arnold Schwarzenegger to deal with the state’s worsening fiscal crisis comes just two days after Marin voters approved a quarter-cent sales tax increase for passenger rail service.In San Rafael, it would push the sales tax to 10 percent.

“The timing is terrible,” said Lise Sonnen, owner of Sonnen BMW in San Rafael. “Chevrolet across the street is in Chapter 11. All their new cars are gone. The Ford store died. … It’s hard enough for us as it is.”

San Rafael City Manager Ken Nordhoff said San Rafael’s sales tax, up a quarter of a percent after Tuesday’s passage of the Sonoma-Marin Area Rail Transit tax, is about half a point higher than the sales tax in other Marin cities.

Schwarzenegger, who proposed the tax hike along with another $4.5 billion in spending cuts during a news briefing, said he has little choice: Just six weeks after signing an overdue state budget intended to close a $15.2 billion deficit, the state faces an $11.2 billion deficit.


In addition to raising the sales tax, Schwarzenegger is proposing expanding its scope to include some services such as vehicle, appliance and furniture repair.

“That would be another $50 or so on our average ticket, which would definitely hurt,” said Gary Nugent, service manager at Heynneman European, a San Rafael auto repair shop. Nugent said the shop’s business is already down 50 percent due to the economic crisis.

The sales tax hike, which would continue for three years, is part of $4.4 billion in tax increases proposed by Schwarzenegger. Other revenue could come from raising the registration fee for vehicles by $12 and taxing companies that extract oil from California, which he said would generate $528 million this year.


State Sen. George Runner, the Senate’s GOP caucus chairman, flatly said Republicans will not support a general tax increase.

“The fact is that during this time of economic challenges is not the time to go back to California taxpayers and ask for more money from them,” said Runner, of Lancaster.

Read the rest here.

I can assure you that, as Marin resident, I will do my best to leave the county for any big purchases I need to make. If I can get into a county that charges 8.5% in taxes, that’s where I’ll make my bigger purchases.  For example, if I need a new car (which I don’t right now, but will soon), I will save $450 on a $30,000 car just by driving a few extra miles.  Small drive; big savings; no-brainer.

It never seems to occur to anyone in government to stop a deficit by cutting spending.  Wouldn’t it be nice if, when I go on a spending spree and outrun my budget, I could simply go to my boss and extort more money from him?  I can’t, though, and the government shouldn’t be able to either.

To be entirely honest, the article does discuss the fact that the government is making spending cuts, most notably for schools.  With those cuts in mind, I’d like to suggest that, if the schools refined their focus to on reading, writing and arithmetic, and stopped all the environmental and community service stuff (which should emanate from the home and not the school), they’d find that they could manage with a shorter day and fewer resources.  I like my schools to educate, not attempt to take over as parents, imposing their values, not mine, on the students.