California was once the land of opportunity, but it
is going down the tubes. Several of California's prominent cities have declared
bankruptcy, such as Vallejo, Stockton, Mammoth Lakes and San Bernardino. Others
are on the precipice, and that includes Los Angeles, California's largest city.
California's 2012 budget deficit is expected to top $28 billion, and its state
debt is $618 billion. That's more than twice the size of New York's state debt,
which itself is the second-highest in the nation.
Democrats control California's Legislature, and its
governor, Jerry Brown, is a Democrat. California is home to some of America's
richest people and companies. It would then appear that the liberals' solution
to deficit and debt would be easy. They need only to raise taxes on
California's rich to balance the budget and pay down the debt – or, as
President Barack Obama would say, make the rich pay their fair share.
The downside to such a tax strategy is the fact
that people are already leaving California in great numbers. According to a
Manhattan Institute study, "The Great California Exodus: A Closer
Look," by Thomas Gray and Robert Scardamalia (October 2012), roughly
225,000 residents leave California each year – and have done so for the past 10
years. They take their money with them. Using census and Internal Revenue
Service data, Gray and Scardamalia estimate that California's out-migration
results in large shares of income going to other states, mostly to Nevada
($5.67 billion), Arizona ($4.96 billion), Texas ($4.07 billion) and Oregon
($3.85 billion). That's the problem. California politicians can fleece people
in 2012, but there's no guarantee that they can do the same in 2013 and later
years; people can leave. Also, keep in mind that rich people didn't become rich
by being stupid. They have ingenious ways to hide their money.
California has one-eighth of the nation's
population but one-third of its welfare recipients. According to BusinessWeek,
"it is one of the few states that continue to provide welfare checks for
children once their parents are no longer eligible." There's nothing new
about the handout strategy. As far back as 140 B.C., Roman politicians found
that the way to win votes is to give out cheap food and entertainment, what
came to be known as "bread and circuses."
Given the widespread contempt for personal liberty
and constitutional values, there might be a way for California politicians to
solve their fiscal mess. They can simply stop wealthy people from leaving the
state or, alternatively, like some Third World nations, set limits on the
amount of assets a resident can take out of the state. This would surely be
within their jurisdiction and would not raise any constitutional issues,
because it would serve a compelling state purpose. In other words, if
California were to set up border controls to stop people, as East Germans did
at Checkpoint Charlie, before they cross the state line, such action would be
protected by the 10th Amendment.
The fact that many Californians have managed to get
their assets out of the state complicates the issue. Article 1, Section 8 of
the United States Constitution authorizes Congress "To regulate Commerce
with foreign Nations, and among the several States, and with the Indian
Tribes." This is known as the commerce clause. There's no question that
people who pull up stakes and leave California affect interstate commerce;
California has less tax revenue, and recipient states have more. What
California Attorney General Kamala D. Harris might do is sue Nevada, Arizona, Texas
and Oregon in the federal courts for enticing, through lower taxes and less
onerous regulations, wealthy California taxpayers.
Were California to take such measures and have a
modicum of success, one wonders how many Americans would be offended by such an
encroachment on personal liberty. After all, how would forcing an American to
remain in a state differ in principle from forcing him to purchase health
insurance?
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