Monday, November 19, 2012

CA's Newest Tax

The editors at the WSJ look at California's new cap-and-trade tax. Here's how they summarize the likely outcome:

This assumes the money ever materializes. A study for the California Manufacturers & Technology Association this year estimates the new law will cost state and local governments between $21 billion and $39 billion in revenue due to job losses in the hundreds of thousands and 5.6% slower economic growth by 2020. California has lost about a third of its industrial base over the last decade.
This is the same policy that President Obama wanted to impose at the national level before West Virginia Democrat Joe Manchin literally put a bullet in it. Cap and tax has been sold as a way to end global warming, which it has no chance of doing. As California shows, its real purpose is to subject even more of the private economy to political direction and grab more revenue to spend.

In another piece they also surmise that the timing of the lawsuit against the law, filed by the CA Chamber of Commerce was the result of failed political gamesmanship:

The lawsuit claims that by raising revenues, the air resources board is imposing a tax, which only the legislature can do—and only with a supermajority vote. Yet why did the Chamber of Commerce wait until after the election and one day before the first auction to sue? The air resources board announced the auctions nearly two years ago and adopted their final framework last November.
Businesses have been lobbying Sacramento fiercely to drop the auctions all year. Maybe they hoped the governor would intercede on their behalf after the election if they supported his tax campaign—or that the $6 billion annual tax hike would satisfy liberals' desire for more revenues. If so, they were mistaken.
If that's the case, I hope those on the Chamber of Commerce begin to realize that principled action -- e.g. defending the individual's absolute right to produce -- would not only be the moral course, in the long run it would also be the most effective.

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