In response to Governor Jerry Brown’s announcement that he reached
a deal
with Assembly Democrats and a couple of Republicans to pass a tax
plan involving the single sales factor for multistate corporations and tax
reductions or incentives for personal income taxpayers and small business,
Republican Senate leader Bob Dutton made a good suggestion. Examine overall tax
reform in a special session.

Dutton did not want the complex deal to be announced at noon
on one day and be passed by both houses of the legislature the next day without
adequate time for study and debate. As Dutton put it, "There
is nothing more complex than tax reform, and trying to jam through a proposal
on the last day of session without transparency or input from the public and
tax experts is irresponsible."

Using the deal as
impetus, the idea of discussing the deal with a broader goal of looking at tax
reform is worth consideration by the governor. Many experts believe the
California tax system was built for another era. Changes could be made that
would encourage business and entrepreneurship, which in turn, would produce
revenue for the treasury.

It is time for the
legislature as a body to focus on tax reform.

I speak from
experience. I served on, or consulted to, three state commissions that looked
at the state’s tax system. I closely followed a fourth and most recent, the
Parsky Commission, created by Governor Schwarzenegger. None of these
commissions led to changes in the tax code. Yet, governors from both parties,
and in one case an Assembly Speaker, created these commissions to re-consider
the tax system because they all recognized it was not working well. 

While commissions
can create ideas, it is the legislature that makes laws. The legislature doesn’t
need to pass off the responsibility of coming up with a framework to re-do
California’s tax system. They should do it themselves.

The last minute tax
plan bill announced by Brown may have created a rare opportunity. Agreeing to
Senator Dutton’s suggestion, the governor can call a special session of
legislators focusing on the one job of reconsidering the tax system.
Legislators would not be concerned with the thousands of other bills that come
their way in a regular session.

An open, lengthy
debate focused on the tax system might create honest changes, not something
that comes about because of a last minute bill with no discussion and no

If the legislature
puts time into reviewing the tax code, it will be harder for the body to duck
the resulting work product as they often do when commissions issue reports.

I realize there is a
risk here considering the majority in the legislature is proudly pro taxes.
However, the people would have any final say on a tax reform package. If the
work product of a special session does not create a fair system that protects
taxpayers, the voters can turn it down. 

In the meantime, the
governor and legislature should take the opportunity provided by this last
minute tax proposal to take the time to consider the larger tax system instead
of doing patchwork tax reform.