The Senate is hashing out its own version of the so-called “Big Beautiful Bill” right now, but Republicans in the upper chamber of Congress, led by Senate Majority Leader John Thune (R-SD) are not so interested in expanding the SALT tax deduction that blue state congressmen fought hard to increase in the House version. If the Senate denies any expansion to SALT, the narrow majority in the House could lose the votes of the SALT Republicans, and the reconciliation could fail. David Ditch of the Economic Policy Innovation Center recently penned a report suggesting that SALT deductions were merely a reward to California. He wrote in the SALT Mines
California is one of the states most affected by changes to the SALT deduction. Both the House and Senate should know that increasing the deduction would encourage California’s flagrantly wasteful spending habits and spread the costs to more responsible states.
It is no surprise that California, the nation’s most populous state, also has the largest state budget. However, the scale and growth of its spending is almost beyond belief.
California’s spending has increased much faster than income in recent years, leading to repeated budget battles as taxes struggle to keep pace with outlays. This is made worse by the fact that its prior spending levels were already above average relative to the size of its economy.
As of 2000, California’s budget was 26% larger than the combined budgets of Texas and Florida, even though California contained 3 million fewer people than these two states. Yet while population growth in Texas and Florida rapidly outpaced that of California – fueled in part by people leaving California – the spending gap widened.
By 2024, California’s budget was 81% larger than that of Texas and Florida combined, even though the latter states now have over 15 million more residents. California’s per capita spending is now 156% higher than Texas and 147% higher than Florida, without delivering markedly more value to its taxpayers.
Action Line: California’s poor fiscal management is partially what lands it near the bottom of Your Survival Guy’s Super States rankings each year. In fact, it’s been one of my “Escape States” (the bottom 10) each year I have published the rankings. An unfortunate record for the state that elevated Ronald Reagan to the White House. If you’re looking for a better America, start your search with my 2025 Super States. And click here to subscribe to my free monthly Survive & Thrive letter.
Read more about the SALT deduction fight here:
