Another week, another special session of the Legislature.
California faces a nearly $30 billion shortfall over the next year
and a half and, to address this crisis, last month the governor
leaned on the outgoing legislators to stay to the final hour in the
hopes of coming up with a solution that included both spending cuts
and tax increases.
Because the special session ended in stalemate, the governor
declared a “state of fiscal emergency” and has called on members of
the new Legislature, who took office December 1, to try again.
Although many lawmakers are carryovers from the previous session,
Schwarzenegger is repeating his mantra that Democrats and
Republicans must leave their ideology at the door. Democrats don’t
want to cut spending and Republicans don’t want to raise taxes, he
says, and the parties must reach a compromise.
But let’s look at the facts. California already has the highest
income and sales taxes in the nation. We have the highest business
taxes west of the Mississippi. Only property taxes — we rank in the
middle — are a comparative bargain because of Proposition 13. In
total, we rank 6th, or higher, in tax burden.
Since California is already a high tax state and spending has
increased 39 percent since Arnold Schwarzenegger took office in
2003, it is clear that for years, it has been the taxpayers who have
been doing all the compromising.
The governor says everything is still on the table and he will
consider any and all tax increases. He recommends a penny and a half
sales tax increase, including an extension of the tax to currently
untaxed services like auto repair. Also being considered is a
cessation of income tax indexing. This would mean that inflation
would be allowed to push California income tax payers into higher
brackets. (Because this would be in violation of Howard Jarvis’s
Proposition 7, which indexed the income tax, if this method of
increasing the burden is adopted, the state should be prepared for
legal fisticuffs with the Howard Jarvis Taxpayers Association.
Initiatives may only be amended by a vote of the People and a
“suspension” of indexing would be about as clear a violation of law
as we have seen).
Moreover, it is ironic that among the tax increase proposals the
governor is willing to consider is a tripling of the car tax. If
this gives you a feeling of déjà vu, it should. It was Gray Davis’
increasing of the car tax that was a major contribution to his being
recalled and to the election of Arnold Schwarzenegger, who promised
to roll back this despised levy.
In 2003, Schwarzenegger’s Recall Express campaign stopped at the
Orange County fairgrounds in Costa Mesa. In his speech, Arnold
critiqued Gray Davis and the Legislature. “All they have done is
spend, spend, spend, and when they realize they spend money they
don’t even have, then it is tax, tax, tax” He said. “How crazy is
that going to be to come up with this crazy idea to raise the car
tax by 300 percent. We’re not going to let it happen. Let me tell
you something … it’s going to hurt the person who is a low income
person who makes $15,000 to $20,000 a year. The person who is
struggling to make ends meet. A person who is struggling to put food
on the table for their family.”
Then, with a Hollywood flourish, he directed his audience’s
attention to a white GM car with the words “Davis car tax” painted
on the side. Above the car, suspended by a crane, was a wrecking
ball, which was released to demonstrate his dedication to smashing
any idea of tripling the car tax.
If the governor is successful in his current effort to raise the car
tax, we suggest that he be required to repeat this visual
demonstration substituting the word “taxpayers” for “Davis car tax.”
After all, his agenda — if fully implemented — will crush the very
citizens he claimed to be defending five years ago.