Life for the Tax Commission Proposal Depends on its Heart
Nine members of the tax commission signed the final report submitted yesterday to the governor and the legislature. Five members refused to sign. Ironically, if this proposal were a tax measure it would fail because it did not receive a two-thirds vote.
Justification for the two-thirds vote found multiple times in the state and federal constitutions means consensus has been achieved on important matters. There was no consensus within the commission that this tax plan is the remedy for what ails California.
The final report from the Commission on the 21st Century Economy was a bold attempt to re-make the state’s tax landscape. The spirit of what was attempted – restructuring tax codes to fund government through economic growth – should be applauded. There should be no penalty for producing a daring, experimental plan.
However, the plan is centered on a new tax proposal that violates a basic canon of good tax policy. The business nets receipts tax (BNRT) is unclear. Taxpayers do not know how it will affect them.
Stop Blaming and Start Praising AB32
In 1973, the president of Ford testified against pollution-reducing catalytic converters on cars on the grounds that such a requirement risked “a complete shutdown of the US auto industry.”
Of course, no such shutdown occurred and pollution was greatly reduced. But 35 years later, Meg Whitman, a candidate for the Republican nomination for governor, is raising similar fears about California’s Global Warming Solutions Act, signed into law by Governor Schwarzenegger in 2006 (AB32). In doing so she betrays an apparent lack of understanding about how AB32 will be implemented, the opportunities arising from that implementation, and an indifference to the risks of suspending the law.
Ms. Whitman says that AB32’s implementation can only result in reduced economic growth, but as California demonstrated in the 1970’s when it launched its energy efficiency effort using performance standards, that does not have to be the outcome — provided we harness the power of capitalism and competition. Back then, refrigerator makers claimed performance standards would curtail consumer choice and raise prices, but instead, choices weren’t reduced, energy consumption per unit dropped 75%, and prices fell nearly 50%. In fact, relative to a 1974 model, energy savings have put $15 billion in Californians’ pockets.
Tax Commission’s solution does not fit the problem
With little drama, but much fanfare, the 21st Century Tax Commission’s report was released yesterday. The panel’s recommendations will receive a pro forma hearing by the Legislature; and in the fullness of time, like many initially controversial ideas that challenge the status quo, they may have a salutary influence on California tax policy.
But the take-away from the Commission’s effort in the short term is less elevating, because it leaves Californians with the impression that the tax system is anachronistic, unfair and broken. That is simply not the case. The Commission purports to “update and improve California’s out-dated revenue system and make it more reflective of our state’s economy” and to “get the state back on track with a more modern, stable and fair tax system to better serve all Californians.” But the Commission failed to make its case that the 70-year-old California tax system is so broken as to justify upending it.
The Commission provides a useful synopsis of the growth and change of the California economy:
FPPC Still Struggles With Old Cases
Gov. Arnold Schwarzenegger got the all-clear last week from the state’s Fair Political Practices Commission on an ethics charge that has been hanging over his head since 2005.
It could have been worse. Last year, former Gov. Gray Davis was fined $4,950 by the FPPC for failing to report contributions to his 2003 recall campaign.
It only took four years to close Schwarzenegger’s case, which involved a financial agreement the former bodybuilder had with the publisher of some muscle magazines. That’s compared to five years for Davis, so there’s improvement, of a sort. But with more 2005 cases still in the pipeline, justice still isn’t necessarily swift at the state’s ethics watchdog agency.
Roman Porter, the FPPC’s executive director, doesn’t deny there’s a problem but insists things are getting better.
Job Creation is Job # 1
California has always been synonymous with the American Dream. “Go west, young man, go west,” they said, and people did. From the Gold Rush until today, California has been the place people aspired to achieve their dreams. We have been the global center of innovation, technology, and entrepreneurship.
In the Golden State everyone had a shot at making a better life. The hardest working and most creative people found success here and made California their home. They established the nation’s best schools and universities, built cutting-edge infrastructure and revolutionary high tech, biotech, entertainment, agriculture and defense industries. Californians made our state the envy of the world.
Unfortunately, those accomplishments are becoming distant memories. Today, California is renowned for record unemployment, budget deficits, and a massive job exodus from the state. While the global economic recession is certainly a factor in the convergence of those negative trends, much of the blame goes to state policies that have knocked the luster off the golden state.
Coastal Cleanup Volunteers Demonstrate California’s Commitment to Vital Resources
Last Saturday, my family and I joined the thousands of Californians who fanned out across beaches, bays, rivers, creeks and wetlands to pick up cigarette butts, discarded food containers and other trash as part of the 25th Annual California Coastal Cleanup Day sponsored by the California Coastal Commission and part of the Ocean Conservancy’s International Coastal Cleanup.
Nearly 70,000 Californians around the state devoted part of their weekend to the yucky, but necessary, task of gathering an estimated one million pounds of trash and recyclables to protect our beaches, oceans and watersheds.
In their hats and gloves, carrying buckets and bags, this army of volunteers provided a visible demonstration of Californians’ love for the coast and their commitment to preserving our state’s natural resources. Californians have shown this same commitment at the polls for nearly a decade as they voted overwhelmingly time and time again, to protect the state’s open space, parks, and water by approving $15.5 billion in investments in conservation bonds.