Will California Vote to Cut Its Own Throat? : If its congressional team helps pass the Clinton budget plan, the state will be the big loser.

Californians should be calling the tune on the “deficit reduction” bill scheduled for a vote in the House today. The Golden State produced nearly one-third of Bill Clinton’s popular-vote majority last year. Three senior members of the Clinton economic team--the director of the Office of Management and Budget, the chairman of the Council of Economic Advisers and the special trade representative--are Californians. Its congressional delegation, the largest for any state in U.S. history, includes two Democrats in the Senate and 30 in the House.

Yet, the tax provisions of the bill will make California the big loser if it passes. Californians file about 12% of all federal tax returns, but with the new higher income-tax rates, they would pay 16% of the increased tax bill. That’s an extra $40 billion sucked out of the state economy over the next five years.

Other states aren’t hit as hard by the Clinton tax package. For example, Arkansas. Data from the spring, 1993, Statistics of Income Bulletin, published by the IRS, are revealing. Although Razorbacks filed 0.85% of 1991 tax returns, we can extrapolate, based on reported income, that they will pay only 0.4% of the new tax. Put differently, Californians file about 14 times as many returns as Arkansans, but they will be paying nearly 40 times as much of Clinton’s tax increase.

Nobody blames Arkansans for looking out for their kinfolk. What’s mystifying is why Californians would want to help them. To their credit, all 22 California Republican congressmen voted “no” in the first legislative go-round on the Clinton package last May, but their votes were swamped by California’s Democrats. Both Sens. Barbara Boxer and Dianne Feinstein voted for Clinton’s plan, as did all but two Democratic members of the House.

Californians can thus claim the dubious distinction of being largely responsible for the Clinton program getting this far: It passed by just six votes in the House, and by one vote--Vice President Al Gore’s tiebreaker--in the Senate.

Ah, but the tax increases only hit “the rich,” Clinton supporters say. Compared to the rest of the country, a lot of struggling Californians are “rich.” California’s per-capita income is substantially higher than the national average, even if its ranking is heading south. However, the cost of living is also higher--something the tax bill doesn’t take into account. Consider housing costs: According to the National Assn. of Home Builders, California has seven of the 10 “least affordable” housing markets in the nation. In Los Angeles, even after the real-estate slump, the median price of a home is 70% above the nation’s median. Real estate in Orange and Ventura counties is even more expensive.

As if California didn’t have enough problems, here comes Bill Clinton, wanting to open a vein in the California economy and drain away more purchasing power. Few rich people stash their money away in mattresses. They spend it--on the rest of us. We sell them everything from cars to clothes to newspapers. So it’s hard to see how working Californians will be better off with $40 billion gone from circulation on the West Coast. Gov. Pete Wilson, who knows something about raising taxes and further damaging a weak economy, predicts that the Clinton package will cost 359,000 jobs a year.

So what does the California delegation do with its Washington clout? Not much. The Times reported last week that Feinstein helped win a $366-million tax break for real-estate developers. Great. So now a few big campaign contributors get taken care of, while the state’s cash flow to Washington is reduced from $40 billion to a mere $39.6 billion. Meanwhile, changes that could really help California are ignored, such as an across-the-board,inflation-adjusted capital-gains tax cut to spur high-tech investment and entrepreneurship.

The only possible argument for the Clinton program is that California’s sacrifice is necessary for the long-term fiscal health of the country. But the Clinton budget will raise annual spending another $300 billion by 1998. All the wasteful programs you’ve read about--the honey subsidy, the mohair program, the space station--have survived.

As an added kick in the teeth, the income-tax increases will now be retroactive to Jan. 1. So this December, when retail stores--and the people who work in them--are hoping for a big holiday shopping season, the crowds will be thinner as “the rich” lay money away until April 15, to pay for Uncle Sam’s bees, goats and military-industrial complex boondoggles.