Sunday, September 12, 2010

Scenarios to Erase California' Whopping Budget Deficit

The most harmonious way to erase California's budget deficit is to exterminate the state's underground economy. Official state reports emphasize that the underground economy causes California to lose a whopping six and a half billion dollars each year just in unreported taxable wage income.  Once California implements an effective program to collect the substantial taxable wage income it loses annually, revenues will be realized directly through additional taxes, penalties and interest, and indirectly through voluntary compliance and the resulting fair competition.   Suppose California had collected that money each year for the past ten years. Despite the national recession, the state would currently enjoy a five billion dollar budget surplus rather than a sixty billion dollar deficit. Furthermore, proper wage and tax payments are linked to fair competition.  The fair competition, in turn, would render California better equipped to manage an economic disaster like a national or a global recession. This option, as opposed to the budget plans dangerous tax hikes and spending cuts, is preferable in that it kills two birds with one stone; that is, it mobilizes California's silent but deadly underground economy to combat the more recent and imminent budget deficit.

No comments:

Post a Comment