California Gold Rush 2.0
California’s nickname, the “GOLDEN STATE” comes with some history. Britannica explains:
“In 1848 John Sutter was having a water-powered sawmill built along the American River in Coloma, California…. His carpenter, James W. Marshall, found flakes of gold in a streambed. Sutter and Marshall…became partners and tried to keep their find a secret. News…soon spread, and they were besieged by thousands of fortune seekers. (With his property overrun and his goods and livestock stolen or destroyed, Sutter was bankrupt by 1852.)”
PBS continues:
“Get Rich Quick
The discovery of gold at Sutter’s Mill…unleashed the largest migration in United States history…. The promise of wealth forever altered the life expectations of the hundreds of thousands of people who flooded California in 1849. ….
State of the Union
…. Newspapers first published accounts of the gold discovery. …. Skeptical editors downplayed the notion, despite letters from California like the one in…the Philadelphia North American that read, ‘Your streams have minnows and ours are paved with gold.’
Not until President James K. Polk announced Colonel Mason’s report…. Did Americans become believers….”
The lure of easy, instant wealth was irresistible. In 1849 (49ers) the rush was on; 300,000 people flocked to California in search of gold.
In 1846, California had approximately 6,500 Californios (Spanish or Mexican descent), 700 Americans and 150,000 Native Americans. San Francisco, 200 residents, suddenly became a boom town of 36,000 by 1852. California joined the union in 1850.
Wikipedia explains:
“Miners lived in tents, wood shanties, or deck cabins removed from abandoned ships. …. The gold rush…accelerated the Native American population’s decline from factors including disease, starvation, and…acts of unprovoked aggression…(leading) to significant conflict between the newcomers and indigenous people, eventually resulting in whole tribes being displaced in some cases.”
Hmmmm…
Those yearning for easy wealth overwhelmed the territory with massive migration causing conflict with the current inhabitants. The immigrants didn’t integrate into the society and culture; they destroyed them. Sounds much too familiar….
Moving on…
Over the next 160+ years California prospered. Rich in natural beauty & resources, California was revered in print and song – depicted by many as Camelot.
California became the largest populated state in the nation by a wide margin: (Courtesy of Britannica)
After the Trump 2016 election, the Calexit movement began:
“YesCalifornia.org makes this appeal:
‘As the sixth largest economy in the world, California is more economically powerful than France and has a population larger than Poland. …. California compares and competes with countries, not just the 49 other states.
Since 1987, California has been subsidizing the other states at a loss of tens and sometimes hundreds of billions of dollars in a single fiscal year.
.… In our view, the United States of America represents so many things that conflict with Californian values, …. continued statehood means California will continue subsidizing the other states to our own detriment.'”
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California Values…
California politicians jumped on the bandwagon, implementing their utopian agenda; hell-bent on defying federal law.
When Governor Gavin Newsom was sworn in January 7, 2019, he inherited a budget surplus. Cal Matters reported:
“Newsom boasted as the state enjoyed a $97.5 billion budget surplus. ….
‘No other state in American history has ever experienced a surplus as large as this,’ Newsom said as he unveiled a revised $300 billion 2022-23 budget.
…. The budget he signed a month later was even larger, $307 billion, with immense new commitments, including cash payments to poor families and expansions of health care and early childhood education.”
The Hoover Institution adds – After A $100 Billion Surplus, California Now Faces A $73 Billion Budget Deficit:
“California’s Legislative Analyst’s Office…increased their estimate for the state’s 2024–25 budget deficit to $73 billion. …. In sharp contrast to the state’s $100 billion surplus from two years earlier.
…. Jerry Brown’s…last budget,…totaled $201 billion. …. The state’s 2023–24 budget is $310.8 billion,…a…spending increase of nearly 57 percent compared to 2018–19.”
It gets worse…
“Auditors found that California understated its 2021–22 liabilities by about $29 billion. This understatement reflects the chronic dysfunction of the state’s Economic Development Department (EDD), which paid out roughly that amount in fraudulent unemployment claims in 2020.
…. No one within the state leadership is demanding accountability from the EDD, no matter how poor their performance is, how much it costs the state, or for how long they have failed to deliver.
…. California faced a budget deficit…which led to…the use of state IOUs, and a temporary increase in the state sales tax and in the top income tax rate.
…. When it came time for those temporary tax increases to sunset, only the sales tax rate returned to its previous level. The state’s top income tax rate was permanently raised to 13.3 percent, which is now up to 14.4 percent reflecting a mental health tax and an uncapped state disability tax.
California’s constitution requires a balanced budget. But despite a projected deficit that is almost twice as high as it was during the financial crisis, Sacramento has offered little in the way of specifics for dealing with this.”
A kitchen table perspective
The highest income tax rates in the nation provides California’s primary source of revenue.
Like the billions spent on the failed rapid rail project, the money is gone. Politicos make no attempt to account for waste and fraud, while it’s estimated that State employee compensation is about twice as high as that in the private sector.
Politicos fuel class warfare; tax the greedy rich who don’t care about the poor. The top 1% cover almost 40% of the state income tax revenue. While the state does nothing to rein in cost and fraud, it demands even more taxes. Understandably, taxpayers feel ripped off!
