Deep in the Heart of Taxes

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

Tax day arrives in California with a large state budget surplus, a poll showing that 95% of likely voters don’t want higher taxes, yet a legislature full of proposals to raise taxes. We might reverse that old revolutionary cry of “No Taxation Without Representation” to “More Taxation Through Representation.”

The litany of tax increase proposals is long. Guns, soda, tires and water all face tax increase proposals. Then there are the ideas to tax business with greater corporation taxes and an oil and gas severance tax. Let’s not forget the estate tax proposal. There is also a measure to make it easier to raise local taxes. I probably missed some.

Of course, proponents behind all these tax increases say it’s for a good cause. And, in some cases the causes are just—but are the tax increases necessary when the state is sitting on a near-record surplus?

California already has the highest income and sales tax rate in the country and the corporate tax would be tops if the corporation tax proposal passes. But, legislators want to pile on. The California Tax Foundation estimated that $6.2 billion a year in higher taxes and fees have been introduced and the press release revealing that figure declared that the estimate was actually LOW. The calculation didn’t include additional taxes that will come with amendments to bills or the idea of a service tax, which has been proposed in a spot bill but carries as yet no numbers on what it would cost. A total of 40 bills were introduced that contained higher taxes and fees.

Meanwhile, the Public Policy Institute of California’s most recent poll asked likely voters if they were satisfied with the amount of taxes they pay. Only 4% said they should be paying more taxes. 40 percent said they pay much more than they should, 23 percent said they pay somewhat more, and 32 percent said they pay about the right amount.

Are California’s elected officials truly representing the wishes of their constituents when it comes to raising taxes?

Californians may have an even greater distaste for taxes after they finish calculating what they owe the federal government. Tax law changes reduced the deductibility of state income and property taxes meaning in a high tax state like California many taxpayers will be paying more federal taxes while feeling the effects of those high California taxes. So far, negative attitudes have been aimed at the federal tax law for this situation, but the idea that high state and local taxes led to this condition is bound to set in.

So what will become of all these tax increase proposals? Will new governor Gavin Newsom be more willing to add to the state’s tax burden than his predecessor, Jerry Brown? Will they all pass? Certainly not.

But the push for tax increases will continue…until it crosses the line of Tax Revolt, not an unknown phenomenon in California.

 

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