Tax reform now, or at least a rough draft

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

It’s only been a month since the appointment of members of the tax reform commission that was the brainchild of Assembly Speaker Karen Bass. My question to the commission: you folks got any recommendations yet?

Because the state could sure use some thoughtful tax proposals. Right. Now. With the state facing a cash crunch (in fact, there’s already a cash shortage that will cause real pain even if the legislature and governor reach an agreement on a plan to address the budget shortfall today), California’s leaders have to raise taxes. So there’s no better time to advance tax reform. If we had strong recommendations from the commission, they’d have a chance of becoming law. And state leaders might be able to say, with some pride, that they took advantage of a miserable situation to make some important changes in how California is governed. The crisis was too good to waste and all that.

At the very least, recommendations from a tax reform commission might shape a more productive debate about the budget. Right now, the back and forth is all about brinksmanship and games of chicken. Will Democrats cut the budget more? Will Republicans finally back down and support tax increases? Can they reach a compromise, or can the Democrats find a way around the requirement of a two-thirds vote on budget and tax issues?

Instead, we need a debate that focuses on the specifics of spending and budget cuts. The two top goals need to be: what’s best for the budget, and what’s best for the economy. On the spending side, that means more of a look at the effectiveness of programs, and an examination of the kind of spending cuts that will do the least damage to the state’s economy.

On the revenue side, that means an end to the tax or not to tax argument (no Republican is willing to support the level of budget cuts needed to balance the budget that way alone), and an examination of how to tax better. The twin goals? Finding the mix of taxes that 1. produces steadier, more reliable revenues and 2. Do the least economic harm to the state. A debate along those lines could get us to a solution

Too bad the tax commission is so new. Speaker Bass, to her credit, has been pushing for the body since last spring, but the governor and other legislative leaders wanted to wait until after they dealt with the budget last summer. And we know what happened. The budget wasn’t signed until summer was over and the kids were back in school, and the budget shortfall was never really addressed. The appointments weren’t made until December. In retrospect, it’s clear that the state’s leaders waited too long.

The commission’s report is due April 15. That’s a pretty fast turnaround already, I know. But I wonder if the commission might show the state something now. A rough draft?

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