California’s Unconstitutional Thievery

No wonder there aren’t any damned jobs out in CA right now:

SAN FRANCISCO (CN) – Small businesses that received $682 million in IOUs from the state say California expects them to pay taxes on the worthless scraps of paper, but refuses to accept its own IOUs to pay debts or taxes. The vendors’ federal class action claims the state is trying to balance its budget on their backs. 
Lead plaintiff Nancy Baird filled her contract with California to provide embroidered polo shirts to a youth camp run by the National Guard, but never was paid the $27,000 she was owed. She says California “paid” her with an IOU that two banks refused to accept – yet she had to pay California sales tax on the so-called “sale” of the uniforms.
The class consists mostly of small business owners, many of whom rely on income from government contracts to keep afloat. They say California has used them as “suckers” as it looks for a way to bankroll its operations while avoiding its own financial obligations. 
“Instead of seeking funds through proper channels, the State has created a nightmare,” the class says. “Many of these businesses will not survive if they are required to wait until October 2009 to have these forced IOUs redeemed by the State.”
The class claims the state is violating the Fifth and Fourteenth Amendments. It demands that California be ordered to honor its own IOUs, plus interest. They are represented by William Audet.

The lawsuit misses part of the point.

GRANTED:  California’s IOUs are a complete fiction.

GRANTED IN SPADES:  California trying to tax businesses on revenue that hasn’t actually been received is just another example of Sacramento being full of, well, assholes.

BUT, that said, California cannot honor its own IOUs.  But wait, Happycrow!  Why not?

U.S. Constitution:  Art. 1 Sec. 10- Powers prohibited of States

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainderex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it’s inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.

No State shall, without the Consent of Congress, lay any duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.

And, of course, knowing ahead of time that they’re paying people in fundamentally worthless pieces of paper, the decision to then turn around and tax businesses on it merely confirms that California deserves an emergency constitutional convention and a push of the “reset” button.  If D.C. were to do this there would be a revolution in the streets by morning — Californians deserve better.

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  1. Mike

     /  August 8, 2009

    Historically speaking every time someone tried this it led to some severe violence. Several Indian Wars and several major labor strikes that got very violent (usually coal mining). I do wonder where this will lead.

  2. Jct: There’s nothing wrong with small denomination municipal or California State IOUs if anyone can pay their taxes with them. When Argentina’s government workers were faced with cuts, their unions talked 6 state governments into paying them with small-denomination state bonds which could be used to pay for state services and taxes by everyone.
    When the local currency is pegged to the Time Standard of Money (how many dollars per unskilled hour child labor) Hours earned locally can be intertraded with other timebanks globally! In 1999, I paid for 39/40 nights in Europe with an IOU for a night back in Canada worth 5 Hours.
    U.N. Millennium Declaration UNILETS Resolution C6 to governments is for a time-based currency to restructure the global financial architecture.
    See on growth of the international time-trading network.
    Too bad California IOUs won’t be accepted in payment for state taxes and services like state bonds were in Argentina. Too bad California IOUs will be denominated too big to use as local currency. Too bad Argentina people were smart enough to avoid the tent-cities catastrophe and California people are too stupid to follow their example.
    If they make IOUs legal tender, I’ll take back every joke I ever made about Girlieman Governor Musclehead if he engineers the California state currency lifeboat.

    • First, rejoinder: good on you for exploiting any other currency system. Given the way that governments purposefully inflate their own fiat money, I think that’s a smart move.

      Second, rebuttal: Cali’s gone the bond route so far and so hard that nobody will accept one from them any more. They’re officially bankrupt.

      Third, (gripping hand): the real issue involving Cali’s gov’t is a pervasive atmosphere of “We make the rules, little people follow them.” This is only one example — how many Cali gov’t vehicles and buses are registered in Wyoming, rather than locally, b/c the official costs of registering locally are higher than local gov’t wants to pay? And how many minutes do you think it would take LA or SF to instantly shut down any local private operator who tried to get away with that? California’s basically screwed b/c its political class is hopelessly corrupt, and its citizenry has for the most part devolved into Hamiltonian “faction” rather than participate in the political process honestly.

  3. Mike

     /  August 9, 2009

    Well, maybe its time for a spot of revolution in California then. Not that I advocate violence, but how about some serious no-payment of taxes? Or (this could be fun) how about the food producers simply stop shipping food to the cities until they straighen out?

    Or (most likely) maybe they simply start recalling their reps in Sacramento?

  4. Sadly, none of the above will occur, because the general public doesn’t select its representatives: the parties do. So long as the parties maintain iron-clad control of their participant by virtue of the primary system, nothing will get done.

    The only hope is that the madmen in charge will run the state so far aground that it defaults on its debt. Anything less won’t fix it. Just to give an example, the State Comptroller came out and stated that CA had been fraudulently declaring safe-deposit boxes “abandoned” so that the state could have the proceeds of the boxes’ contents at auction (this was started by his predecessors). When he announced that this theft would cease, there were howls of protest from all corners who talked about how this or that program was more deserving of the money produced than were the safe-deposit boxes’ owners deserving of their own property.

  5. (Oh: the 1st para above is predicated on shameless Gerrymandering like we have in CA)

  6. (deleted a double-post)

    The safe-deposit box syndrome is classic “why democracies fail” material — once the body public begins to use the government to steal from People X to give to People Y, it’s all over but the crying.

    Fortunately, this is only a STATE gov’t, not a nation, so there may be something that can be done about it. Otherwise, it’d be civil war and refugee time.

  7. Mike

     /  August 10, 2009

    Dude, someone touches my safe-deposit box and I am reaching for my Mossburg and the shell pouch. Its crap like this that makes me glad I have a safe in my house for keeping stuff safe from the government.

    And that includes my guns.

  8. convivialdingo

     /  August 10, 2009

    The primary system works to control the party until people get “mad as hell” ™. That’s when you see a big infiltration of outsiders – and if the numbers are great enough then you have a political revolt. Not even the Robert’s book of Rules can save them at that point.

  9. UNLESS your district is so heavily gerrymandered that there are no outsiders, b/c the only folks who aren’t part of the problem are pissed b/c they’re not making the problem evolve **even faster.**

    That’s why the gerrymandering is so significant. CA’s been having political revolts for the past ten years straight. Doesn’t help them for jack, and won’t while the current district system survives.

  10. Mike

     /  August 11, 2009

    Too damn true.


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