This Friday, we take a deep dive into the policy choices confronting Californians: Douglas Rivers and Michael Boskin analyze findings from two recent polls on policy preferences; Lee Ohanian provides a critical look at two measures that would increase taxation in California without addressing spending; and Lanhee Chen proposes a ballot initiative to make elections for California’s controller and treasurer offices nonpartisan.
California Decides
In addition to serving as a Senior Fellow, Douglas Rivers is the chief scientist at the global polling firm YouGov PLC. He teamed up with Senior Fellow Michael J. Boskin to analyze the results of two recent YouGov polls examining how Californians, and Americans nationally, feel about taxes and spending. As it turns out, despite California’s high taxes and government spending, the poll found that Golden State residents actually have views on taxation similar to those of residents in other states, at least when it comes to their own tax burden: They would prefer lower federal and state income tax rates. Turning to California’s Proposition 40, proposing a wealth tax on billionaires, Rivers and Boskin find a conflicted voting public and suggest that “the majority of Californians believe the state has a spending problem, not a tax problem.” The survey also found considerable pessimism from Californians about the state’s ability to administer a wealth tax, even if they favor the idea in theory. While the findings are interesting in that they suggest California policy realities diverge considerably from voters’ preferences, the authors conclude that political change in Sacramento is not likely—at least not yet. Read more here.
“California’s state budget increased by about 75 percent in the past eight years, despite no population growth,” Senior Fellow Lee E. Ohanian writes in California on Your Mind. His column argues that given this large growth in spending, “the last thing politicians should be asking for is higher taxes.” Yet higher taxes are on the ballot, Ohanian reports, with the proposed billionaire tax joined by an unrelated ballot measure that would make permanent a top state income tax rate that was sold to voters in 2012 (and renewed in 2016) as a “temporary tax to fund education.” Funding for education in California is not the problem, in Ohanian’s view; the state spends on average just under $27,000 annually per pupil, “yet only 29 percent of our eighth-graders are proficient at federal standards in English and just 25 percent in mathematics.” Meanwhile, a public charter school in Vacaville “delivers much better learning outcomes while spending only about $11,200 per student.” Ohanian ends with a call for a comprehensive review of the state budget, as well as the adoption of greater oversight and accountability measures. Read more here.
In 2022, Research Fellow Lanhee J. Chen ran to serve as California state controller. While he didn’t win, he gained more votes than any Republican running for a California state office in recent years through his nonpartisan, accountability-focused platform. Yesterday, he wrote in the Los Angeles Times with a proposal “to make nonpartisan the election of our fiscal officers in California.” As he explains, neither the state treasurer’s office nor the controller’s office exercises the type of discretion associated with political roles, such as setting law enforcement or social policy. Rather, these positions “are a check against wasteful spending and a defender of the state’s creditworthiness.” The treasurer serves as “California’s chief banker,” with duties like selling bonds and managing investments, Chen explains, while the controller is an “accountant and internal auditor.” He argues that shifting to nonpartisan election of these offices promises to “create more competitive campaigns and, ideally, less ideological fiscal officers.” Read more here. [Subscription required.]
For Defining Ideas, Research Fellow David R. Henderson takes a look at a recent report from the Cato Institute’s Stephen Slivinski comparing a range of freedoms across the 50 states. One aspect of the overall rankings (in which California is 44th) is “fiscal burden,” which blends the level and type of taxation, amount of government-issued debt, and government spending in a state. “Only four states earn a grade of A and they are, in order, New Hampshire, Florida, South Dakota, and Nevada,” writes Henderson. California, meanwhile, “comes in at forty-seventh, better only than New Mexico, New York, and Hawaii.” Where California is competitive, Henderson reports, is in the areas of mitigating law enforcement overreach (seventh place) and medical freedom (14th). The economist suggests that the rankings may be useful to several groups, including “people who are considering moving from one state to another, voters who care about freedom and want to know how their states and politicians are doing, and politicians who might want to nudge their state a little closer to freedom.” Read more here.
Confronting and Competing with China
In a post at VoxEU, Senior Fellow Amit Seru and coauthors report findings from their recent research on the sources and scope of Chinese technological innovation. Many China observers have wondered in recent years what accounts for a “dramatic rise of domestic patent publications by Chinese inventors.” The authors assembled a new data set of domestic Chinese patents to study the innovation ecosystem in China. As they write, “The data reveal an innovation system that is more broad-based, more university-centered, and less dominated by state-owned enterprises, large national champions, or US-trained returnees than many standard narratives suggest.” The authors report that a rise in Chinese patent quantity has not resulted in lower patent quality, as measured by citations, but say that further research is warranted into how government incentives are impacting technological research and innovation in that country. Read more here.
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