From the Publisher: It’s Tax Time and Wonderful Things are Coming

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Arnold G. York

I walked out of the front door and it was like walking into a hair dryer, with some wind pushing the air. When the World Series opens in Chavez Ravine at 5 p.m., it’s estimated the over 100 degrees Fahrenheit temperature all over LA will drop to a cool 97 degrees Fahrenheit, making this the hottest World Series opener ever. To baseball people, that means that fast balls are probably going a little bit faster and hits off the bat are probably carrying a little bit farther. It’s also tougher to throw a curve ball in the hotter air. Whether that helps the Dodgers or the Astros, I’m not sure, but probably the two best teams in baseball are meeting this year and it promises to be an extraordinary World Series—even for nonbaseball fans. Tickets for tonight’s opening game cost an average of $1,863 and since they’re not giving away any press tickets, I’ll be watching this on TV like most of you; at least we get air conditioning.

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There is a Red Flag Warning out for Malibu on Tuesday, Oct. 24, so hopefully by the time this week’s newspaper hits the streets, we will have already dodged the fire bullet. We’ve been talking to some people in Northern California about how to form their own version of Operation Recovery, which we did after the 1993 Topanga-Malibu fire, where 400 homes burned out. After a disaster, the support groups serve as a kind of resource sharing, information gathering and psychological support group, which are essential for everyone’s survival. Initially, you actually do get a bit nuts after a disaster and it takes awhile to recover your bearings. There are a thousand questions after a major fire, loads of misinformation floating around and real predictable problems with insurance companies, local and county governments, and all of their rules. For those who rebuilt, it took almost three very difficult years here in Malibu and I doubt it’s gotten any faster since then. 

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Washington, D.C., has shifted gears and now we’re going into tax cut mode. Frankly, I’ve always had difficulty understanding why people get so put out by taxes. No one ever gave you something for nothing. I don’t resent paying the Toyota Corporation for my Lexus or paying Apple for my computer, yet I must admit it kind of gets me when I have to pay the government taxes. I hear terrible things about California as a high-tax state, but as far as state taxes go, we are somewhere in the middle. California, which has been rapped as sort of a financially crazy place with all sorts of silly ideas, is far from that. We have a solid and very diverse economy, which grows at an acceptable rate, has a comparatively low unemployment rate and a low inflation rate. California also has good (but not great) public schools; a superb university system that employs a vast number of people; several industries like technology, entertainment and alternative energy, which are on the cutting edge of the new information economy; a beautiful coast; and great weather (or at least formerly great). It’s true that land is very expensive, particularly on or near the coast, and we are very short on housing. What we have is quite expensive so it’s a difficult place to maintain manufacturing. Strangely, despite that, LA is one of the major manufacturing hubs of the country. The California valleys don’t do as well and have been left behind in the economic boom.

So, why have this major push for a tax cut? The national economy is fine, almost at full employment with low unemployment, low inflation and corporate profits almost all up. The stock market has gone through the roof. Our problem is not that high taxes are holding us back. Our problem is that too many Americans are not sharing in this bounty and are angry about it. We know what the tax cut is not going to do; it’s certainly not going to grow the economy in any substantial way that will give those unhappy people a bigger share. All it’s going to do is shift around who pays less and who pays more. But tax cutting is tricky. Different cuts effect different states in different manners. It doesn’t line up simply “blue state, red state” or democrat vs. republican. For example, California is a major agricultural state and a major agricultural exporter. On agriculture, we have more in common with Iowa and Nebraska than some other blue states. Whatever you fix in tax reform, you can be assured that for everyone who benefits, someone else’s ox is being gored because wherever you give someone a tax cut, you have to make that revenue up and someone else has to pay more. If you make the cuts but don’t find additional revenue, the deficit goes up and the deficit hawks go nuts. This is not partisan politics—it’s simply arithmetic. The people who invariably get the reduction in taxes are the people with the most political clout. I suspect what we are going to see play out in Washington, D.C., is that the fat are going to get fatter, corporate America—which these days is really just international corporate America—will do just fine. The lean will end up even leaner than before and the winning team will declare victory; they’ll declare how wonderful all this is for America, which will be true for their America. 

As for the rest, well, “wait until next year.”