In Post-Brown Era How Will Tax Measures Fare

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

In the post-Jerry Brown era, how will the desire of many legislators to raise taxes be met?

This issue must be considered when looking at the California Chamber of Commerce’s list of Job Killer bills, which includes seven measures that would, if they became law, either directly raise taxes or make it easier to raise taxes. The list covers income taxes, corporate taxes, service taxes, sales taxes, and two bills to lower the voting mark to pass local taxes for varying purposes including housing, infrastructure and transportation. While the Chamber acknowledges that there is no movement on these bills, they can be revived at any time.

Jerry Brown has not been averse to raising taxes. Witness not only his leading the campaign to pass the Proposition 30 income tax increase (and his conspicuous absence during the campaign to extend those taxes with Prop 55 after promising that the Prop 30 taxes would be temporary), but his recent call for a 911 emergency system tax even as he is about to leave office.

At the same time, Brown has kept a relative tight rein on spending, at least in comparison to the wishes of many of his fellow Democrats in the legislature and the interest groups that plead for more tax dollars.

Many legislators think that the solution to solving state problems is to throw money at them. In certain cases, interests that benefit when the government has money to dole out in salaries or grants urge legislators on.

The question for taxpayers is why in the face of a booming economy and near-historic budget surpluses is the legislature talking about taxes at all? It seems to be in the nature of the beast. One wonders what happens to the tax increase refrain under a new administration with a possible stronger Democratic hand in the legislature.

According to the California Taxpayers Association, California currently has the highest in the nation state sales tax, the second highest in the nation gasoline tax, the highest in the nation personal income tax, the highest in the Western U.S. corporate income tax, and even under Proposition 13, high property taxes.

Yet, legislators offer more proposals.

With Brown out of the governor’s office a push for tax increases will continue and probably speed up.

If Republican John Cox surprises the experts and wins the governor’s race, given his clear stand on the gas tax repeal, he will chill any tax increase efforts.

What will Gavin do? That mantra will be repeated many times on many major issues as Lt. Gov. Gavin Newsom campaigns for governor. Given some of the positions on the left Newsom has staked out, tax increase interests are undoubtedly looking forward to an opportunity to make their case to Newsom once Brown is out of office.

In the meantime, from the CalChamber website here are the tax increase measures the Chamber classifies as Job Killers.

  • AB 2351 (Eggman; D-Stockton) Targeted Tax on High Earners   Unfairly increases the personal income tax rate from 13.3% – which is already, by far, the highest income tax rate in the country – to 14.3% for one category of taxpayers (including some proprietors), who already pay half of California’s income taxes, forcing them to mitigate these costs through means that include reducing workforce, in order to provide more funding for higher education.
  • ACA 22 (McCarty; D-Sacramento) Middle Class Fiscal Relief Act —  Unnecessarily increases California’s 8.84% corporate tax rate, already one of the highest in the nation, to 18.84%, which will encourage companies to leave the state and discourage companies from expanding or relocating here. 
  • SB 993 (Hertzberg; D- Van Nuys) Tax on Services  Imposes a 3% tax on services purchased by businesses in California, with some exceptions, adding another layer of taxes onto California companies, raising costs, and putting them at a competitive disadvantage.
  • SB 1398 (Skinner; D-Berkeley) Increased Tax Rate — Threatens to significantly increase the corporate tax rate on publicly held corporations and financial institutions up to 15% according to the wages paid to employees in the United States, and threatens to increase that rate by 50% thereafter, if the corporation or institution reduces its workforce in the United States and simultaneously increases its contractors.

2017 JOB KILLER CARRY-OVER BILLS

  • ACA 4 (Aguiar-Curry; D-Winters) Lowers Vote Requirement for New Tax Increases — Unnecessarily reduces the voter threshold from two-thirds to 55% for local governments to enact special taxes, including parcel taxes, for the purpose of improving public infrastructure and affordable housing, which creates an opportunity for discriminatory and higher taxes to be imposed against disfavored industries and commercial property owners.
  • ACA 11 (Caballero; D-Salinas) Targeted Retail Industry Tax Increase — Exposes the retail industry to increased taxes by imposing a quarter-cent sales tax increase to fund affordable housing and homeless shelters, without creating greatly needed market rate housing.
  • SCA 6 (Wiener; D-San Francisco) Lowers Vote Requirement for Tax Increases — Unnecessarily reduces the voter threshold from two-thirds to 55% for local governments to enact special taxes, including parcel taxes, for the purpose of providing transportation services, which creates an opportunity for discriminatory and higher taxes to be imposed against disfavored industries and commercial property owners.

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