Stimulus equals deficits and higher taxes

by Rocket Finance


Despite the passage of theĀ  American Reinvestment Act, also known as the Obama stimulus package, tax and spend states still cannot balance the budget.

A recent Wall Street Journal article detailed how New York State continues to raise taxes – despite just having been handed $10 billion dollars via the American Reinvestment Act. The New York State Assembly used the federal dollars to increase spending by 9% and then hopes to close the deficit with new taxes. New York is raising taxes at a time when the rich who pay most of the taxes in the first place are fleeing the state in record numbers. Privately employed individuals are seeing pay cuts and unemployment, but public employees will find an 3% pay increase in their paychecks under the new budget. Politicians continue to spend other people’s money while the City of New York eyes bankruptcy.

The same scenario has been playing out in the state of Michigan over the past few years. Michigan governor, Jennifer Granholm enacted huge tax increases after taking office and the Michigan economy has been tanking ever since.

Other states who are contemplating large tax increases include Oregon, Illinois, Wisconsin, Washington, Arizona and New Jersey.

What else do these states have in common?

All of these state received large amounts of money from the recent $875 billion dollar stimulus bill.

All of them still have huge budget deficits.

All of them feature liberal governments who continue to be elected because they bribe state citizens with public funds.

Businesses are leaving these states as fast as possible.

When will we learn that simple personal finance principle that we cannot spend more than we earn? When will states figure out that a good business climate equals a good tax base?

Do you think President Obama is paying attention?

Picture: Tomas Fano

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