Now Is The Time For Remaking Tax System
You couldn’t come up with a better time than right now if
you wanted to remake the California tax system.
It won’t be
easy, but many of the stars are aligned. And no one has more incentive to make
such a change happen now than Gov. Jerry Brown.
Brown has a
number of needs that could be met by a big push for comprehensive tax reform.
First, he needs more revenues for the budget if he wants to avoid making more
cuts to important public services. Second, he needs to find a way to talk about
jobs and the economy, and taxes are an obvious way there. Third, he needs to
breathe some life into his stale governorship by taking on game-changing
reform; if he doesn’t go on offense, and show himself to be a force for fixing
a broken system, the California public is likely to turn on him.
Texas versus California Job Creation Argument Keeps Popping Up
The Texas versus California job creation comparison continues
to make noise during these tough economic times, and while Texas takes its
lumps over state issues on occasion (see Greg Lucas’ recent piece
in Capitol Weekly) there seems little doubt that purely on a jobs creation
front Texas is doing much better.
Adding to that view were numbers on very small, non-employee
businesses released by the U.S. Census Bureau as described by Dan Walters in
the Sacramento Bee Capitol
Alert yesterday:
"The number of California’s non-employee businesses hit a
high mark of 2.76 million in 2007 but by 2009 had dropped by 82,878, the Census
Bureau report, based on Internal Revenue Service data, found. Business receipts
declined from $145 billion to $121 billion during the two-year period."
Meanwhile, the report noted Texas added
8,260 small firms between 2008 and 2009.
Axe the Gross Receipts Tax to Create Jobs and New Tax Revenue
The City of Los Angeles has the highest gross receipts tax rate of all 88 cities in L.A. County — a distinction that also puts it among the highest of any major city in the United States. This, coupled with the fact that technology now allows businesses to locate almost anywhere, has left the City struggling to attract and retain businesses, jobs and tax revenue.
In 2009, at the urging of the L.A. Area Chamber and other business organizations, the City convened a Business Tax Advisory Committee (BTAC), similar to the one created in 2001 which recommended a 15 percent business tax reduction that resulted in job growth and more money for the City’s coffers.
Comprised of nine citizens, including several tax experts, BTAC was charged with making recommendations to reform the City’s tax code, and doing so in a way that is revenue neutral. The Committee went to work studying immediate and long term solutions to fixing the City’s draconian tax practices and changing the often complained about review processes used by the Office of Finance. Recognizing the stakes and implications for the City, BTAC and the independent economist selected by the City to assist the committee, researched many scenarios for reducing the gross receipts tax, including complete elimination.
Amy Winehouse Economics
Let me apologize in advance for using the name of a recently deceased
young woman as a descriptor of our economic problems. But I mean no disrespect
for Amy Winehouse. On the contrary, my disrespect is aimed at those responsible
for wrecking our economic system to the point that the only options remaining
are rehab or premature death.
Beautiful, talented, wealthy Amy Winehouse was found dead at age 27,
joining such music personalities as Janis Joplin,
Jimi Hendrix, Kurt Cobain, and Jim Morrison – all members of the "27 Club."
Autopsy is pending, though the cause of death is hardly obscure. For years, the
multiple award-winning singer and songwriter had been in and out of rehab for
alcohol and drug abuse. The night before her death, reportedly she bought
cocaine, heroin, ecstasy, and ketamine. Prophetically, her last album was
titled "Back to Black."
Books, articles, and films have attempted to explain why
talented, successful people in the music business so often descend into a death
spiral of alcohol and drugs. One can speculate that their fans almost expect it.
One can moralize that the music business and the drug business are intimately
related. But that is not our subject here.
L.A. Needs a Real Pro-Jobs Policy
Much has been written about the so-called pro-business
policies of "Business Tax Holidays" and "incentive packages" (including steep
discounts in DWP rates) – all in order to attract business to Los Angeles. When a politician holds a press conference
with business owners, standing behind a glossy logo, clamoring on about how his
or her pro-business policies are attracting business to the city (with glowing
headlines to follow), re-election seems like a certainty.
Lately, LA’s officials have been touting some high-profile
acquisitions and relocations in their attempts to claim that LA is a
business-friendly city. For example, the
BYD electric car company, Gensler architecture firm, and Balqon Corp. Yet, the city’s unemployment rate continues
its steady, steep climb to intolerable levels.
In March 2010, when Newsweek reported on the hiring of city
"jobs czar" Austin Beutner, Newsweek
noted that the city’s unemployment was at a staggering 11.3%.