There are few politicians in California with the expertise in California and how its tax policies impact California and its taxpayers more than State Board of Equalization Member Bill Leonard. So I am very pleased to present the following Guest Commentary from Leonard for FR readers:
State’s Retailers Will Get Clobbered by Perata’s Tax Hike
By Bill Leonard
Senate President Don Perata (D – Oakland) has thrown down the gauntlet in saying he will hold up the state budget rather than accept the across-the-board cuts the Governor has proposed. It is disheartening to see Perata’s solution is a one-cent increase in the state portion of the sales tax, which by the way is a 16% increase in the tax (6.25% to 7.25%). Remember, this is a tax that must be paid by retailers only — not lawyers, therapists, web designers, political consultants, gardeners, etc. The sales tax was meant to tax consumption, but the amount of consumption being captured by it is decreasing every year relative to the whole economy.
In 1990 the state had roughly 900,000 retailers. 18 years later, we have roughly 1 million. This is an 11% increase, which might sound good except for the fact the state’s population went up 44% in the same period. Yet, the Democrats are looking to this diminishing class of businesses for more revenue. Our retailers are under siege already. The vacancies in the strip malls will get even worse if this tax increase becomes law.
George Skelton’s column earlier in the week credited Pete Wilson for a $7 billion tax hike in the early 90s. What Skelton left out is that less than $5 billion of what was promised actually came in, and one of the worst recessions in memory was exacerbated. Although it is common sense that people change their behavior in response to changes in the price of goods, the taxpayers’ response to new taxes is not factored in when revenue forecasts are made. These static estimates assume people are like cattle. The tax-hike proponents just whip out a calculator and multiply the tax hike by the number of people, and voila, that is their revenue number. This utterly ignores reality. In fact, the revenues from the Wilson tax hike came in 20 percent short of expectations, or $800 million short, the first year after the hike. Even as the economy recovered, revenues still came in short of forecasts by half a billion per year for several years.
**There is more – click the link**
March 16th, 2008 at 12:00 am
I’ve YET to hear any cuts coming from the Democrats. Why is raising taxes the only solution we hear from them? Why don’t they look at how one school district (San Diego), can justify the spending they do (Buses with very small numbers of passengers, very low enrollment schools, free “6 to 6” programs, free field trips, etc) and then you have a district, just up the freeway, Poway, that packs their buses, charges (or at least has a sliding scale) for their “6 to 6”, field trips, 6th grade camps, etc.
You have one district that seems to be fiscal responsible (Poway) and another (San Diego) that isn’t.
The problem isn’t just with Sacramento, but all of these agencies that depend on money from Sacramento. These agencies should ALWAY be trying to cut their expenses, instead of ALWAYS planning for money $$ from Sacramento, but the system isn’t geared for that kind of philosophy. It’s the philosophy of spend as much now because tomorrow you can always get more. That philosophy must change for us to really rein in the free spending of Sacramento.
March 16th, 2008 at 12:00 am
Logic never prevails when dealing with emotional liberals..do not bore them with historical facts!
Lets talk about cutting government employment a few percent.
There are over 240,000 California government workers and those additional ilk making proposition commercials bloating teacher, firemen, prison guard pensions.
Expenses need a major tune up. Every organization has human capital that is unproductive called dead wood.
Go on offense and cut government workers and let the liberals eat cake for a change!