At roughly eleven o’clock this morning, Governor Jerry Brown is expected to hold a press conference and release his proposed state budget for the 2011-2012 fiscal year. Presumably he will also present his proposed revisions to the current budget, which is significantly out of balance. It has been widely reported that Brown will include in his proposal for the 2011-2012 budget placing on the ballot increases in the state’s income tax, alternative minimum tax, sales and use taxes, and an increase in the vehicle license fee.
These tax increases should be a non-starter, and Republicans (rightly so) are already strongly united against putting them forward to voters. It is worth noting that these very same tax increases were placed before voters in a special election in May of 2009 and rejected by almost a two-thirds margin. The fact that Brown would even introduce such an idea represents a bit of hubris from the Democrat Party. You see, it has been decades of liberal policies that have placed California government in such a precarious position. Not only have liberal-dominated legislatures continued to ratchet up spending by egregious amounts, year after year, but they have continued to pass more and more onerous laws and regulations making it that much more difficult for private companies to operate and show a profit. Democrats have also given us a totally dysfunctional tax code where the wealthiest sliver of Californians represent a massive percentage of tax revenues — thus ensuring that when a recession like the one we’re in now hits, that state tax revenues plummet even harder than they otherwise might with a flatter tax system.
We can expect that Governor Brown will reference the above mentioned taxes, and call them "extensions" rather than new taxes. That is State Capitol double-speak. These taxes which amount to about $1500 a year for the average family, which were passed by the legislature in the infamous 2009 budget deal, have an end date — they go away. In my book, since those taxes end, anything passed by voters would have to be a new tax, plain and simple.
To further assail the Governor’s ability to credibly label his proposal for new taxes "extensions" — a substantial portion of those taxes have already ended. In the 2009 budget deal, a .25% point increase was placed on each personal income tax bracket. In addition the deal increased the Alternative Minimum tax rate from 7% to 7.25%. But for these two tax increases, they were in place for only the 2009 and 2010 tax years — so they are done. Starting January 1, employers stopped taking the new income tax out of the paychecks of W-2 employees. Those who make quarterly payments will write their first checks and they will be without the income tax increase — which is over. So what Governor Brown is actually proposing is that voters enact an income (and AMT) tax increase that, if passed in June, would be retroactively applied back to the beginning of the year.
I don’t know how Governor Brown, in good conscience, can refer to this as the extension of a tax. How long does a tax have to be gone before increasing that same tax again is semantically referred to as an extension instead of an increase?
Presumably the Brown budget will also include hitting Californians with an increase in the state sales and use tax rate by one-cent, and the vehicle license fee from .65% to 1.15% of a vehicle’s market value. Again, these are tax increases because they are both scheduled to sunset on June 30.
We’ll see how fair and balanced the coverage is on this issue — with those news sources that probably would like to see these taxes hiked referring to them (including the already expired income tax hike) as "extensions" and more balanced reporters and outlets simply referring to them as proposal tax increases.
Either way, if Governor Brown and his public employee union allies really want to go through the exercise of having California voters consider raising their own taxes (during a recession), then they should get about the business of qualifying it by initiative. Smart political law attorneys say they can achieve this for a special election in July. Of course, smart political analysts say such an effort will fail.
January 10th, 2011 at 12:00 am
“Meet the new boss, same as the old boss” is a bit overused, but it applies literally here. So sad for my state.
January 11th, 2011 at 12:00 am
There is no way that Californians are going to vote to donate more of their income to the State of Califonia.
The reccession/depression has already greatly reduced charitable giving to institutions that actually help people.
At least the guy ringing the bell for Salvation Army in front of the grocery store will sing you a song and/or say thank you or God Bless You when you drop money into the pot.
When I registered my F250 here in California I donated $500 to the State and all they gave me in return was a little sticker that costs less than a dime in return.
I guess the little sticker was kind of like my donotation reciept.
If I fail to put my donation reciept on my license plate, a gun toting donut eater will demand another involuntary donation from me and he also refuses to even say thank you for my money.
Californians continue to vote for liberal politicians who are committed to raising their taxes as the solution to fund government. They are all too slowly waking up and making the connection between their vote and how much nore money gets lifted from them. We need to stop this bad behavoir and just say NO to more taxes.
If California actually LOWERED taxes this year in the form of a five year tax reduction plan, the economy would rebound immediately and the state would actually see an increase in revenue.
Businesses would be able to predict their own future , investing in their own success. Then and only then, business will actually begin to move to California.
Free enterprise is ready to move forward at the first word of reduced taxes. I have several investors (clients) who are ready to jump back in the game once it is “safe” until then, they are fine with keeping their money in the mattress.
If the government needs more money–all they have to do is reduce tax rates. If liberals simply wanted to increase revenue to government, they would implement smart revenue increasing tax decreases. However, their idealology calls for the demonizing and destruction of individual wealth, so it is always something more than commonsense good governance that they are after.
How about electing politicians who will not only stand up for no new taxes–but rather stand for reducing tax rates?! Then even the gun toting donut eaters will get to keep more of their own income.