Ed Schultz talked about this the other night, and now Wonk Blog picked up the story. It's a big one, because it proves once and for all, tax increases boost state revenues, making them healthy. And isn't that what business is looking for?
California raised a bunch of taxes this year. Its economy hasn’t collapsed: Six months ago I wrote that California was diving into an interesting political and economic experiment: Could it keep adding jobs even after slapping its wealthiest residents with the highest state income tax rate in the nation?
Most of the economists I talked to in the state predicted the tax hikes wouldn’t matter much. A lot of conservatives wrote me to predict the opposite.
What’s happened since? Well, California kept adding jobs, and at about the same rate as the nation overall. The analysts at Beacon Economics in Los Angeles noted recently that California accounted for a quarter of the nation’s net job growth last month.
One thing, at least, seems clear: The doomsday predictions haven’t come true. California is still recovering. We’ll check in again in a few months to see if the data give us any better idea of whether, and/or how much, higher taxes have dampened that recovery.