Cross-posted at CalWatchdog.
A day of extremes at the state Capitol on Wednesday led to very different budget crisis resolution angles – green jobs or tax reform? From a press conference announcing a green jobs initiative to a panel discussion about how to implement tax reform, the extremes were arresting, and even comical.
In one corner was the Democratic team, Senate President Pro Tem Darrell Steinberg and Assembly Speaker John Perez, proclaiming their “Green Jobs Initiative,” which amounts to another group of bills that push even more state subsidized “green jobs” and “clean energy” subsidies, and includes curriculum provided to high schools to educate students and prepare them for employment in clean energy field.
In the other corner was Republican Sen. Sam Blakeslee, together with a panel of tax reform experts discussing strategies to permanently reduce the volatility of state revenues, with the goal of making California a competitive job creator. There was no hype, and no reason to persuade anyone present of the need for tax reform.
Legislative Analyst Mac Taylor conducted a powerpoint overview of how the tax system currently works, explaining how personal income taxes, corporate taxes, sales tax and property tax effect the state’s budget.
“If California is to recover and return to a state of prosperity, we must stop talking about temporary relief and begin talking about permanent fixes,” said Blakeslee.
Let’s analyze the legislator’s agendas – we can support state subsidies for the “green” industry, born out of Al Gore’s global warming hysteria, or work on simple, comprehensive tax reform to help the state of California prepare more stable budgets, while more fairly taxing the state’s residents.
Steinberg and Perez said that their green jobs initiative would provide incentives to the private sector to invest in California. “Incentives” always means state subsidies. Messing with the free market is usually what Democrats support. And because of the subsidies, we will never know if the green energy market in California is real, or a scheme.
The biggest surprise at the tax reform hearing was Democratic Sen. Rod Wright, D-Inglewood, who gave many examples of manufacturing and industry in his Southern California district which had closed down, and all but disappeared. And according to Wright, it is the fault of overreaching tax and regulatory state policy leaving businesses with the inability to financially plan on a long term basis.
Representatives from the Nummi auto manufacturing plant in Fremont have told Wright that it costs $400 more to produce the same car in California, than it does in Texas. When Nummi wanted to expand, it would have cost the company $80 million to retool the Fremont plant. But retooling in Texas cost nothing additional.
Wright said that operating a business in the state just doesn’t pencil out, which is why his district, once a thriving hub of auto manufacturers, rocket and shuttle manufacturers, and airplane manufacturers, is now mostly slums, and rundown. The people in his district used to work – now they are poor, Wright said.
Of particular interest to Wright is the repeated attempts by Democratic legislators to pass an oil extraction tax. Wright said most oil extraction in the state goes to asphalt and not gasoline, which is imported offshore. So the tax would effect the prices of other products and not oil in the state, only hurting mostly small, independent businesses. By contrast, Wright asked, “What happens if Standard Oil leaves Contra Costa County? They are the biggest employer in the county. Are we going to chase them out too?”
Tax experts on the panel covered tax policy and the problem of budget volatility with “boom or bust” revenues.
Suggestions to fix the volatility issue included reducing personal income taxes but expanding the base of who is taxed, since only 50 percent of Californians pay income tax, and the other 50 percent receive state provided services.
Stimulating manufacturing once again through manufacturer tax credits was discussed, as well as the potential benefits and pitfalls of taxing services in the state.
The extremes between subsiding green-tech business or reducing overall taxes was quite a contrast. But it’s difficult to ignore the evidence in both cases.
Despite the fact that climate change has come under attack by a growing number of scientists who refute the man-made global warming theory, California Democrats continue to push the expensive agenda.
And states which have undertaken tax reforms are financially thriving, with private sector businesses voluntarily expanding or moving for the tax benefits.