Tuesday, August 15, 2006

What is wrong with this picture - Where is Micawber when we need him?

The National Conference of State Legislatures released a report on state revenues and expenditures for the current fiscal year. Last year revenues surged by 7.7% - that is a pretty healthy rise. With an underlying inflation rate less than one third of that that should mean good things. But there is a cloud in that silver lining. Expenditures rose 8.4%%. Next year expenditures are expected to grow by a bit less 7.6%.

In California the surge in revenues came as a result of a system which relies heavily on capital source income taxes - capital gains and options contributed heavily to the surge in revenues this year - including one set of payments from Google employees that amounted to more than $400 million.

Legislators should remember the advice of Micawber in David Copperfield - his principle was a simple one ""Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

Except in this case, the misery goes to the taxpayer.

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