Op-Ed: Higher taxes, fewer jobs equals disaster

As the state's unemployment rate remains at record highs, California officials are patting themselves on the back for having "saved or created" 100,000 mostly public sector jobs using $5.3 billion in federal stimulus dollars.

But the sad reality is they've destroyed far more jobs than they've created. Instead of congratulating themselves, they should be apologizing to the record 2,247,000 unemployed California workers who still need a job and can't find one.

In the past year alone, nearly 800,000 California workers have joined the ranks of the unemployed. Nearly a third of those have been jobless for more than 27 weeks. As a result, California has one of the highest unemployment rates in the country, at 12.2 percent. The Inland Empire has an even higher unemployment rate of 14.2 percent.

The pain is even greater than revealed by these statistics. Thousands of discouraged workers have dropped out of the labor force or settled for part-time work to try and make ends meet. Others have packed their bags and left the state entirely. Over the last five years, more than one million Californians left the state, while those who stayed behind became poorer. According to the U.S. Census Bureau, in 2008 alone more than 160,000 Californians fell below the poverty line.

True, the whole nation is going through a deep recession. But the pain of this recession is not evenly shared, nor is it random. States like California with high taxes and oppressive regulatory environments are experiencing the worst suffering, while states with good business climates are faring far, far better.

Take Virginia, for instance. For four years in a row, Forbes has ranked Virginia's business climate as being the best in the nation. And what a difference a good business climate makes: Virginia's unemployment rate is only 6.5 percent and, unlike California, its economy will likely grow this year.

Fortune 500 CEO Walt Havenstein, who last month moved his company's headquarters from San Diego to McLean, Va., explained, "Virginia's favorable business environment, highly skilled workforce and attractive quality of life combine to make this an ideal location for our corporate headquarters." He also commended Virginia's governor for "creating an environment that is very supportive of business."

A study by the Milken Institute notes that "California has been progressively losing more of its manufacturing employment, particularly high-value-added manufacturing, to states such as Oregon, Texas, Minnesota, and Washington" and attributes much of California's decline to high taxes and an "onerous regulatory climate."

As the Milken study shows, if California's Democrat majority was more concerned about saving and creating good paying private sector jobs rather than adding unneeded regulatory burdens, they could have protected as many as 476,000 good-paying manufacturing jobs, which in turn would have spurred the creation of 1.17 million more jobs in other sectors of the economy.

The governor and Legislature accomplished nothing to protect jobs this year, but did find time to enact the largest tax increase in California history.

These tax hikes come at the worst possible time and are forcing already struggling California families and businesses to send even more of their scarce dollars to Sacramento when they shop, work, and drive their cars.

Higher tax rates haven't solved the state's fiscal problems. State revenues fell nearly $1.1 billion short of projections during the first quarter of the fiscal year beginning in July, proving the old adage "you can't tax your way to prosperity."

A 2008 Board of Equalization analysis warned that a sales tax increase of the magnitude approved would cost 58,000 jobs and reduce business investment by $660 million. The analysis has yet to be updated to include the full economic impact of the tax package approved by lawmakers.

The truth is that California's leaders have nothing to crow about. The only new jobs their programs create are for government bureaucrats. And these are coming at the cost of a growing number of private sector jobs.

Sacramento politicians continue to live in a fairytale land where they fantasize that new regulations they impose will somehow magically bring about a "green economy," providing environmentally-sensitive "green jobs" for California's unemployed workers.

Their incessant talk of green jobs, however, is nothing more than a smokescreen to distract attention from the true job-destroying nature of their policies. Earth to Sacramento: unemployed Californians want jobs — they don't care what color they are.

It's time for California's leaders to quit pretending, apologize to California's 2.2 million unemployed workers, and finally start working for them instead of against them.

Sen. Bob Dutton, R-Rancho Cucamonga, serves as the GOP point person on jobs and budget issues. Dutton has more than 30 years of experience in the private sector.