They recently proposed a billionaire’s tax targeting the state’s 214 billionaires:
“The proposed ballot initiative…would impose a one-time 5% wealth tax on California billionaires, payable in annual installments of 1% over five years. The tax is based on worldwide net worth of taxpayers valued as of December 31, 2026.
…. Therefore, a 5% tax on billionaires’ extraordinary wealth can raise substantial revenue for the state.”
Not satisfied with taxing citizens on what they own and earn in California, they now want to extract taxes on wealth worldwide.
It’s not hard to predict the outcome of the vote – millions of Californians, (including 870,000 dead and relocated voters receiving ballots) versus 214 billionaires.
California Gold Rush 2.0 is outbound!
The wealthy, fed up with “California values”, are grabbing their gold and fleeing California to more tax friendly states. CEOworld explains:
“California leads all states in millionaire departures with net outflows of 102,600.
…. On the inflow side, Florida dominates with 133,000 new millionaire residents—almost equivalent to California’s entire loss. The Sunshine State has become the single largest beneficiary of domestic wealth migration. Texas ranks second with 36,000 net inflows.”
Build Remote lists major corporations like Chevron, Charles Schwab, Hewlett Packard, and others, fleeing the state, along with their top employees. It’s estimated that California lost almost $12 billion in taxes as a result.
Exit interviews generally cite economics; a better business climate is available elsewhere. Off the record comments paint a different picture. Streets are not safe; crime and drugs are rampant and people living in tents – just like 1849.
After WWII, Berlin was divided; East Germany was under communist Russian control, while West Germany offered capitalism. For 16 years, millions of East Germans moved away for a better life. To stop the outbound migration, the Berlin wall was built; citizens were trapped in a communist country.
Controlling Migration
To refill their exit migration gap, California adopted “sanctuary policies,” offering free food, shelter, medical care, and citizenship for illegals to enter – proclaiming exemption from federal immigration laws. California is trading high end, productive workers for a larger welfare class, many who have little regard for American laws and values. This will not make up the lost tax revenue. The rest of America isn’t buying “California Values.” Polls indicate over 80% of Americans see illegal immigration as a real problem.
If California doesn’t fill the exit migration gap, they lose money and power. Population gives you seats in the House of Representatives and a larger share of federal dollars. Why would any reasonable American oppose voter ID? American citizens only should decide how our country is run.
The Newsom Wall
Newsom publicly opposed the billionaire’s tax. California’s richest residents fled, leaving a $25 billion hole in CA tax revenue, while record spending remains. That’s a lot of gold rushing for the exit. Expecting a billionaire’s tax to be a “one time” event is foolhardy.
Newsom now calls for, “A national billionaire’s tax.” Newsom wants all states to implement billionaire’s taxes. By doing so, his high-net-worth taxpayers would have no place to flee. Curtailing waste and spending never gets mentioned.
The gold rush is on. Job creators and wealthy people are taking their gold, fleeing to safety, away from politicos wanting to confiscate their wealth to fuel their political ambitions.
One can look over the horizon and see massive wealth migration, further dividing the country, like Berlin. No one will benefit if that happens….
Politicians everywhere need to be fiscally responsible, looking after the needs of their citizens. In the meantime, will the last worker exiting the Republic of California, please turn out the lights!
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On The Lighter Side…
Last weekend Jo and I flew back to Indiana. It was fun spending a couple weeks in Florida celebrating our nation’s 250th birthday. A golf cart is the primary mode of travel in our community. We took delivery on ours last November and the odometer rolled over 1,000 miles last week. Even on hot, humid Florida nights, it’s fun to drive around the town squares, enjoy a nice dinner and entertainment.
A neighbor asked how we compared Florida summers to Arizona. Triple digit heat is the norm in Phoenix. In central Florida it is generally 10-15 degrees cooler, and cools down a bit more at night. The humidity in Florida is generally 20% higher, and afternoon rain is commonplace. Some feel it is a trade-off.
I feel each of us have our own comfort meter. I disliked the summer sun in Arizona, generally feeling like immediate sunburn and blistering. In Florida, hot and humid, perspiration is a given, but I don’t experience the same discomfort.
On the 4th we went to a community event in a local town square. Hundreds of people roamed the booths, enjoying the day. The band was playing and I’d estimate there were well over 100 people line dancing together. I told Jo, we were much less likely to see that in AZ, unless we were in the mountains where it is much cooler.
Soft ice cream goes well in either location.
Quote of the Week…
“Keep your eye on one thing and one thing only; how much government is spending, because that is the true tax… If you’re not paying for it in the form of explicit taxes, you’re paying for it indirectly in the form of inflation or in the form of borrowing. The thing you should keep your eye on is what the government spends, and the real problem is to hold down government spending as a fraction of our income, and if you do that, you can stop worrying about the debt.” —Milton Friedman
And Finally…
We will close out the week with some Will Rogers timeless humor about government:
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And my favorite:
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Until next time…
Dennis Miller
“Economic independence is the foundation of the only sort of freedom worth a damn.” – H. L. Mencken
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