Betty Yee: Tax Reform is Hard, Start the Conversation Now

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Previewing the coming report from her Council of Economic Advisors on Tax Reform, state Controller Betty Yee said California needs comprehensive tax reform that must generate job creation to produce a healthy California economy.

Speaking at the Los Angeles County Business Federation Institute last week, Yee noted proposed fixes to the tax structure have rarely considered the entire tax system. There have been 4600 tax proposals in the last two decades, she said, but few were comprehensive reforms.

When asked how her tax reform council addressed some of the current tax change plans such as a tax on services, split roll property tax, and business net receipt tax, Yee said that the council considered these ideas but she would wait for the official release of the report to disclose any conclusions. She did say there are pros and cons with each of the reforms.

Her council’s report is due out in a few weeks. She hopes the report will kick off needed discussions that will include the public. Government can’t answer all the questions, she said, because government officials often don’t understand the impacts of a tax change proposal.

Yee admitted finding the right balance for both the tax system itself and the politics surrounding it would take some time. One item she wanted the council to address is a stable tax system. That may be a difficult goal to attain considering prevailing attitudes about some of the state’s major revenue sources. Yee pointed to the stability of the property tax system as opposed to the volatility of the income tax, the state’s main revenue source. She acknowledged that a majority of Californians favors the progressive tax system despite its built in volatility.

Yee revealed the council also contemplated creating regional governments and regional finances.

The council’s mandate was to conduct a broader consideration of the tax system that would lead to creating jobs, revenue sustainability, fairness, economic expansion, and support for strong local governments.

Members of the Controller’s Council of Economic Advisors on Tax Reform are listed here.

We’ll see what they came up with in a few weeks.

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