When King Henry VII faced an insurmountable budget deficit, his advisor John Morton devised an ingenious, albeit paradoxical solution. British subjects, who could afford to pay higher taxes, would be forced to pay higher taxes.
His tax affordability test classified people into two categories, those who spent and those who saved. Anyone who spent money proved their means because they had extra money to spend. Alternatively, those who saved money could also pay higher taxes because they had extra money saved.
Morton’s Fork forced everyone to pay higher taxes.
Governor Schwarzenegger and state legislators have resurrected Morton’s tortured logic and unfair tax paradox in crafting Proposition 1A, a phony spending cap that raises taxes by $16 billion. Voters have been told that we have just two choices in the May 19th Special Election. We can take an immediate tax increase in exchange for a long-term spending cap. Or, we can allow Sacramento‚s spending to continue unabated and inevitably pay for the spending with higher taxes.
Higher taxes – whether we spend or save.
Don’t believe this false choice. Taxpayers deserve a real and meaningful spending cap, but Proposition 1A’s $16 billion tax increase is too high a price. Its immediate tax increases are too punitive on working class families, and its spending limitations won‚t stop future tax increases or the growth of government.
Crafted in the middle of the night with no public input, Proposition 1A is one of the worst written bills in California history. Literally. In accordance with state law, the Secretary of State‚s office has posted the text of the proposal on its website. 75% of the document is marked with giant X’s. Entire sections have been crossed out. On several pages, handwritten notes are scribbled into the margins. If a voter’s ballot on Proposition 1A had similar markings, it would be immediately deemed invalid by the registrar of voters. Yet, it is acceptable for legislators to present these legal hieroglyphics for voter consideration.
Sacramento’s scheming doesn’t end with handwritten X marks. Utilizing a loophole in election law, legislative leaders eliminated any reference to the measure’s two year tax increases in the ballot argument, title or summary. Why? According to a recent Field Poll, support for Proposition 1A dropped by 23 percent when voters heard about the $16 billion tax increase.
And it’s easy to understand why support dropped so precipitously. Californians cannot afford another tax increase. The 1.8 million out-of-work Californians should not be hit with two additional years of higher car taxes. The 404,000 families who defaulted on their mortgage payment in 2008 cannot afford two years without the $200 child dependency credit. The 9% of unemployed San Diegans won’t be able to pay the county’s new corresponding sales tax rate.
Many business groups and tax organizations are urging taxpayers to take the short-term tax hike in exchange for what they call a "strict and meaningful" spending cap. However, the non-partisan evaluation of Proposition 1A by the Legislative Analyst’s Office effectively refutes this claim.
The LAO writes, "In any given year, Proposition 1A does not strictly limit the amount of revenues that could be collected by the state or the amount of spending that could occur. The measure would not cap the total level of spending that could be authorized in any given year if alternative revenues were approved."
In other words, spending can increase if the legislature raises taxes. Prop. 1A is only as strong as the current two-thirds budget vote threshold. As Republican legislators proved this year, the two-thirds vote can be overcome by buying off individual legislators interested in advancing their political careers.
15th century British citizens may have been subject to Morton’s Catch-22, but California voters don’t have to fall for the same trap. Taxpayers should reject Proposition 1A’s phony tax paradox.