Wednesday, January 7, 2009

California's tax refund IOUs

The LAT reports this morning that it's getting more likely that Californians who overpaid their income tax for 2008 will get IOUs instead of monetary refunds. How much will the IOUs of a bankrupt state be worth? Not much. Will the state ever have enough cash to pay off the IOUs? Not so long as the legislature refuses to cut back expenditures sufficient to balance the budget.

Democrats in the legislature think Republicans in the legislature and the governator will be blamed for the IOUs. Therefore, they'll continue to do what they always do: try to raise taxes. They think it's a winning strategy. For them, not for California.

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