The SALT deduction makes it easier for fiscally irresponsible states to dodge accountability with voters. By allowing taxpayers to write off their state and local taxes on their federal returns, the SALT deduction shields residents of high-spending states from bearing the full burden of the government they have. Last week, I wrote about the example of New York, in contrast with Florida, based on an article by David Ditch of the Economic Policy Innovation Center.
Ditch has a new article out today about California, and the numbers are just as shocking. California is by far the most populous state, so it obviously has the largest state budget. But just how much larger is it than those of other big states?
- In 2000, California’s state budget was 26 percent larger than Texas’s and Florida’s put together, even though those states combined had 3 million more people than California did. Today, Texas and Florida have 15 million more people than California does. Yet California today has a state budget 81 percent larger than Texas’s and Florida’s combined.
- California spends more money on Medicaid alone than Texas spends on its entire state government. California has spent more on Medicaid than Florida has spent on its entire state government every year since 2015.
- “At $157.3 billion, California’s Medicaid budget is larger than the GDP of 14 states (Alaska, Delaware, Hawaii, Idaho, Maine, Montana, New Hampshire, New Mexico, North Dakota, Rhode Island, South Dakota, Vermont, West Virginia, and Wyoming).”
- California has expanded Medicaid to cover illegal immigrants and uses the “provider tax” to game the federal matching funds formula.
- California has spent $37 billion on programs to reduce homelessness since Governor Gavin Newsom (D.) announced that his administration would make it a “statewide mission” in 2019. Yet 187,000 people are homeless in California, 36,000 more than when that mission began. California has spent nearly $200,000 per homeless person on programs to reduce homelessness, only to have homelessness increase.
The federal government should not eat part of the cost of these state-level failures by allowing California’s taxpayers to write off their state and local taxes. If Californians want to govern themselves this way, they should pay for it, and Republicans especially should not feel any obligation to help them.