Inspired Idiot of the Week: California Edition

Veronica Perez was skeptical when city workers found her under the Los Angeles highway overpass she called home.

They presented her with an opportunity to move into a private room—a converted hotel room, part of a state initiative where some units were renovated at costs approaching $400,000 each.

Before long, Veronica found herself receiving three meals a day delivered straight to her door and participating in weekly painting classes. Additionally, she began receiving free medical care.

This was one of several California state programs meant to address homelessness. Others spent up to $4,000 per person a month putting the homeless up in motels and hotels, including some name-brand hotels like the Radisson.

California’s extreme and highly ineffective spending on homelessness has become the stuff of legend. But now the numbers have become clearer.

Last week, the state auditor released a scathing report finding that there were no systems set up to monitor the money, let alone the outcomes. In short, there is no accountability in place to determine whether these programs are worth the cost. (They’re not.)

But California’s state government continues shoveling money into a bottomless pit of incompetence.

In the five years from 2018 through 2022, California spent a total of $24 billion to address homelessness.

At the start of this period, around 140,000 California residents were homeless.

So, the state spent around $34,285 per homeless person, per year.

That amount is actually pretty close to California’s per-capita income of $45,491. So, it should have been enough to get every single homeless person off the streets.

Instead, by 2023, the number of homeless Californians had climbed to over 180,000.

And just 15,000 more people were living in California’s homeless shelters in 2023 compared to 2018. So, if you decide to call that success, it only cost taxpayers $1.6 million per homeless person taken off the streets— what a bargain!

But this wasn’t a one-off. This is consistently how California in particular, and governments in general, operate.

In 2008, California voters approved a $10 billion project to build a 500-mile high-speed rail that would connect Los Angeles to San Francisco by 2020.

Guess what? It didn’t happen.

It’s now four years after the original 2020 deadline. The government now believes it can complete a 171-mile rail (as opposed to 500 miles) between the cities of Merced and Bakersfield (instead of LA and San Francisco).

They also think they can complete this different project by… 2033 (instead of 2020). And at a cost of $35 billion (instead of $10 billion).

You might also like to know that ALL federal taxpayers from the other 49 states have chipped in, thanks to various COVID bailouts, infrastructure bills, etc. Total federal money allocated towards the failed rail project so far is $6.6 billion, and that’s just getting started.

Just like the failed homeless programs, the government has taken taxpayer money and thrown it down a bottomless pit of incompetence.

This is one of the reasons why tax planning is such an important part of a Plan B. Well, tax planning should frankly be Plan A.

The reality is that just about everyone has completely legitimate ways to legally reduce the amount that you owe.

I’m not talking about any obscure loophole or exotic tax structure. Sometimes it’s as simple as maximizing deductions (like contributions to retirement accounts, health savings accounts, etc.)

And for people who are more flexible with their lives and decisions, moving to a lower tax state can result in huge savings.

Moving to Puerto Rico can cap qualifying business income at just 4% tax, and investment income at 0%. Or moving abroad entitles you to claim the Foreign Earned Income Exclusion (which is $126,500 for single taxpayers, or $253,000 per couple).

Bottom line, there are always legitimate ways to reduce what you owe while still being 100% compliant with the tax code. And with so many Inspired Idiots in charge who keep throwing your money away, it really makes sense to consider your options.

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