Why Efficiency, Not Higher Taxes, Is the Path Forward

Rebuilding the Engine:

California does not suffer from a lack of money. It suffers from an outdated system.

For decades, the state has attempted to solve structural inefficiencies by increasing taxes—particularly on income, capital gains, and wealth. While these measures may generate short-term revenue, they do not address the root cause of California’s fiscal instability: a government engine designed for a world that no longer exists.

The modern economy is defined by mobility, speed, and efficiency. Capital moves instantly. Talent crosses borders freely. Innovation compounds rapidly. Yet government systems remain largely unchanged from those built 75 to 100 years ago—designed for a paper-based, low-mobility, post-war industrial economy.

Rather than modernizing the engine, we continue to pour more fuel into it.

This approach is fundamentally flawed.

The Real Problem: Volatility and Inefficiency

California relies heavily on mobile and volatile revenue sources—income taxes and capital gains—while maintaining a sprawling bureaucratic structure that grows more complex and less efficient over time. When markets perform well, revenues surge. When they slow, deficits appear. The response is almost always the same: raise taxes again.

This cycle creates instability, discourages long-term investment, and erodes trust.

Other states demonstrate that high public spending is not inherently tied to high income taxes. States like Texas and Florida fund government through alternative, more stable mechanisms—property taxes, consumption taxes, and tourism—taxing place and activity rather than productivity and innovation.

The result is not “low taxes,” but predictable taxes that do not punish growth.

Growth Is Not the Enemy—Stagnation Is

The assumption behind wealth and income tax increases is that fiscal shortfalls are caused by inequality or excessive private accumulation. This diagnosis misses the point.

The real issue is that California does not extract enough economic return from what it already collects.

In business and technology, inefficiency is never solved by increasing fuel consumption. It is solved by redesigning the system. Engines are rebuilt to use less fuel, produce more output, and scale sustainably. Government must follow the same principle.

A Better Path: Rebuild the Engine

The solution is not austerity, nor is it endless taxation. The solution is modernization.

That means:

• Outcome-based budgeting, where programs must demonstrate results or sunset automatically

• Radical process efficiency, replacing redundant approvals and outdated workflows with modern systems

• Growth-multiplying investments, such as completing high-speed rail, expanding world-class parks, and developing tourism infrastructure

• Revenue stability, shifting reliance away from volatile income streams toward durable economic activity

When government becomes more efficient, tax dollars go further. When the economy grows faster, revenues rise without increasing rates. When investment capital is welcomed rather than punished, innovation flourishes.

The Choice Ahead

California faces a simple but profound choice.

We can continue patching an aging machine—adding taxes, expanding bureaucracy, and hoping the next increase solves the problem. Or we can stop, rebuild the engine, and design a government capable of thriving in the 21st century. More fuel will never fix a broken engine. Only rebuilding it will.