Tax-Happy Session Ends; Could Have Been Worse

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

With the gas tax increase, the cap-and-trade extension, which many call a tax increase because it raises revenue for the government to spend, and now the document tax to fund housing issues, this legislative session probably produced the most tax-happy lawmakers since the 1935 legislature created both a state income tax and a vehicle license fee.

Yet to be determined, will this willingness to raise taxes have repercussions at the ballot box? The test will not be so much whether individual legislators are returned to office. Odds are most incumbents are safe. Rather, the test will come with the recall effort against Sen. Josh Newman, since that election is focused on his gas tax vote; and a gas tax repeal initiative if either of the two proposed measures make the ballot.

An earlier UC Berkeley Institute of Governmental Studies poll showed disdain for the gas tax with 58% opposed. However, in a recent IGS poll, when voters were asked to rank 20 priority issues in the order of importance when they choose whom to support for the next governor, the gas tax landed tied for 12th place on the poll.

That number is likely to change when the gas tax collection begins in November and Californians become more aware of the new law. It should be noted that the general issue of Tax Policies ranked tied for 6th in the same poll with 51% of the respondents classifying Tax Policies as a priority. Incidentally, the high-speed rail project, which is kept alive by funding from cap-and-trade, finished last in the priority list with only 17% tabbing it as a priority.

There is another way of looking at the tax increase fever in the legislature—it could have been worse. Many legislators have a knee jerk reaction to reach into the taxpayers’ pockets to solve any problem. Fortunately, not all these tax funded problem solutions are finalized.

As evidence, take a look at the Job Killer bills listed by the California Chamber of Commerce. Under the subsection on Taxes, the CalChamber lists nine measures, that is a third of all the bills labeled as job killers.

Among the tax increases tagged by the Chamber are targeted taxes on contractors, alcohol, sweetened drinks, and high-earners. There are also bills to make it easier to raise taxes. None of the nine bills made it to the governor’s desk this year.

But, a warning: it is a two-year legislative session and some of these tax measures could get a new life next year.

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