Tag Archives: Sacramento Shakedown

Sacramento Shakedown: your paycheck just got 10 percent lighter

GMU economist Don Boudreaux’s assessment of California’s decision (effective November 1) to increase the amount it withholds from employees’ paychecks by 10 percent can be summed up in one word: Theft.

Dr. Boudreaux recounts other episodes in history in which heads of state used their authority to extract revenues. In 1626 the British royal treasury was broke and Parliament wouldn’t raise taxes. King Charles I told landowners to pay up their “ship money“.Eighty refused, including John Hampden, who subsequently went to jail.  Charles I tried the tactic again ten years later. Hampden again refused and again went to jail. Why suffer jail twice? As Edmund Burke, reflecting on Hampden’s actions noted, “Would the payment of 20 shillings destroy Mr. Hampden’s fortune, no but the payment of 20 shillings on principle it demanded would have made him a slave.”

Is this sort of thing legal? Yes. The California legislature and the governor realized raising taxes wasn’t the way to go, so they found a dodge: shifting and acceleration. In other words, they changed the withholding tables, not the tax.