While the legislature is in session, the National Federation of Independent Business/California will be profiling anti-small business bills and initiatives and the adverse effect they would have on California’s job creators. This is the first column of the 2012 series.
Each year when March rolls around, I hold my breath, hoping that the Governor and Legislature might just give small business owners in California a break this time. And each time I am sorely disappointed. This year, unfortunately is no different, and the attacks on our job creators came even earlier than ever.
Last month, Governor Brown announced his plan to raise taxes on hard working Californians. Specifically, it retroactively raises the sales tax by ½ cent starting in 2013, and raises income tax rates by 1% for those making $250,000 to $300,000 a year, 1.5% for those making from $300,000 to $500,000 a year and by 2% for those making over $1 million annually to January 1, 2012. Taxes expire in 2016 – whew, I’m glad he put that in there!
State revenues for the current Fiscal Year are up 3%-4%, and are expected to increase 7% next year – the largest increase in any year since 2006-07. So, even with the economy improving slightly, it tells us our elected officials will stop at nothing to increase spending. And, with a no new taxes budget passed last year, the Department of Finance admits that our deficit will shrink from $28 billion last year to $1.9 billion in 2015. So why do we need a $7 billion/year tax increase without any spending cap?
Some may like to brand an income tax hike as a “tax on the wealthy”, but let’s not forget that small business owners will be hit especially hard since many file taxes as individuals. And a higher sales tax will do even more harm to California consumers who are also the employees and customers of the business community.
Even worse, these higher taxes are not accompanied with any reform to make government more efficient or effective — like a reasonable cap on state spending or meaningful pension reform. They do nothing to help retire California’s $33 billion in budgetary debt, $87 billion in general obligation debt and over $500 billion in unfunded pension liabilities — debts that will ruin the future of our children and theirs to follow.
Now is the time for the business community and all Californians to stand together and oppose yet another attempt by politicians to raise more money, instead of streamlining government and making it more efficient. That’s what small business owners do every day – if the money coming in doesn’t match the money going out – something has to change. That’s the real world folks – if you spend more than you make you won’t keep your doors open very long.