California's fiscal problems are pretty bad. Some of its residents would probably refer to them as "gnarly." Its economy isn't helping matters. A major casualty of the real estate bubble, its unemployment rate in July was about 12%, according to the Bureau of Labor Statistics. One clearly bad idea when an economy is doing that bad would be to raise taxes. Consequently, California's next move should be obvious: it's raising taxes.

The Los Angeles Times reports:

For only the second time in 30 years, the tax board is lowering the point where each tax bracket begins, bumping many people into a higher category. At the same time, officials are cutting back some deductions. Everyone will pay more, even people whose bracket or income doesn't change.


The extra sums will total as much as $140 per family, on top of the increases previously enacted.



Often, decisions like this receive condemnation by fiscal conservatives, but are brushed off by progressives who remind everyone that those changes won't affect the recession, because they won't take effect for several years. Not this time. The LA Times further explains that these changes will apply to the 2009 tax year.

Bear in mind, this isn't even the first wave of tax hikes that California has seen this year. The LA Times says:

Back in February, state lawmakers and Gov. Arnold Schwarzenegger approved a slate of temporary tax increases in an effort to balance California's perennially out-of-whack books.


In addition to the income tax rate rising 0.25%, the dependent credit was slashed by more than two-thirds. The vehicle license fee nearly doubled to 1.15% of a car's value. The state sales tax climbed 1%.



The Times quotes one sandwich shop owner who puts the obvious intuitive stupidity of decisions like this into perspective:

"Everything is going up, up, up," said Othman Rabie, owner of a sandwich shop in downtown Sacramento. "And business is going down."



With moves like this, I would not expect to see California's unemployment rate dip below double-digits for quite sometime. It will likely lag the rest of the nation in its economic recovery. Of course, if its politicians continue to make poor decisions like this one, then it may never recover.

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