Tax Reform and the Strength of the Pragmatic Angel

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

At his budget press conference, Gov. Gavin Newsom was asked what he plans to do about tax reform. According to one account, the governor said that the state desperately needs to change the tax structure and added, “I can be stubborn. I can be pragmatic. Here, I’m stubbornly pragmatic.”

He can be stubborn in demanding certain changes but the pragmatic side softens stubbornness because it calculates what can actually be accomplished. If he has a stubborn devil perched on one shoulder and a pragmatic angel on the other it seems that the pragmatic angel has the governor’s ear.

Spending interests, particularly representing schools, have reached out to the governor to come up with a tax solution that might avoid big-time battles over tax increase ballot initiatives going forward. These interests want Newsom to drive a tax package through the legislature before the November ballot is finalized. 

The pragmatic angel is whispering that such a move is not doable while the state sits on a huge surplus and legislators would have to defend their tax increase votes in the coming legislative elections. In addition, the governor’s budget calls for a $3 billion increase over last year for the school’s Proposition 98 guarantee, fueled largely by increases in property taxes.

Newsom has talked about reaching out to all sides in the tax debate to find a compromise. “My desire is to use this as an exercise in bringing the parties together to see if we can compromise on a more comprehensive tax package,” Newsom told the press in the past. In September I reported that a Newsom advisor said the governor intended to work on the tax issue after he finished with the legislative term and bill signings. 

If he is talking about a tax reform compromise he hasn’t talked to anyone I asked who you would expect to have a place at the table. 

While the stubborn side wants to get something done, the pragmatic angel may be more convincing on the reality of finding a trail through the tax reform minefield.

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