It’s the talking point that won’t die: that California’s temporary taxes aren’t really temporary. It’s an argument usually offered by the anti-tax crowd when they’re opposing some tax hike proposals. You just can’t trust those “temporary” tax proposals, they say, because no taxes are ever temporary.
That is nonsense. In California, the opposite is true. Tax hikes here are almost always temporary. And that’s a problem, for two reasons. Our tax structure doesn’t make much sense. And way too much of our spending—because it’s protected by the constitution – is permanent.
The latest temporary-is-permanent claims are surfacing from people like Joel Fox in this space and the columnist Tom Elias. Elias recently wrote that California has only seen one temporary tax disappear on schedule (an old Pete Wilson tax on the rich).
That’s wrong. In fact, Elias wrote about this in the context of Prop 55, as if it were an example of temporary taxes becoming permanent. But Prop 55 proves the opposite—the temporary nature of our taxes. For one thing, Prop 55 does not attempt to extend the temporary sales taxes of Prop 30, which are expiring. For another, Prop 55’s taxes are themselves temporary. And for still another, Prop 55 exists precisely because Prop 30’s income tax hike on high-income people is going to expire.
The current expirations are not the only examples. Gov. Schwarzenegger put in place temporary taxes that expired. (Voters turned down his bid to make them two years long than they actually were).
But there’s a bigger problem here than just short memories or talking point nonsense. It’s that we seem to consider temporary tax rate increases a good thing. They’re not.
The state desperately needs a top to bottom change of its tax system, with changes in the rates going forward, without sunset. Most people acknowledge this, but no one can do anything about it. One big reason: raising taxes, even for one person in California, requires a two-thirds supermajority of the legislature. Or a vote of the people.
And by the way, many of the people who say taxes aren’t really temporary are strong defenders of that 2/3 vote.
Because of the difficulty of raising taxes in a more sensible way, we pursue temporary taxes, in combination with permanent changes in spending. Prop 55, for example, combines temporary taxes with a constitutional amendment that locks in certain spending. Prop 30 did the same thing. Gov. Schwarzenegger put forward his temporary tax ballot measure in a 2009 special election along with permanent changes on spending.
Of course, you can point to these facts. And maybe some of those who claim temporary taxes become permanent will stop writing this nonsense. At least temporarily.