California: If we can’t tax you, we’ll let the other guy do it!

June 13, 2011

Really, I sometimes wonder if Democrats oligarchs  in the state legislature are issued fake mustaches so they can twirl them and laugh maniacally as they find new ways to shove new taxes down our throats.

The latest comes as a result of our annual battle over the state budget, which is due June 15th. The Democrats will have no problem passing the budget, since it requires only a simple majority and they control both chambers (1). But, they still have to come up with the money to pay for that budget, since there’s a statutory requirement that it be balanced.

Now, the governor and and his legislative allies want a special election to impose new taxes to help fund that budget. (They call them “extensions of existing tax hikes,” but, since those are set to expire no matter what, they’re really tax hikes.) A special election requires a two-thirds vote of both chambers, and the Republicans are holding out, creating an impasse; correctly, in my mind, but we’ll come back to that.

So, faced with solid opposition, what does Senate President Pro Tem Darrell Steinberg do? He calls for the political equivalent of an end-around play, introducing a law allowing the counties to impose income taxes:

Counties, school districts and community colleges would have broad authority to seek taxes on income and a vast array of products including cigarettes and alcohol under a bill approved by the California Senate on Friday.

The bill, which Senate leaders say will pressure Republicans to support the governor’s tax plan, gives the local entities power over taxes that currently only the state Legislature can impose. The Senate passed the bill after Republicans, and a handful of Democrats, refused to support a measure sought by Gov. Jerry Brown to place extensions and increases of current state tax rates on a special election ballot. That measure needed a two-thirds majority vote from the Senate.

The special election measure would have asked voters this fall to extend and increase personal income and sales taxes, along with the vehicle license fees, through June 2016. But Democrats in the Legislature altered the plan so that if voters rejected the measure, most of the taxes still would have been imposed for the remainder of 2011-12 fiscal year.

The article goes on to point out that Steinberg is playing hardball (with our paychecks as the ball) to pressure the Republicans to accede to a special election (2). But implicit is the threat to send the bill to the Assembly, where I’m sure it will pass easily. And there are several problems with this:

First, We The People made our will clear about new taxes in 2009, when Prop 1A was crushed 65-35. The voters sent a very loud, very clear message to Sacramento that we are taxed enough, thank you, so instead please do your jobs and come up with a budget that meets existing revenues. Instead, they either want another expensive special election (3) to ask us the same question we only just answered, or they’ll let the counties and school districts do it (to us). This is not only “playing hardball” with Republican legislators, it is also a slap in the face of the voters who’ve already made their will plain.

But arrogance is often a trait of oligarchy, so I guess I shouldn’t be surprised.

The second problem is with the very idea of giving county boards of supervisors, school districts, and community colleges the power to tax — they’ll go right ahead and do it. Sure, they’ll have to call an election, but all they’ll wind up doing is encouraging the most productive elements of society to move elsewhere. This only gives wastrel government more money to waste and helps them avoid dealing with massive waste and inefficiency by encouraging them to rob their constituents. It’s like giving an alcoholic the keys to the liquor store.

Finally, the fundamental objection is this: We are taxed enough. California has an income tax with eight rates. The top two tiers pay 10 and 11 percent, respectively. Now, you might think only the wealthy get hit with these rates. Well, in California, we have a different idea of “wealthy.” The second highest tax bracket, 10%, starts at $47,055. Yes, you can make less than 50 grand a year, and Sacramento thinks it only fair that you fork over 10 percent. And let’s not forget sales taxes that range from 9.25% to 10.75%.

And Brown, Steinberg, and the Democrats want more, one way or another.

The real problem here isn’t that taxes aren’t high enough, it’s that nearly 40 years of Democratic control of the legislature have lead to insane spending and borrowing, as well as unsustainable public employee pensions. Instead of a bloody-minded obsession with raising taxes, the legislature should be bending all its efforts to creating the conditions here that will stop the flight of businesses from California and encourage others to come here: fewer regulations and lower costs to do business. And they should be easing the way for intelligent exploitation of our natural resources, including the billions of barrels of oil estimated to sit off our coast. All of these would create jobs that would bring in revenue without having to raise taxes.

Instead, we get political gamesmanship and an unwillingness to see that the Golden State is going the way of the goose that laid the golden eggs.

Footnotes:

(1) And see what that’s gotten us? Let this be a warning to the rest of you.

(2) More money we can’t afford to spend.

(3) I think they learned it from the EU: “You’ll keep voting until you give us the answer we want, peasant!”

(Crossposted at Sister Toldjah)


Will: a VAT only if you get rid of the income tax

April 17, 2010

George Will, declaring that he could support a VAT only if the 16th amendment is repealed:

When liberals advocate a value-added tax, conservatives should respond: Taxing consumption has merits, so we will consider it — after the 16th Amendment is repealed.

A VAT will be rationalized as necessary to restore fiscal equilibrium. But without ending the income tax, a VAT would be just a gargantuan instrument for further subjugating Americans to government.

(…)

Because the income tax is not broadly based, it radiates moral hazard: Its incentives are for perverse behavior. The top 1% of earners provide 40% of that tax’s receipts; the top 5% provide 61%; the bottom 50% provide 3%. So the tax makes a substantial majority complacent about government’s growth.

Increasingly, the income tax is codified envy. A VAT is the political class’s recourse when the resources of the minority that is targeted by the envious are insufficient to finance ravenous government.

My only quibble is with his use of the word “liberal;” there’s nothing liberal about the dominant wing of the Democratic Party. It’s merely a thin mask covering a progressive-statist face.

(via Dan Mitchell)


The Flat Tax: Good for America, Bad for Washington

March 29, 2010

Dan Mitchell of the Cato Institute and the Center for Freedom and Prosperity has just released a video explaining why he believes a flat tax would be better for the country and fairer overall:

Here’s what he says about the “progressive taxes are more fair” argument favored by the left-liberals:

There are two big hurdles that must be overcome to achieve tax reform. The first obstacle is that the class-warfare crowd wants the tax code to penalize success with high tax rates. That issue is addressed in the video in a couple of ways. I explain that fairness should be defined as treating all people equally, and I also point out that upper-income taxpayers are far more likely to benefit from all the deductions, credits, exemptions, preferences, and other loopholes in the tax code.

You can read the other reason in his article at Big Government.

Personally, I’m drawn to the idea of a national sales tax or VAT as a replacement for the income tax. It makes sense to tax consumption instead of productive work, though I recognize some fear that it would be a hidden tax that fuels government growth.

Regardless, I think we can all* agree that the current tax system is a nightmare that needs to end.

*(Except for Democrats progressive statists and the tax-prep industry.)

LINKS: More at Hot Air.