Wait. We know that Jerry Brown is California’s Governor and Dave Jones is our Insurance Commissioner. So what’s up with the title of this column?
The fact is, Brown isn’t so much insurance commissioner as he is in the business of selling insurance. To understand this, realize that a major oil company, casino Indian tribes and health care providers have all contributed to Jerry Brown’s campaign to raise taxes on Californians, taxes that will hit average folks especially hard.
Why would Occidental Petroleum, Native American gambling interests and the California Hospital Association, among others, support making a bad situation – California already ranks at or near the top in almost every tax category – even worse? Certainly these savvy businesses are aware of the damage done to our state economy by high taxes and crushing regulations, which has just been confirmed in a report by the Washington, D.C.-based Tax Foundation that shows California ranking 47th out of 50 as a place to do business.
To support his budget that will spend seven percent more this year than last, the governor plans to increase income taxes on those making more than $250,000 along with a half-cent hike in the sales tax. A review of Brown’s initiative by the non-partisan Legislative Analyst shows that the bulk of the new taxes will come from the highly regressive sales tax. State Senator Rod Wright summed up the problem graphically, “If somebody makes $10,000 a year or somebody makes $300,000 a year, the sales tax on toilet paper is the same.”
The motive of those businesses siding with Brown becomes more apparent when their relationship with state government is examined more closely. The tribes have shown a tendency to make nice with those in power. Slot machines have proven to be cash cows and agreements with the state determine the number of slot machines the casinos are able to offer to gamblers. When new agreements are discussed, it wouldn’t hurt to be able to call in a chit with the governor.
It is even more clear as to why health care interests, including Blue Shield of California, would want to be on the governor’s list of friends. State government has significant regulatory oversight of both hospitals and health insurance companies. For some service providers, the state is a major client and it is the state that controls how much hospitals are reimbursed for care provided to the uninsured on an emergency basis. Although to citizen taxpayers, their actions may look shortsighted, perhaps for hospital and insurance company executives, helping the governor achieve his goals seems like a good insurance policy.
The advantage to a major oil company from helping the governor raise taxes may seem less obvious. However, several efforts are pending, including one by former President Pro Tem of the Senate and current chairman of the California Democratic Party, John Burton, that would saddle oil firms with an oil extraction tax. If you are a company looking to head off higher taxes on your business, contributing to the pet project of the man who wields the veto pen probably looks like a good investment. A few hundred thousand dollars today could head off millions of dollars in taxes later.
For average Californians who are unfamiliar with the nasty business of politics, know this: Governor Brown is feverishly working the phones to line up even more businesses to literally pay tribute, in cash, to his tax increase effort. But it also appears that most businesses have had enough and are standing up to the Governor’s political shakedown apparatus.
As John Kabateck, President of the National Federation of Independent Business and I stated in a recent open letter to state business leaders, “It is difficult to understand why, given California’s heavy tax burden any private sector entity doing business in California would support even higher taxes.”
We called upon the business community to do the right thing for all Californians who are anxiously awaiting relief – any relief – from the terrible tax-and-spend policies in Sacramento. We hope that business leaders and their organizations will step up to the plate for the good of all hardworking Californians, and help hold the line on taxes.