Today in the Assembly Transportation Committee will be the first appearance in the lower chamber this session of a car tax bill, A.B. 8 (Perea) that, if ultimately signed into law by Governor Brown, would hit every car owner in the Golden State with 9 years of additional car taxes totaling over $2.3 billion.
Rome Burning
In the strongest possible turns, I urge all legislators in the Assembly Transportation Committee to oppose this bad bill. But I especially want to emphasize to Republicans what a terrible piece of legislation this happens to be — A.B. 8 is bad public policy and it is bad politics for Republicans.
A.B. 8 – Very Bad Public Policy
Californians are amongst the highest taxes people in America. After the new taxes implemented after the passage of Proposition 30 last November, virtually no other people in America are burdened more by their state government than the people of California. In 2007 the legislature passed what were at-the-time characterized as “temporary fees” on car owners (a whole assortment of them) — which are due to expire at the end of 2014. A.B. 8 would go ahead a reauthorize all of these taxes — so that car owners would be paying them all of the way until 2023 (yes, you read that correctly). Californians need tax relief — desperately. There are not that many examples of places in state government where by simply doing nothing, relief will occur. But this is one of them. Simply by letting these so-called “temporary taxes” expire at the end of next year, car owners in the state can catch a much-deserved break.
A.B. 8 is the latest example of a very dangerous and very concerning pattern in state politics — where the majority party enacts regulations that are costly to businesses, and then general tax increaes or broad-based taxes are proposed, the “revenue” from which goes, at least in part, to provide relief to many of those business interests hit hard by the regulations. In this case, based on direction from Capitol Democrats, the California Air Resources Board has placed onerous burdens on many businesses, hitting them with costly regulations to force these businesses to reduce the amount of pollution that they produce. These costly regulations should be repealed or at least reduced — but the majority party has no intention of doing so. Instead happily create an insidious situation where Republican legislators are asked literally to rob Peter to pay Paul. Should California car owners endure nearly a decade more of higher taxes to pay for these regulations?
It is one thing to be sympathetic to these over-regulated businesses — after all, without the “mitigation” of having their regulatory burden, in essence, paid for by all car owners, many of them could go belly up. And others could be hit very, very hard. But the argument to be made then is to undo the regulations. At the risk of sounding callous (and I don’t mean to) — Republicans participate in passing taxes to “mask” the negative impacts of costly regulations on business, then to all appearance, there aren’t (or there are seemingly are a lot less) negative impacts to job creation and growth like we argued when Democrats passed them in the first place.
No one is saying that over-regulated California businesses should not get relief, but not at the expense of a massive, broad-based tax increase on every automobile owner in California. Frankly, this sort of redistribution of wealth is immoral, and conservative legislators should take no part in it.
A.B. 8 — Very Bad Politics
There are several reasons why Republicans supporting A.B. 8 is very bad politically.
The first goes to this issue of having the majority party pass regulations, and then passing broad-based tax increases and using some or all of the revenues from those higher taxes to mitigate the negative impacts to those hit hardest by the onerous regulations. Guess what happens if this sort of scheme works? Do you think you will see fewer instances of it? Of course not — this will happen over and over again. Doesn’t that present a wonderful image? Dozens of bills pitting business interests against taxpayers, with GOP legislators being split like human wishbones every single time?
The second issue is that the Republican brand name in California is already in bad shape. Republicans voting to put a bipartisan patina on statewide car taxes can only serve to further injure the party’s image.
Finally, we have to consider that this is the first session (in a very long time) in which Republicans find themselves in the super-minority in both chambers. If Republicans are going to come back from the brink, it is going to mean being very aggressive in every possible way. The lowest-hanging fruit, of course, is that when Democrats want to pass tax increases, which they can now do without a single Republican vote, it is important to make them do this without a single Republican vote. Or maybe to be more specific, it is important to force EVERY Democrat to vote for the tax increases. You can be very sure that if Republicans go up on A.B. 8, it will mean that vulnerable Democrats in targeted seats that the GOP wants to win back in 2014 will be able to lay off of the bills, and not vote for the taxes. And even if some targets did vote for the taxes, they will be able to point out that it was with bipartisan support. This would be bad politics for Republicans looking to pick up seats in November of next year.
The Howard Jarvis Taxpayers Association has made it very clear to every member of the legislature that they oppose this tax increase, and have urged one and all to oppose A.B. 8. I stand with HJTA in also urging legislators to reject this very bad bill when it is up tomorrow in the Transportation Committee. But I will add a partisan argument here — this bill is particularly harmful to Republicans, and its passage with Republican voters will be the harbinger of bad things to come — and I believe its passage with any GOP votes will materially harm Republican chances of picking up the important seats we need to win next year. Send a message that this legislature should oppose higher taxes, vote no – and legislators should urge their colleagues to do the same.
In closing, I wold remind legislators that while there are thousands of lobbyists plying their wares in the State Capitol, taxpayers are the least represented in the process. With the exception of the occasional group like HJTA, taxpayers are actually counting on their elected officials to defend them against all of those who would seek to use the coercive power of government to plunder their property. Don’t let them down.