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Op-Ed: L.A. Plays Robin Hood in Reverse

Thursday, 14 Feb 2013 | 8:11 PM ET
Corey Dorsey Photography | Flickr | Getty Images

We keep hearing how the rich in America should pay more in taxes. You know, the whole "fair share" argument that President Obama and the Democrats really believe got them all re-elected.

And with the ongoing debate in Washington over the budget-cutting sequester and whether tax hikes should be used to put off those cuts, we won't be hearing the end of those "fair share/soak the rich more" arguments any time soon.

But the real story about the true nature of tax revenues and what they're really used for is brewing in Los Angeles right now.

America's second-largest city is about to vote on a half-cent sales-tax increase that's projected to bring in an additional $200 million per year.

Forget the fact that L.A. already has one of the highest sales taxes of any city, (9 cents on the dollar), and forget the fact that these rosy revenue projections often miss the mark.

The NEW outrage factor is a report in today's L.A. Times, that strongly suggests that revenue from the sales-tax hike could go toward … wait for it… pay raises for existing city employees!

That's right, the extra half-cent tax on every dollar anyone spends on just about anything in the City of Angels could go into the pockets of people in secure government jobs with benefits.

Remember, these are sales taxes we're talking about. So the poorest of the poor, the longest of the long-term unemployed will all be digging deeper into their pockets to boost the salaries of people who may be higher on economic totem pole than they are.

Who's talking about "fair share" now?

But this tax hike isn't being sold that way. No, the campaign in favor of the plan focuses on deficit reduction and dire warnings about police layoffs if the city doesn't get more revenue.

Warnings aside, even the L.A. Times is having a hard time swallowing this and the paper publicly came out against the sales-tax hike in an editorial yesterday.

Sales-tax hikes are a particularly nasty policy for poor and lower middle class people. But sales-tax hikes to enrich government and only government are more than egregious.

If L.A. is so bent on paying its government workers more money, maybe it should focus a little more on growing the city's economy rather than creating yet another incentive to live and shop out of town.



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  • Lawrence Kudlow is a CNBC senior contributor. Previously, Kudlow was anchor of CNBC's prime-time program "The Kudlow Report"