The phrase “feeding the alligators” is a metaphor about the dangers
of appeasement. One may be able to buy temporary peace by feeding a
threatening alligator, but the problem is that the alligator will,
sooner or later, get hungry again. And because it was previously
fed, it is now larger and more dangerous.
Regrettably, the California business community has often chosen to
feed the ever-growing alligator of government when it comes to
important political battles. Thirty-one years ago, California
business interests were united in their opposition to Proposition 13
due to fear that if homeowners received tax relief, the Legislature
would try to make up the difference by raising levies on them. For
short term protection for themselves, business was willing to feed
average taxpayers and homeowners to the alligator.
The more things change, the more they remain the same. More than
three decades after the passage of Proposition 13, these same
interests were donating millions of dollars to the campaign to pass
Proposition 1A, which would have meant a tax increase of $16 billion
of mostly regressive taxation falling on regular folks. Why? Gary
Toebben, chief executive of the Los Angeles Area Chamber of
Commerce, summed it up best. “We’re concerned that if this doesn’t
pass, the Legislature will come back and pass taxes that are more
targeted toward business,” he told the Los Angeles Business Journal.
One notable business exception in the battle over Proposition 1A was
the National Federation of Independent Business, which was strongly
opposed. But then this organization represents thousands of smaller
businesses that are more in touch with the concerns of most
California taxpayers.
The divergence between grassroots taxpayer interests and business
interests over Proposition 1A is ironic in that, logically, ordinary
taxpayers and business should be marching in the same direction.
Unlike the labor interests, taxpayers recognize that business
provides jobs and income to most in our state. When business
succeeds, the state prospers and, as an additional bonus, more tax
revenue pours into state coffers to provide essential services.
Thinking taxpayers don’t want to see additional burdens on
California businesses. They know that increased business costs are
eventually passed along to consumers or result in lower wages and
benefits. Average taxpayers are usually sympathetic to the “job
killer” arguments frequently advanced by California business
organizations.
Several recent surveys rate California is 47th out of 50 — or lower
— in business climate. We understand that most business must
compete nationally and even internationally, and increases in taxes
on business will only accelerate the exodus of business that have
come to the conclusion that they must find a more tax friendly
environment or close their doors. Any doubts that this threat is
genuine are dispelled by almost daily news reports. For example, the
Metro Denver Economic Development Corp. has been advertising in
California touting the tax advantages of moving to their state.
Already Hewlett-Packard has agreed to build a $260 million dollar
data center in Colorado, as the company prepares to shut down its
Palo Alto customer support office that employs 800 people.
Despite the usual lack of reciprocity, taxpayers have long history
of defending business. When in past years radical tax raisers have
pushed splitting the property tax roll so that owners of commercial
property would pay higher tax rates, most taxpayers said no.
But here is the real irony. Had Proposition 1A passed, the left of
center labor interests would have argued compellingly that
Californians don’t mind additional taxes. And, like a larger and
hungrier alligator, these powerful interests would be back with a
serious push for a split roll, an oil severance tax, a
nickel-a-drink tax and a myriad of business-targeted taxes, fees,
charges and assessments.
Make no mistake, these labor interests will still make a push for
these proposals, but their internal political calculus has been
severely altered. Like Governor Schwarzenegger, they too have come
to understand that any tax or fee increase is radioactive.
It is the hope of conservatives and grassroots taxpayer advocates
that the business community has learned something from this. It is
time that all those who believe in free enterprise and limited
government stand shoulder to shoulder and stare down the alligator.