The following commentary was submitted for publication by the proponents of Proposition 1A. It’s author, Loren Kaye, is the President of the California Foundation for Commerce and Education, which is a research and policy foundation associated with the California Chamber of Commerce. Kaye’s piece references an interview that FR conduced with economist Benjamin Zycher, which can be found here.
Taking Issue with Economist Ben Zycher’s Analysis of Proposition 1A
By Loren Kaye
FlashReport recently published an interview with Ben Zycher of the Pacific Research Institute claiming that Proposition 1A will not work. I found his arguments unconvincing and misleading, and am writing to set the record straight.
**There is more – click the link**
March 24th, 2009 at 12:00 am
I enjoyed this article by Loren Kaye, but some of his points do not stand up to scrutiny. As a tax attorney and former Legislative staff member, I was particularly disturbed by the comments he made under his second point:
“Remember: since Proposition 13 passed in 1978, the Legislature has never raised taxes to increase programs and services – only to address deficits or emergencies.”
Unfortunately, this statement is demonstrably false.
In the first place, the Legislature has gotten into the habit of calling almost every new tax a “fee,” even when they had to stretch the definition of that word much farther than the English language would allow. The numbskulls on the California Supreme Court encouraged that abuse in the Sinclair Paint decision, when they allowed the Legislature to impose a majority-vote tax on paint sellers who had never sold any lead paint for the purpose of funding children’s health programs that state bureaucrats claimed were somehow related to fighting lead poisoning.
The Legislature took that crazy opinion and ran with it, creating several new majority-vote taxes that go well beyond the twisted reasoning of the Sinclair Paint decision. Now, when the United States Navy buys a computer monitor in California, it is forced to pay the new “e-waste fee” even if the monitor will be used on a ship defending free trade in the Indian Ocean and there is no possibility of it being deposited in a California landfill. That tax is also called a “fee” by people like Mr. Kaye, but it was not imposed by the voters and it was certainly not designed to address deficits or emergencies.
Secondly, with regard to increasing taxes that the Legislature admitted were taxes, the Legislature itself created the “deficits and emergencies” that it used to justify the tax increases that it passed. In that sense, Mr. Kaye’s assertion is essentially the same as saying “Since Proposition 13, the Legislature only raised taxes when the majority wanted to raise taxes.” As he would say, that statement is like saying that a ten-cent cigar costs a dime.
The important point is that Ben Zycher is right: Tax increases and majority-vote fee increases would increase the “cap” in Proposition 1A. Thus, Proposition 1A is a complete waste of time as a spending cap; and it is truly disastrous for taxpayers because it would extend the largest tax increases in American history for at least two years into the future.