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OPINION (NATIONAL REVIEW) – Many conservatives may see Gavin Newsom as the epitome of the progressive Left, with some even calling his policies “communist.” But the policy preferences of the California governor (whose presidential ambitions are evident) represent something more plausible and thus more dangerous: a blending of Peronist income redistribution coupled with the fanatically “green” authoritarian agenda embraced by the state’s dominant tech oligarchy, public-employee unions, and climate activists.
California politics often do not follow the patterns seen in other places. Its governmental model has failed, having recently been rated by WalletHub as the least efficient in delivering services relative to the tax burden it imposes on residents, and yet it continues to win voters’ support. The Golden State, after all, still works for many who bought their homes decades ago and have seen their values soar. It remains the terroir of choice for billionaires, movie stars, and venture capitalists, and it remains home to three of the world’s five leading tech companies. It has natural advantages such as a pleasant climate and often spectacular topography, which surpass anything Chicago, Detroit, or even New York could boast.
However, California’s and Newsom’s political future now relies on one thing: the ability and willingness of the state’s wealthy to continue to fund an incipient Peron-style welfare state. Roughly 100,000 taxpayers with incomes above $1 million — one-half of 1 percent of all tax returns filed in the state — collectively pay about 40 percent of all of California’s personal-income taxes, the state’s primary source of revenue. Without the ability to tap into the incomes of the richest of the rich, the whole system tilts towards failure.
Today the limits of the “California model” are being tested by realities such as a steadily declining population and a state deficit of $30 billion or more. Last year, a booming pandemic-driven tech economy, plus federal Covid transfers, generated a historic $100 billion surplus. Now, with the decline of start-ups, disasters such as Silicon Valley Bank’s failure, and falling real-estate prices, the revenue base has cratered. The decline in tech jobs — the San Francisco Chronicle estimates 100,000 so far — is shrinking California’s high-earning-taxpayer base, while the states that Newsom lambasts, such as Florida and Texas, enjoy large budget surpluses, generate more jobs, and, in some cases, initiate tax cuts.
