Governor Arnold Schwarzenegger’s executive order creating a tax commission to modernize California’s revenue gathering system is missing an important ingredient. Stating the rational for a tax commission, the second sentence in the order reads: “Our tax system has not been restructured in over 80 years even though our economy has changed dramatically.”
While that is basically true what is missing is the other side of the equation–how we spend our revenue. Spending of public money has also dramatically changed in 80 years, and spending drives the need for revenue. Would it not be wise to examine spending as well to eliminate unnecessary programs or to remodel the way services are delivered so the that tax restructuring and spending programs can be fashioned at the same time to meet the actual needs of California?
This is not to say that the tax commission is a bad idea. There is value in looking at the tax structure and its relationship to the state’s economy. No doubt changes need to be made. But, if we are going to do a reconstruction job let’s do it right the first time. Patch the leaks in the roof as well as rebuild the foundation.
Tax commissions are not new. A 1905 commission that sought a new tax structure in California saw its proposal shot down by the voters in 1908. When the legislature reworked the commission’s suggestions, the voters finally gave their approval a couple of years later only to see that tax plan reviewed by another tax commission in the late 1920s.
One of the impediments against adding to the commission’s duties is the relatively quick deadline for the commission to complete its work as specified in the executive order. The commission’s work is to be completed no later than April 15, 2009. Certainly, someone has a macabre sense of humor calling for the commission’s report on tax day. If the commission elects to create a tax system that raises taxes, introducing such a plan on the day taxes are due for America’s taxpayers is poor salesmanship.
Perhaps the answer is to create a second commission that will focus on spending matters. Have the two commissions work at their goals simultaneously. The legislature can merge the two reports and create a reform that shows the best efforts to bring not only the tax structure into the 21st Century, as the governor’s order demands, but to bring California’s governance system into the 21st century as well.
Ultimately, the voters will have the final say on any plan brought forth by a commission or commissions and shaped by the legislature. It would be prudent to let the people know that the formulation of this new plan made every effort to improve both taxing and spending procedures before the voters are asked to give their blessing at the ballot box.