How to Solve the California Budget Crisis - again.

By TomKando

By the time you read this, California may have a budget, and it may no longer be paying people with IOUs, but then again, you never know. So let me try to help the legislature and the governor once more:

1. The Budget deficit is $26 billion. There are 37 million people in California. If every Californian were to pay a one-time $700 surcharge, the deficit would be wiped out. Or if you prefer, there are 12 million households in California. To wipe out the deficit, each household would have to pay a one-time average (=mean) surcharge of $2,200.

2. Unfair, you say. Some could afford this, but for many it would be hard. Okay, so the surcharge could be progressive, like the income tax. The rich would be hit with a larger tax surcharge than the poor.

3. Also, using average(=mean) income is unfair. The median (half are under it, half over) is fairer. Median annual household income in California is $50,000. There are 6 million households making less than $50K a year, and 6 million who make more. To erase the $26 billion deficit would require that every household under 50K pay $1,100, and every household over 50K pay $3,300.

4. But wait, it’s not like we need to raise $26 billion: The legislature has already agreed about many cuts. Let’s say that only half the deficit still needs to be funded. This reduces the liability to a one-time $550 surcharge for every household that makes under $50K, and $1,650 for households earning more. This raises over $13 billion.

5. By the way, average household size is three, so for those making under $50K, the liability would be $183 per person, those making over that would pay $550 on average. People could pay installments:The poor would be hit with a $15 monthly bill for one year, and the rich with a $46 bill. And if you wanted, you could make the surcharge more progressive, and use more than two income categories.

6. If everyone else chipped in, I wouldn’t mind sending the Franchise Tax Board an extra $67 per month for a year (my half of my household’s liability. I am in the rich half of the population). That’s less than my fax bill, less than a dinner for two at Frank Fat’s. That way California would not collapse, and 37 million people would have a life.

7. ...Oh yes, what about future years? Well, first of all,don’t ever ask me to do this again. Furthermore, make sure you set aside a safety-net fund. Finally, index the state budget to population growth and inflation. The only problem is: This plan is far too simple and reasonable to have the remotest chance.leave comment here