Increasing Taxes, Increasing Unemployment

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

On Friday, it was announced California’s unemployment rate hit a twelve-year high at 7.3%. On Sunday, the legislature met in extraordinary session to vote on a budget plan that would raise the income tax on upper income taxpayers and raise the corporate tax. The measure was defeated, failing to secure a two-thirds vote.

Good thing because, had the plan succeeded, the unemployment rate would likely jump even higher.

Taking money out of the economy from businesses and those who can invest in job creating enterprises is not the way to confront an unemployment crisis. It would just exacerbate the problem. Corporate tax collection was lower than expected in July according to the Controller’s monthly report, down almost 18% from the projection in the Governor’s May revise. Raising taxes on businesses won’t help that situation.

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Why Monterey Would Be a Cool Capital

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)

This piece of mine which ran in yesterday’s Los Angeles Times started out as an attempt at satire. But now I think I’ve talked myself into it. Why not relocate state government to Monterey? The state government could use a change of scenery..

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T. Boone Pickens: The First 21st Century “Energyman”

Patrick Dorinson
Host of The Cowboy Libertarian Radio Talk Show in Sacramento

On September 27, 2006 to great fanfare and international media attention, Governor Schwarzenegger signed AB 32, California’s landmark bill to drastically cut greenhouse gases in California.

As with all “landmark” bills the devil is in the details. Does anyone remember AB1890 California’s “landmark” Electricity Deregulation bill? As someone who was in the trenches at the California ISO during the Energy Crisis of 2000-01, I remember it vividly.

Whether you agree with the merits of AB 32 or not, it is the law and now we must implement it. The California Air Resources Board and a slew of other government officials and business groups are now in the process of setting the standards of how California is going to meet the aggressive goals set out by AB 32.

Setting standards is one thing, but what will be the means to get there?

Enter T. Boone Pickens.

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Goodbye to the Budget Nun

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

California’s Legislative Analyst, Elizabeth Hill, is retiring. It has been her job for 22 years to run the Legislative Analyst’s Office and present analysis on legislative measures, the governor’s budget and a wide array of initiative proposals. Beyond that she has led the LAO in preparing studies to bring perspective to many of California’s governmental conundrums. I remember carefully studying one such book entitled Making Government Make Sense. I didn’t agree with all the recommendations but I applauded the effort.

Yesterday the Senate took time to praise Elizabeth Hill as reported by Capitol Alert’s Shane Goldmacher. Hill heard justifiable tributes from both sides of the political aisle. Frequently, the 120 members of the legislature are referred to as Hill’s 120 bosses. However, Hill looked at these legislators as her clients delivering her observations in a straight talk manner that would humble John McCain.

And she never forgot that she had a few million more clients beyond the legislature – the people of California.

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Odds and Ends – August 15, 2008

Chandra Sharma
Political Communications, Redistricting and New Media Strategist

A few odds and ends from the past week:

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Citizens In Chains: The High Cost of Prisoner Lawsuits to California Taxpayers

Tom Scott
CA Executive Director, National Federation of Independent Business

Last week Citizen’s Against Lawsuit Abuse (CALA) released a new study focusing on prisoner litigation.  At a time when this state is in complete lock-down on the budget it seemed like an interesting topic to raise.  Civil litigation by prisoners  has cost the taxpayers of California nearly $200 million.  And that does not include federal class actions and the subsequent receiver and three judge panel put in place by federal courts or habeas corpus lawsuits. It also does not include the bureaucracy that is involved to deal with the litigation, such as the Litigation Coordinators at each of the 33 prisons in our state or the staff that assists them in monitoring the caseload and the administrative fees.  Some of these coordinators make nearly $120,000 a year.

Let me make it clear that not all lawsuits are frivolous.  Certainly there are issues that need to be heard and prisoners deserve  a venue for grievances, but spending an average $32 million dollars a year, enough to fund the care and feeding for nearly 500 prisoners, seems over the top.  I do not think the average citizen has a clue that  these costs are so high.

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Lions and tigers and tax reform. Oh my!

Loren Kaye
President of the California Foundation for Commerce and Education

You know that real reform is about to happen when opponents let loose their menagerie of hobgoblins and boogeymen.

