WILL RICH CALIFORNIANS FOLLOW THE FRENCH?

What do Gerard Depardieu and wealthy Californians have in common? Governor Brown is hoping the answer is “very little.” Several anecdotes and a spate of statistics, however, suggest they share more than Sacramento types would like to think.

Monsieur Depardieu, one of France’s most famous actors, has taken refuge in Belgium from President Hollande’s 75% tax on income over a million euros. The Cyrano de Bergerac star, however, is hardly alone in his search for a less taxing environment.

According to a Swiss magazine, 44 of that nation’s 300 richest residents are French and include famous names like Peugeot and Rothschild. Earlier this year London Mayor Boris Johnson, speaking fluent French, encouraged financial workers on the other side of the Channel to move to his city.

With the passage of Governor Brown’s Proposition 30, overall state-federal marginal tax rates for the Golden State’s top earners could exceed 50 percent—depending of the resolution of President Obama’s proposal to tax millionaires, billionaires, and those with adjusted incomes over $200,000.

As a consequence, the somewhat diminished flight of folks out of California could again become frantic—especially on the part of enterprises struggling in a business climate that ranks near the bottom of the Tax Foundation’s list of states. Among recent departures are 800 Chevron and 1000 Comcast jobs that are moving to other states, especially business-friendly Texas.

Ironically, folks in Hollywood are themselves increasingly prone to take productions elsewhere to secure tax breaks that aren’t available under the political regime they enthusiastically support. A double irony is that conservative Riverside County is pondering incentives that might encourage these “runaway” studios to film in the Inland Empire.

Beyond anecdotes, historical statistics suggest that Brown’s new taxes on the somewhat and actually wealthy are unlikely to produce significant revenues. As economist Thomas Sowell has noted, “high tax rates that people don’t actually pay do not bring in as much hard cash as lower tax rates that they do pay.”

The 1920s provide a poignant example. In 1921 a 73 percent tax rate on the wealthy brought in less revenue than a 24 percent top rate in 1925. Similar but less drastic cuts by JFK, Reagan, and George W. Bush produced similar results.

Rich folks, especially in a technologically enhanced economy, have many ways to avoid paying taxes. Tax-exempt bonds, even with low yields, beat paying half one’s dollars to the government. Or consider Google, an Obama-friendly California-based corporation that utilizes a Bermuda company to shelter two billion tax dollars.

Vilifying the rich may be emotionally gratifying, but it’s bad economics and socially destructive—as California, like France, may someday learn.

VIOLENCE PERVADES A CULTURE WITHOUT MORAL BACKBONE

“Oh my gosh, here we go.” Those were the thoughts of Newport Beach Deputy Chief David McGill when he got the call last week about a man firing a weapon at the city’s Fashion Island shopping center.

The previous day the lives of twenty young children and six adults at a Connecticut elementary school were brutally ended after the killer murdered his own mother at home. Fortunately, the Newport Beach shooter “released his tension” in a less horrific manner—directing more than 50 shots to the skies.

The next day Los Angeles police arrested a 24-year-old Pomona man for threats made against “kindergarten and elementary school kids” via the college student’s Facebook posting.  L.A. County prosecutors, however, declined to file charges despite a large cache of firearms that police found at the parental residence where he was arrested.

According to neighbors the now-free young man is a “head-of-the-class student” and a “totally good kid.” Perhaps the threatening post was, for him, a form of humor—not unlike Jamie Foxx’s Saturday Night Live comment (prior to the Connecticut horror) that in his new movie (“Django Unchained”) “I kill all the white people. How great is that!” Audience laughter followed.

The absence of a recent body count in California perpetuates the illusion that such things happen “somewhere else.” Disappearing down the memory hole is April’s murder of seven at Oikos University in Oakland. Last year’s shooting at Seal Beach, where eight persons were killed, has become ancient history—an artifact as remote as the slaughter of twenty-one humans at a San Ysidro McDonald’s in 1984.

