Sunday, January 24, 2010
The trouble with California
Is California's' recession much worse then the rest of the United States; and if it is then why and can it be fixed. The national unemployment is around 10% and California's unemployment rate is around 12.4%. Although this is not the highest rate in the United States there are still multiple other problems for California. According to this article California is facing the problem of providing more services during the recession while collecting less tax revenue. Considering the population of California its understandable that they are racking up a bigger deficit then most states. The Golden State all so has some serious infrastructure issues. Over 40 years ago Proposition 13 was put into effect which states that in order to raise taxes there needs to be 2/3 majority vote. Even with this large problems which must be fixed in order to change the financial budget of the state California's economy simply can not fail. California is eighth largest economy in the world and with proper investment with rules and guidelines California can fix their budget crisis.
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I find this article very interesting. Not only did I not know about California's bigger problem with the recession but I am shocked by proposition 13. After reading about the proposition I am surprised that this was approved. If California cannot raise taxes, I don't see how they can survive unless they make tremendous spending cuts. The government is going to have to end up bailing them out and the state should revise it's policies.
ReplyDeleteIt is difficult to use taxes as a means of raising tax revenue because California already has some of the highest tax rates in the country. The current sales tax, ranging from 9.25% to 9.5% depending on where you are in the state adds on almost 10% extra costs onto any purchases. It is important to resolve the issue because state funding for issues like in-state schooling is drying up however I do not think raising tax rates would be the most efficient way to remedy this problem.
ReplyDeleteAccording to the Bureau of Labor Statistics, unemployment in Detroit is near 50 percent. This is much higher than the percentages seen in California. Additionally, the state of Michigan's unemployment rate has risen to 15.2 percent. This is the highest of any states since march 1984. Along with California, Michigan is in need of an economic recovery that would lower the unemployment rates.
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