Gavin Newsom and the Question of Taxes

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

In his successful campaign for governor Gavin Newsom promised to advance a number of programs like universal pre-school, health care for all and education that will be costly. Where does he get the money while also considering how to reform the state’s tax system?

Shortly after the election, fellow Democrats, including Assembly Speaker Anthony Rendon are also talking tax increases.

If the Democrats secure the two-thirds supermajority in the legislature required to raise taxes—which appears likely at this time—the foundation will be in place for tax increases.

In a state notable for decades as the home of tax resisters, there are signs that voters may not object. In the last few statewide elections voters have raised income and sales taxes and rejected repeal of gas taxes and extending property tax breaks.

On the local level, voters continually vote to raise numerous taxes.

How many more tax increases are in the future and where will Newsom draw the line?

Is Newsom planning on confronting Proposition 13 when the split roll appears on the 2020 ballot—a position his predecessor, Jerry Brown, avoided?

Newsom is already listening to Senator Bob Hertzberg, re-elected Tuesday, to consider an overhaul of the entire tax system that would include some form of service taxes. If Newsom wants to spend political capital on such an ambitious effort it would likely come soon.

However, Newsom has said such an effort would take time. Look for another tax reform committee to be formed—which would be the fourth such committee over the last 20 years.

Or the incoming governor could rely on Hertzberg’s connection with Nicolas Berggreun’s Think Long Committee to do the heavy lifting on formulating a tax reform plan….or cut an overall tax package deal in the legislature that could include a move on commercial property taxes.

Another question: Will tax reform venture into the difficult area of spending issues, particularly the cost of pensions?

And what happens if the economy turns sour? Are all bets off on reform…or is that the time to go for it considering California’s current tax structure was birthed in the gloom of the Great Depression.

Look for early signs on tax questions in the budget and official announcements from the governor’s office.

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