Many folks are eager to assure us that these horrific events are no worse than shootings in the past. According to one scholar, “mass killings actually reached their peak in 1929.”

Those individuals are quite literally “whistling past the graveyard.” The late Senator Patrick Moynihan, himself a distinguished scholar, noted that the St. Valentine’s Day Massacre in 1929, where four gangsters killed seven other gangsters, was a huge event meriting two entries in the World Book Encyclopedia. How many folks even remember  Seal Beach?

Only in the last few decades has violence been mass-marketed extensively via films, music, and video games to both adults and kids. Ten years ago when I was teaching at a La Jolla prep-school, one teacher felt comfortable showing another ultra-violent Quentin Tarantino movie, Pulp Fiction, to students in a religion class. There was no administrative reaction.

When folks in authority are more worried about being called prudes than about setting high standards--for language, parenthood, and entertainment--that culture is in trouble. Not all shots will be fired into the air.

PROPOSITION 13 MAY BE DEMOCRATS’ NEW SCAPEGOAT

A joke in the old Soviet Union concerned a departed leader who left his successor two envelopes with these instructions: “When you are in big trouble, open envelope number one. When you are in really big trouble, open envelope number two.”

A few years later the official was in a huge mess, so he opened the first envelope. It said, “Blame everything on me.” After a while the official was facing an even greater crisis, so he opened the second envelope. It read, “Prepare two envelopes.”

The moral of the story is that scapegoating becomes routine in a system that doesn’t work. California’s politicians have transformed this practice into a fine art.

For several decades the dwindling numbers of Republicans in Sacramento were regularly blamed by Democrats and their media allies for the state’s wildly imbalanced budget. As is the case now in Washington D.C., GOP opposition to tax increases took the political rap for deficits—not the other party’s penchant for spending that, adjusted for inflation, increased over 40 percent per capita in the Golden State from 2000 to 2010.

Now that Democrats possess sufficient numbers to make Republicans irrelevant, one would think this supermajority would have to own the consequences of their belief that, as one skeptical commentator put it, “California is only one massive tax increase away from being fixed.” This consequence seems especially reasonable given that voters recently approved Governor Brown’s Proposition 30 tax increases.

There is considerable evidence, however, that the big government crew is building up a new scapegoat beyond the GOP, oil companies, and those dastardly Koch brothers—just in case higher taxes don’t produce revenues that keep pace with continuing demands for more “stimulus and investment.”

The new scapegoat for failed economic policies in Sacramento appears to be Proposition 13. Recently State Senator Mark Leno introduced legislation that would reduce from two-thirds to 55 percent the majorities needed to increase local property taxes. Other ideas designed to “reform” Prop. 13 focus on assessments for commercial property.

The speed with which these proposals appeared after the passage of Prop. 30 suggests that Democrats don’t expect Brown’s new taxes to be the magic bullet that will cure California’s ills. This assumption is reinforced by recent figures from the State Comptroller’s office showing November’s revenues came in 10.8 percent ($806.8 million) below budgetary expectations.

In short, if new taxes don’t produce a flood of additional revenue and a balanced budget, Sacramento’s prescription will be more of the same. The two revolving envelopes for these legislators will always read “Blame the rich” and “Raise taxes.”

“MEATLESS MONDAYS” DISTRACT FROM TOUGH POLITICAL TASKS

What are politicians to do when problems are massive and solutions bound to offend the powerful interest groups that pull their strings? Answer: Focus attention elsewhere.

That’s what the Los Angeles City Council did a couple of weeks before the national election when it adopted a “Meatless Monday” resolution “in support of comprehensive sustainability efforts” that would also “encourage residents to eat a more varied plant-based diet to protect their health and protect animals.”

Councilwoman Jan Perry, whose district extends southward from downtown L.A., introduced this zany motion. As an encore, she hopes to ban new fast-food restaurants in the area—a move that would lessen the number of jobs available for her constituents where unemployment far exceeds the county’s dismal rate of 10.5 percent.

