They say that in life, timing is everything. That certainly can be applied to politics and Los Angeles Mayor Antonio Villaraigosa proved that this week. On the very same day that a referendum was filed to preserve balance in the California State Senate and prevent tax increases, the Mayor asked for a crushing new tax on employers. Now, more than ever, the business community needs to back a public referendum on the Senate lines.
California, like the nation, has been in a seemingly endless series of budget crises. The reflexive answer from the Democrats, and specifically Mayor Villaraigosa, is to raise tax rates. Democrats now want to roll back Prop 13 protection for businesses and attempt to force them to pay higher real estate taxes. Every business will pay for those increases, whether they own land or not, because land owners/landlords will pass on those higher taxes to tenants. Those increases will weaken the California economy further and result in higher unemployment and larger deficits.
Of course, the working assumption of those Democrats is that all they need to do is pass a law and the taxes will be paid. The problem with such political laws is that they run into – and lose to – the laws of economics. In this case, the high tax and regulatory rates that have been piling on California employers for years now by the Democrats have all but strangled the Golden Goose of economic prosperity in the Golden State. It’s a pretty simple cause and effect. The anemic tax receipts being reported this week are one of those effects.
Despite what Villaraigosa and his Democrat friends think, there is not pot of gold sitting out there to bail out Sacramento. His proposal to hike real estate taxes on every business in California will devastate an already crippled economy. Indeed, the reason business is not hiring people isn’t because the cost of business in California is too low – it is because it is too high.
To date, despite the Democrats’ desire, tax increases have been held largely at bay because it takes a 2/3 vote in the Senate and Assembly for such increases. The new Senate lines, as I have stated at length, were achieved not through fairness but by failing to apply the standards by which the lines were required to be drawn. As such, they violate the California Constitution and, according to Democrats, may well have put them within reach of 2/3 in the Senate and the ability to vote for higher taxes without Republican input.
The best way to stop that is to support the referendum on the Senate lines. In 1978, in his book A Time for Truth, William E. Simon, Sr., former Secretary of the Treasury, business man and philanthropist, called upon American business to stop funding the Left, its candidates, universities and otherwise, in the hopes of placating them. He called upon American business “to rush by multimillion to the aid of liberty, the many places where it is beleaguered.”
Government is now five times as large today as it was then. Obamacare, unfathomable then, looms over employers. In California, if the fair lines are not drawn through the referendum process, the growth in government will accelerate, not to mention higher property taxes. Liberty is beleaguered here, and 33 years after Simon made his fateful request, the truth is that it is time for employers around this state to support the public referendum of the Senate lines.