Welcome to the April Business of Wine issue of NorthBay biz magazine. This is a new cover theme for the magazine. It explores some of the different aspects of the wine industry that are so important to the economic viability of the North Bay. We hope it helps grow your knowledge and appreciation of the economic engine chugging along right here in our midst everyday. So please enjoy all the stories, special features and columns this month in the North Bay’s only locally owned business publication—NorthBay biz.
Just a little more than three months ago, White House Chief of Staff Rahm Emanuel declared what he called, “Rule Number One: Never let a crisis go to waste.” And true to his word, the administration has wasted no time in its efforts to use this financial crisis as a means to begin to nationalize entire segments of the economy in an astounding shift of power. Suddenly endangered now is an America where individuals controlled and determined their own routes to happiness and success—where “free markets” were free to work—where citizens possessed power. Instead, we’re on a road that envisions a very real and different destination—a vision in which politicians and their minions are at the center of American life—where every decision about what’s best for you is made in Washington. Trust in government, not in your own ability, is their mantra.
Emerging from the current economic trauma depends largely on reinstilling failing consumer and business confidence. America and a large part of the world have been waiting for some sign, some hope from Washington to help allay their fears. Instead they’ve heard nothing but doom and more gloom being preached from the pulpit of the highest office in the land. Markets crash and stocks plunge after hearing terms like “national catastrophe” and “global chaos” with every speech. This isn’t accidental. Barack Obama is determined to pass this transforming policy. He’d rather redistribute income than create wealth. His ideology comes first and the economy is an afterthought. When asked why Obama was being a prophet of doom, Dick Morris answered “Because he is so anxious to cram through every last spending bill, tax increase on the so-called rich, new government regulation and expansion of health care entitlement that he must preserve the atmosphere of crisis as a political necessity. Only by keeping us in a state of panic can he induce us to vote for trillion-dollar deficits and spending packages that send our national debt soaring.” America already has the second highest business tax rate in the industrialized world. Is there any wonder why businesses are relocating outside this country or outsourcing millions of jobs that were previously held by American workers?
So how are we going to pay for all the new programs and the trillions in bailouts? Well, government is about to get a lot bigger. To begin to grasp how big, this year’s federal budget, as proposed by Obama, will comprise 28 percent of the GDP. When added to the 12 percent spent by states, counties and cities, government will consume 40 percent of the economy in 2009. That’s not wealth creation; it’s simply recycling (our) money! So who’s going to pay? Simple, the people designated as the filthy rich. You know, the top 5 percent of wage earners who already pay 60 percent of federal taxes. Did I mention the bottom 40 percent pay no taxes? The top tax rate will increase to 40 percent while deductions for this lucky group will be cut by 20 percent. California income tax will be 9.55 percent. Then add Medicare and Social Security taxes and more than 50 percent of a Californian’s income will be confiscated before they have the pleasure to pay sales tax, gas tax, property tax, phone tax, cable tax, etc. ad nauseum. So at the end of a taxable year, maybe someone who earns $225,000 annually gets to keep $80,000 of his or her hard earned income. Try sending a couple of kids to college, making the mortgage and car payments, and see how much is left over for discretionary spending.
While the nation is burning and Congress and the President are busy fiddling, the California legislature was busy holding up their end, having just passed a budget that Washington could be proud of. Unfortunately, the citizens here are left holding the bag—again. To pay for their profligacy, Proposition 1A is on the ballot this May and it calls for $16 billion in higher taxes for all Californians. This comes at a time of record high state unemployment, home foreclosures, plunging retirement fund accounts, and so forth. The statewide sales tax will go from 7.25 to 8.25 percent (a 14 percent increase), income taxes will increase by one quarter of a percent and child tax credits will decrease from $400 to $100. Also, if Prop 1A passes, the car tax would double.
Here’s the best part, the authors of the ballot argument in favor of the Proposition never mention the tax increases. Instead, their argument for passage centers on the budget spending cap provision of the measure. I guess these politicians are so used to fooling the public they feel like, why should this time be any different? Why be honest? The truth is sometimes very painful. And the truth is that a tax increase of this magnitude will take $16 billion out of the local economy. That means less consumer spending, less investment and job creation. This is a huge change in tax policy and the politicians don’t want you to know too much about it until it’s too late and their hands are back in your pockets—up to the elbow this time.
I’ll leave you with this quote from the late Dr. Adrian Rogers: “The government cannot give to anybody anything that the government does not first take from somebody else. And when half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it.”
That’s it for now. Enjoy this month’s magazine.
– Norman Rosinski
