Misleading Budget Reporting from the Los Angeles Times

The LA Times had a ‘news analysis’ piece today on the impact of the budget deal on the middle class. While it got the gist right – Californians are getting screwed – it repeats a great many of the myths about state finances. I was going to discuss it in detail, but instead I’ll point to Robert at Calitics.

I do want to mention three things. On the question of the tax burden in California as opposed to other states. According to this CNN Money graph from 2005, California ranks 20th on taxes as a percent of income. In a February 2009, the Public Policy Institute of California [PDF] showed that on the same metric, California ranked 18th. We are firmly in the middle of the pack. For some reason, the mindset in California is that our tax burden is still well over the national average. This hasn’t been true since the last 1970s, but reporting like this helps to perpetuate the belief.

The second issue pertains to paying for our freeways. I’ve discussed a mileage tax before, and how it should replace the gas tax as the means for paying for transportation infrastructure, with the gas tax being retained for climate change mitigation until a carbon tax is instituted. The article hints at a mileage tax around the edges, but mostly suggests that new construction will take the form of toll roads rather than freeways. This need not and shouldn’t be the case. The debacle of the TCA in Orange County should be evidence enough. There is a good coverage of this issue over at OC Progressive.

Finally, there is the question of the article’s focus on the middle class.

But at a time when taxes are about to rise substantially, the services that have long set this state apart are deteriorating. The latest budget cuts hit public programs prized by California’s middle class particularly hard — in some cases at the expense of preserving a tattered safety net for the poor — following years of what analysts characterize as under-investment.

The entire tenor of the article paints the picture that the middle class is being targeted specifically for both tax increases and budget cuts, in favor of the “tattered safety net”. However, this is misleading in three ways. First, public programs are prized by and benefit all residents of California, not just in the specific (everyone wants afforable higher education for their kids), but also in the abstract (quality education benefits businesses in the state and helps combat crime). Second, see this post at Calitics on the intensely regressive nature of the tax hikes in this budget – it is the poor who are being unfairly targeted, while corporations get a tax cut. Finally, the Democratic proposal for this budget always involved restoring high income tax brackets abolished in the 1990s. It is the governor, and ultimately the Republican obstructionists, who deserve the credit for shifting the burden to the middle and lower classes, both in the form of the income tax increase and in the sales tax increases, which are inherently regressive. Of course, this is seen as a bonus by the Yacht Party. Shame on the Los Angeles Times for getting the isolated facts right, but missing the larger story.

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