High Speed Rail Will Save You Money and Create Jobs

But the Howard Jarvis Taxpayers Association would prefer you not know that.

In what is becoming an unfortunate trend, California journalists are turning their articles over to the right-wing anti-tax brigade, allowing them to spout nonsense but rarely providing important alternative information. In today's LA Daily News is an article titled California tax bites get hard to digest (get it? hard to digest? you slay me, Daily News) that makes the following flawed claims:

Stung by one of the highest state tax rates in the nation, Californians soon could be paying even more if officials and voters approve an array of new bond measures and taxes now under consideration.

Already on the November ballot are nearly $17 billion in statewide bonds, ranging from $9.95 billion for a high-speed passenger train system linking Southern California to the Bay Area, to $5 billion that would give motorists cash rebates for buying fuel-efficient vehicles.

Two problems here: first, Californians do NOT pay one of the highest state tax rates in the nation. According to the California Budget Project we rank 13th in state taxes and 18th in state plus local taxes. That hardly qualifies as "one of the highest state tax rates in the nation" but the claim goes uncorrected.

The second problem is the implicit equation of a bond measure with a tax increase. Rod Diridon is famous for saying "this project won't raise your taxes" and while it's not what I would say, neither is he technically wrong - there is no tax increase written into Prop 1(A). Depending on how the state resolves the current budget crisis it is possible that there will be extra money to pay the annual debt service - and the state Legislative Analyst has said we can afford that debt. It's possible that Prop 1(A) might lead to higher taxes, but it's not certain, and depends on a whole host of factors. Those who claim it WILL raise taxes are assuming certainty where none exists.

The Howard Jarvis Association, which alongside the Peninsula NIMBYs are likely to be the main source of opposition to Prop 1(A) this fall, goes on to argue these tax and bond measures will be the death of us all:

"What's happening is the taxpayers are under assault like we've never seen before," said Jon Coupal, president of the Howard Jarvis Taxpayers Association. "We have not seen an assault on taxpayers of this magnitude since the tax revolt leading up to Proposition 13 three decades ago.

"Our elected leadership, at both the state and local levels, is pushing California into the 'coveted' position of the highest-tax state in America. If that happens, it will be economic suicide for the Golden State."

Seeing as we're currently at 18th in state and local taxes, it would require one hell of a tax increase to put us up to #1. But what's more important is their delusional argument that taxes will cripple California.

That's only true if you assume that the taxes vanish into a black hole, never to emerge in any form again. But with the HSR bonds, as with other mass transit proposals like SMART or the LA Metro sales tax, that's just not so. High speed rail will produce immediate and long-term economic benefits while saving Californians money.

The California High Speed Rail Authority has estimated that the cost of expanding freeways and airports to meet the demand HSR would serve is between $80 and $150 billion - from twice to four times the cost of HSR. HSR is therefore a savings over those alternatives.

Of course, California taxpayers will save money once the system is open through cheaper fares than what airlines and gas stations can offer. As we've pointed out before, the long-term gas price trend remains upward, and by 2018 it's likely that oil prices will be substantially higher than they are now. Even if Prop 1(A) were to be paid for by new taxes, it'd be around $525 per person *total* ($19 billion in bond principal plus interest, divided by 36 million Californians). If the bond life is 40 years, as AB 3034 directs, that comes out to $13 per year per Californian.

If a Californian travels between the northern and southern halves of their state at least once a year using HSR they're likely to save more than $13 a year, and likely to save much more than $525 over the life of the bonds.

Finally, HSR will create jobs. The current estimate is 160,000 construction jobs and 450,000 permanent new jobs will be created by the project. As Atrios, a longtime fan of our project that he calls "SUPERTRAIN", noted today that's a badly needed economic stimulus in a country that has lost 800,000 construction jobs. California now has the fourth highest unemployment rate in the nation at 7.3%, behind Michigan, Rhode Island, and Mississippi. 160,000 new construction jobs would be an ENORMOUS boost to this state at a time when we desperately need new employment.

What prosperity California still has today is the product of past public spending - the bay bridges, the freeways, the aqueducts, the universities. All of those were paid for by taxes, and Californians reaped the rewards. But those investments need to be renewed, in a way that suits the new conditions of the 21st century, specifically energy, environment, and climate. High speed rail accomplishes all those wonderful things.

The Howard Jarvis Association would prefer California voters know none of this. In their mind all taxes are bad, as is the government spending the taxes support. In a state with a decaying infrastructure and a sky-high unemployment rate, partly due to the Association's successful 30-year war on government, you wonder why anybody would listen to them.