Harris’ Plan To Spread California’s Economic Dysfunction

By David Ditch, The Daily Signal | October 29, 2024

Vice President Kamala Harris was born and spent most of her life in California, where she was elected to the Senate. It should, therefore, come as no surprise that her proposed policy agenda is aligned with California-style governance.

Since the effects that high taxes and heavy regulation have had on the Golden State are clearly visible, it should be obvious that applying the Harris model nationally would be a disaster.

Even with California’s appeal of natural beauty and pleasant weather, Americans have been fleeing the state in droves for years.

A net 1.25 million people left California for other states between 2010 and 2019. Incredibly, this trend is getting worse, with a net 749,529 people departing California in 2021 and 2022 alone.

Similarly, many major corporations have moved headquarters out of California, including Tesla, Hewlett-Packard, Oracle, Chevron, and Charles Schwab.

There are good reasons for that exodus.

California places a heavy tax burden on its citizens and businesses. That includes high personal and corporate income taxes, general sales taxes, and gas and diesel taxes. With many states taking the opposite approach by cutting taxes in recent years, California is increasingly an outlier.

It would be one thing if those tax dollars were all used wisely. Unfortunately, California’s state and local governments are notorious for wasting money. That ranges from boondoggles such as the state’s dysfunctional high-speed rail project to a network of nonprofit groups that bilk cities with minimal oversight.

In addition, California has a painfully high cost of living.

Part of that is energy prices that are inflated by taxes and onerous “green” energy production mandates. Housing is also expensive because local governments have blocked or delayed needed new construction for decades.

In contrast, states such as Florida and Texas have attracted millions of residents from other states, thanks to pro-growth policies of low taxes, modest regulation, and making it easy to start and grow businesses.

Such states provide a haven from the excessive government seen in places like California.

That’s why the details of the Harris economic plan are so important—and so concerning.

The 82-page plan, released in September, calls for increasing the federal government’s control.

For example, there would be tax credits for selected (politically favored) industries. However, there would be broad tax increases on all businesses, since she claims they aren’t paying their “fair share.”

That means the government would be picking winners and losers in the economy. It would also make most American businesses less competitive globally and reduce job-creating investments.

That’s been the case in California, which taxes most businesses heavily while showering a select few with benefits. That approach resulted in driving businesses to other states.

The Harris plan also proposes a national minimum wage increase. That mimics another job-killing policy from California, which has gone so far as to mandate $20 an hour for fast-food restaurant employees.

When it comes to the cost of living, the Biden-Harris administration’s track record has been abysmal, fueling inflation through out-of-control deficit spending and a multitude of expensive regulations. To date, Harris has been unable (or unwilling) to distance herself from the current administration’s policies.

Subsidy proposals in the Harris economic plan would also make inflation worse.

Handouts for home purchases would encourage sellers to raise their prices, while an expansion of student loan “forgiveness” would encourage universities to keep tuition at eye-popping levels and add to the national debt.

Higher prices, excessive regulations, and central control of the economy are both the hallmarks of Harris’ economic plan and the causes of California’s troubles.

People who are unhappy with California can move to other states. But if California’s policies spread nationwide, Americans would have nowhere to escape to.

This column reflects David Ditch’s personal opinions. His biographical information is presented for identification purposes only. We publish a variety of perspectives. Nothing written here is to be construed as representing the views of The Daily Signal.

David Ditch is a senior policy analyst in budget policy in the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation.

Original article link