Raising Taxes in a Recession: A Terrible Idea

I've posted several times that the idea of raising taxes in a recession is a poor one. It doesn't matter if its to balance out of control spending or worse to pay for boondoggles like the transit tax scam or the gang tax.  With Angelenos struggling to pay bills, buy gas and get by the last thing the economy can handle is more taxes.  And to top it off your DWP and trash rates were raised significantly again.

Wednesday I had a conversation with a former elected official who now sits on an important local panel.  It doesn't matter who they are.  With respect to the proposed sales tax increase to pay for Westside transit projects the individual told me "investing in infrastructure is one way to stimulate a stagnant economy."

We've heard many politicians say this but it's never really panned out.  Did constuction of the Metro Red Line boost the economy in the late 90s? No, it came from the dot.com explosion and rising property values.  Indeed, the current downturn will naturally be well over before the first train is even run.

The best thing the City Council and State Legislature could do is to CUT taxes and fees.  That means they'll need to make some pretty painful spending cuts.  However very quickly they will see that revenues will increase the more they cut taxes and the more that private investment is stimulated.

It wasn't George Bush or John McCain or even Ronald Reagan who said that "It is a paradoxical truth, that tax rates are too high today, and tax revenues are too low, and the soundest way to raise the revenues in the long run is to cut the tax rates," no, it was President John F. Kennedy who in 1962 significantly cut taxes which led to a long term economic expansion that was stalled by the massive increase in social spending of Lyndon Johnson and his escalation of  the Vietnam War.

Arnold.  Antonio.  Anyone.  Want to follow the lead of JFK?