The Senate Democrats want to continue ‘temporary’ taxes passed in last year’s budget negotiations.
The temporary tax extension is part of a plan to raise taxes $4.9 billion to help deal with the state budget deficit. With the legislature notching a 16% approval rating in the latest PPIC poll, extending temporary taxes will provide another blow to the legislature’s reputation.
The Democratic proposal includes extending a quarter-percent of the income tax surcharge scheduled to end December 31; extending a $217 per dependent reduction in the state’s dependent income tax credit; raising the vehicle license fee to 1.5 percent from 1.15 percent after being increased from 0.65 percent last year; and suspending corporate tax changes set to begin January 1. For good measure, they added an increase in the state’s alcohol tax that was not part of last year’s budget deal.
Temporary taxes have a way of sticking around. Recall the sales tax increase Governor Pete Wilson supported to close the budget hole in 1991? A half-cent of the 1.25 percent sales tax increase was temporary. But, when time came for the tax to expire, the legislature and governor put a measure on the ballot to continue the half-cent sales tax for "public safety." With wildfires burning up parts of the state, the voters passed the measure.
California is not the only state that can find reason to continue a temporary tax. The famous and deadly Johnstown Flood in 1930s Pennsylvania caused much damage. To clean up after the floodwaters receded, Pennsylvania passed the temporary Johnstown Flood Emergency Tax in 1936. Damage from the flood was cleaned up years ago. The tax remains.
Taxpayers will see the attempt to continue a tax classified as ‘temporary’ as a raw deal. A fair question to ask: If temporary taxes are extended once, will they be extended again?
I suppose there is a chance a temporary tax can disappear – if you wait long enough. The federal telephone excise tax passed to help fund the Spanish American War finally stopped – 108 years after the war ended.