The councilwoman is only following in the footsteps of other politicians like New York City Mayor Bloomberg who, having little success doing what politicians are elected to do (i.e. manage finances and provide basic government services at reasonable rates) have assumed the mantel of Nanny-in-Chief.

In Bloomberg’s case the latest object of his wrath was sugary soft drinks in excess of sixteen ounces. Other Bloomberg crusades have been waged against trans fat, salt, and outdoor smoking.

In Southern California the specter of thin plastic shopping bags has captured the fertile imagination of officials whose schools are often performing as poorly as the public employee pension funds that were mindlessly expected to grow as quickly as the number of retirees tapping these exorbitant benefits.

Other faux-crises that fascinate Golden State politicians include endangered critters like the three-inch delta smelt—a species-of-sorts whose protection trumped the water needs of Central Valley farmers and put thousands of unprotected homo sapiens out of business.

Put simply, “meatless” diversions shift attention away from yawning budget deficits, a high-tax, high-regulation environment that’s driving entrepreneurs out of state, illegal immigration issues that have only been ameliorated by a lousy economy, a graduation rate of 61.6 percent in the LA Unified school system, and a plethora of problems related to crime, drug smuggling and drug abuse.

The situation reminds me of a scene at the beginning of the film “Sex, Lies, and Videotape” where Andie MacDowell is explaining to a psychiatrist her obsession with a garbage-laden barge searching for a friendly port-of-call—an extraneous event that allows her to ignore a dissolving marriage.

Politicians fixated on “plant-based diets” are engaged in a similar delusion that detracts attention from budgets, jobs, education, public safety, and infrastructure. Believe it or not, constituents can plan their own diets without bureaucrat tutorials.

CHRISTMAS VERSUS THE NAKED PUBLIC SQUARE

One of the consolations of living in Sun City (aka Menifee) is the nostalgic atmosphere that pervades the residential communities dating from the sixties and seventies. When cruising these holiday-enhanced streets, one could almost forget that in America today, and especially in Santa Monica, there are folks who devote significant effort to removing from public property scenes that have warmed young and old hearts since 1953.

Last year in that saint-christened city a group of atheists conspired to secure for themselves the lion’s share of spaces available for decoration based on a lottery that had been set up to ensure equal access by folks of different persuasions.

Many of these slots were, appropriately enough, left empty by folks who are skilled at destroying tradition but ill-equipped at putting anything uplifting in its place. A few other displays were used to mock religion—a good example of the new “spirit-of-the-solstice-season.”

Two slots housed a condensed version of the traditional Nativity scene, and one space commemorated the Jewish festival of Hanukkah.

This year “The City of the Christmas Story” all-but-ditched the traditional displays at Palisades Park, insisting that any scene erected must have an attendant, presumably to protect it from vandals. A federal judge recently upheld the position of the municipality that seeks to wash its hands of what has become a legal and cultural battlefield.

Who knew that images promoting “Peace on earth; good will to men,” could be so divisive?

What most folks don’t know is that the modern judicial interpretation of the Constitution’s establishment clause would have seemed bizarre to the Founding Fathers, including Thomas Jefferson. The Jefferson Memorial, which is replete with religious references, pays tribute to an unorthodox President who nevertheless regularly attended church services that were held in the Capitol building itself for seventy years.

By contrast, the crew that gets its drawers bent out of shape over traditional Christmas displays on public property now insists that government-related acknowledgements of “the season” should shed all their essentially religious components and employ only images that don’t offend secular sensibilities—perhaps Black Friday fistfights or tasteful representations of a meaningless universe.

The logical kicker is that these dismal metaphysical preferences aren’t rational imperatives. Moreover, they offend individuals who lack a grinchly disposition and cringe at the idea that the only thing we have in common is government and black holes.

Here’s a novel thought. How about exhibiting some charity when in a government “of the people” some of those folks express their holiday traditions in the public square? That response certainly beats a cheerless, naked and rigorously intolerant public square.