The California taxpayer’s case for independence
Why should California want more autonomy (or independence)? Viewed through the lens of taxpayer advocacy, the case is simple, if not stark.
You’ve probably heard that California is a “donor” state. If you combine state spending data from the Pew Charitable trusts with IRS data for 2014, you can calculate that California taxpayers were on the hook (that is, accounting for deficits) for $39.8 billion in excess of what we paid in federal taxes, or about $1,025 per person.
This pattern is fairly consistent over time: Californians pay about 12% of all federal taxes collected from the states and DC, but receive about 11% of spending. And this is a conservative estimate; if you use a tax incidence model like the famous Tax Foundation study, you can support numbers twice as big.
California is often chided for having high, and thus business-unfriendly, state and local taxes. The Tax Policy Center’s figures bear that out: in 2014, the average Californian paid $5,449 in state and local taxes, while the average American only paid $4,675.
However, the difference, $774, is actually less than what California lost in subsidies to other states. Our fiscal relationship with the federal government puts us in the unenviable position of Lewis Carroll’s Red Queen: we have to raise state and local taxes just to keep up with the level of services expected by the average American.
And there’s an even worse drain on California’s economy: the U.S. military. According to the SIPRI military expenditure database, the U.S. spent over 600 billion dollars on the military, more than $70 billion of that funded by California taxpayers. That’s about $15 billion more than our state plans to spend on K-12 education this year. It’s also as much as what Russia (the entire country) spends on its military. Canada, a country with a larger land area and a smaller population spends about $15 billion dollars a year on its military, and Mexico, our neighbor to the south, spends about $7 billion a year.
Why are California’s schools underfunded, our roads crumbling, and our dams ready to break? Because the money isn’t here. It’s in Mississippi. It’s in West Virginia. It’s in a F-35 fighter jet.
And yes, the U.S. military does much more than just defense. But even there, the U.S. clearly spends more than is necessary to maintain international order: if we hadn’t had a huge, well-funded military all ready to go, the United States might have thought twice about invading Iraq without the support of any major allies.
Imagine, for a moment, that the U.S. military were a state program. A program that spends way more than comparable programs anywhere else, is heavily subject to regulatory capture by its own contractors, was involved in a huge boondoggle between 2003 and 2011 (Iraq), and whose boss complains that it is “crumbling” and now needs even more money to mop up the mess it helped create (ISIS). California probably wouldn’t go one election cycle without an initiative on the state ballot seriously reining it in. Right?
Of course, it’s not a state program, it’s the federal government, where voters never get a chance to weigh in directly.
But if we’re successful at raising money to collect signatures for our initiative, California voters will be able to weigh in next November. While the initiative’s stated goal of California becoming a “fully-functioning sovereign and autonomous nation,” may be several years off, the additional leverage it will create for California in the federal system will be immediate.
As things stand now, any additional autonomy Californians can get over our own federal tax dollars will be more than welcome.
Be sure to see our other research and articles on Taxation Without Representation.