Newsom Should Turn the Hunger for New Taxes Into a Tax Reform

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

The new governor’s political needs are shifting towards tax reform.

Tax reform, of course, remains a huge political challenge, one that Jerry Brown and legislative leaders have been too scared to tackle. What has changed is the larger context around taxes: the status quo on taxation can no longer hold.

That’s because the huge Democratic majorities are hungry for all kinds of new taxes. And they are pushing forward bills to raise taxes and levies on all sorts of things. And while lawmakers are unlikely to use their veto-proof majorities to override Newsom vetoes—California governors are simply too powerful in our system to challenge—they could push through a host of little changes.
All these changes share the same serious flaw: they are built upon our existing tax system. Which means they are sure to have unintended consequences. And that adds to the risk of a broader political backlash against them.

Which is why Newsom, if he’s wise, should embrace tax reform right away—as a form of defense against all these taxes. In other words, the governor should tell the Democratic taxers that they can’t just go off raising one tax at a time. They need to fit into a larger framework of reform that does three things. 1. Produces more revenues for the state, in good and bad times 2. Makes our taxation simpler. 3. And covers a broader swath of the 21st century economy.

By doing things this way, Newsom can block certain tax ideas by noting that they don’t fit into a reform framework. And he can force those with tax ideas to talk to each other, and try to make sure that all the changes being made fit together.

The political optics of this approach are also much better for Newsom. He poses both as check on liberal excess, while pushing an overall reform.

 

(UPDATE: This article was first posted incorrectly with Joel Fox as author. It was corrected. Joe Mathews wrote the article.)

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