Today’s LA Times was the forum for the tax raisers to complain about common sense tax policy. But they had to dress it up as a give-away, because that’s what you do when common sense is not on your side.

The common sense part: taxpayers pay taxes on income (profits) and can write off losses. But for many business taxpayers, their business cycles do not conform to the arbitrary dates of a tax year. Federal tax law has long recognized this fact of economic life, and has allowed taxpayers to write off losses going back two tax years and forward up to 20 years. (The latter is particularly helpful for businesses with long gestation periods, like biotech firms.)

California only recently agreed to partially conform to federal law, allowing write-offs of losses prospectively for ten years. But as part of their initial $8 billion tax increase to close the budget gap, Democrats proposed to suspend the ability to write off these losses for two years, but offered to extend the carryforward to 20 years. The suspension would amount to a $1.5 billion increase on business taxpayers.

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Democratic Party Supporters’ Money Backs Redistricting Reform

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

There appears to be a widening crack in the wall of Democratic Party opposition to redistricting reform.

Recent ballot measures attempting to reform the redistricting process, which creates district boundaries from which candidates run for legislative offices, has often pitted one major political party against the other.

Not this time.

While some Democrats are claiming that Proposition 11, the redistricting reform on the November ballot, is a “Republican power grab,” and the state Democratic Party is officially opposed to Proposition 11, usually faithful donors to Democratic causes are putting up money in support of the measure, reports the San Francisco Chronicle’s John Wildermuth.

The Chronicle lists heavy financial hitters such as John and Ann Doerr, Silicon Valley venture capitalists, Sacramento developer Angelo Tsakopoulos and Los Angeles investor Eli Broad, all of whom have donated large checks to the Democratic Party and the Democratic Central Committee, on board the Prop 11 wagon.

The Proposition 11 effort is co-chaired by former Democratic state controller Steve Westly, who has written about redistricting reform on Fox and Hounds.

Other notable Democratic politicians on board are former Governor Gray Davis and former Assembly Speaker Bob Hertzberg.

The measure also has strong support from good government groups like California Common Cause, which often sides with Democratic positions on bills and issues.

Back in June I wrote on this site that there was a good chance Prop 11 could pass. Democratic spokesman Steve Maviglio commented on my piece that there were a number of reasons that Democrats would soon rally around the No campaign. My comments and Steve’s response are here.

I don’t see that happening, yet. Maybe it will as Election Day gets closer but evidence indicates as more Democrats come aboard the Yes campaign it will be impossible for the No on 11 campaign to make the usual “us versus them” argument.

That’s a good thing because redistricting and fair governance should be debated on merits, not on loyalties to a particular political party.

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Economic Suicide

Jon Coupal
President of the Howard Jarvis Taxpayers Association

Rumors of a budget deal are one thing. But the vast majority of the Republicans in the Legislature have no desire to be participants in the assisted economic suicide of California. New figures on California’s tax burden are out from the Tax Foundation; California’s tax burden is now up to sixth highest in the nation. Republicans know that they were not elected to move California down the road to higher taxes and more burdensome regulations coupled with an abject failure to address waste and fraud.

In a prior budget battle, a handful of Republican legislators signed off on a Gray Davis budget and were rewarded with severe electoral retaliation. (Think Johannessen, Briggs, etc.) But this year, all but a handful of GOP legislators believe – and rightfully so – that a tax increase will solve absolutely nothing and, in both the short and long term, inflict irreparable damage to the Golden State.

We’d be surprised to see a budget this week or even next, for that matter.

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Effects of Prop. 2 — the UN-SAFE Food Initiative

Vice President, J.S. West Co.

This November, Californians will be voting on Proposition 2 – the ‘Standards for Confining Farm Animals Statute.’ As a 4th generation family farmer, I oppose Prop. 2 – a risky, dangerous and costly measure for California that, if passed, will:

  • threaten Californians food safety and public health
  • hurt California agriculture, the state’s #1 economic industry
  • drive nearly all California egg farmers, including cage-free farmers, out of business in the state.

Californians need to understand that Prop. 2 is not about the treatment of animals, instead it is about the standards for housing egg-laying hens. California’s current housing standards are the most stringent in the nation protecting farm animals’ well being and keeping our food safe.

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