The economy is such an important part of this debate. The choices that the country of California makes, and whether those choices will be easier or harder than those faced by the state of California, will greatly depend upon how much money we have available in our budget.
For that reason, the United States Government and California’s critics desperately want you to believe that California would be poorer as an independent country, that we would be greater in debt, and that we would therefore have to raise taxes even more just to make ends meet.
But that simply isn’t true. In fact, it’s not even close – California is a donor state which means that we have been subsidizing many of the other states with our federal taxes. This has been happening for decades now and we lose generally tens and sometimes hundreds of billions of dollars in a single year.
In 2017, the last year for which information is available, Californians collectively paid $440.5 billion in federal taxes while federal spending in California totaled approximately $407.4 billion – a loss of over $33 billion just last year. A breakdown of federal spending looks like this: per usaspending.gov, there was $300.4 billion in direct payments, grants, contracts, “other financial assistance,” and loans spent in California, and per CalMatters.org, the federal government provided a $107 billion supplement directly to the state budget.
There very well be some overlap in the two. For example, figures provided by usaspending.gov and the $107 billion supplement to the state budget account for federal taxes awarded to the California Department of Education. On usaspending.gov, the federal government awarded $7.33 billion to the California Department of Education while the 2017-18 state budget visual available at CalMatters.org depicts $7.6 billion in federal spending on education in our state. In short, that loss of $33 billion last year may actually be a much larger figure.
We encourage you to visit: https://calmatters.org/articles/california-state-budgetbest-visualization-tool/ and interact with their visual representation of the various revenue and spending streams of the California state budget. We also encourage you to dig through the data available at https://www.usaspending. gov/#/state/06 for information about federal government spending in California. Meanwhile, you can obtain gross income tax collections in California from the Internal Revenue Service Databook for 2017, available here: https://www.irs.gov/ pub/irs-soi/17databk.pdf .
In summary, Californians lost at least $33 billion dollars in taxes paid to the United States that were then spent elsewhere. To put that in perspective, California’s entire state budget in 2017 was $183 billion. So when we talk about how much money is available in our budget, California as an independent country would have had at least 18% more money last year without cutting any services or programs, and without any new taxes.
By keeping all our taxes in California, we will have more money to fulfill our promises to public workers, better fund education, repair our infrastructure, and potentially implement a universal healthcare program – all without raising any new taxes or cutting other services.
By remaining part of the United States, not only will the 49 other states ensure that we keep subsidizing them, but California will always be in debt, will always be forced to borrow money that puts us deeper into debt, and will always have a massive national debt hanging over our heads. Today that national debt is more than $22 trillion.