News

Waging the fight against stealth taxes

For years, the actions of the politicians in Sacramento have run California into the ground through unaffordable spending and unconscionably high taxes. But rather than allow the state’s economy to shake off the dust and get back on its feet, some politicians are poised to deal the state a few more crushing blows – unless voters say “no” on Proposition 25 and “yes” on Proposition 26 on November 2nd. 
Proposition 25 on the statewide ballot would eliminate the 2/3 majority vote requirement for passing the state’s budget in the Legislature and reduce lawmakers’ pay for every day the budget is late. Although Proposition 25 sounds like an effort to improve efficiency and accountability in government – which Sacramento badly needs – it is actually a thinly-veiled attempt to get around the voter-approved protection against runaway tax increases that has been in effect since 1978. 
Requiring a timely budget is not the same thing as requiring a more responsible budget; the latter is what the current 2/3-majority requirement does by encouraging consensus building while discouraging knee-jerk revenue-raising ploys.  By allowing a budget to pass the Legislature with a simple majority, Proposition 25 would give Sacramento a license to further increase wasteful spending and impose billions more in taxes with far less deliberation. Californians will only see larger, more frequent deficits and more fiscal irresponsibility in the years ahead as politicians have fewer hurdles to rewarding special interests and funding pet projects. Perhaps this explains why government-employee unions, who demand more generous taxpayer-funded compensation and benefits, are spending millions to enact Proposition 25 and why pro-taxpayer groups like the Howard Jarvis Taxpayers Association and the California Taxpayers Association oppose the measure. 
But how can we be certain that Proposition 25 will make the state’s finances worse? Because even with a 2/3 tax-hike safeguard, politicians have pursued other revenue sources through the back door. In fact, the state and local governments in California have enacted or discussed $10 billion in fees in recent years on items such as food, grocery bags, cellular phones, and cars. While there is nothing inherently wrong with a properly designed user fee, such as a proportionate charge for a building permit, the funds generated from these fees have often been used to provide for unrelated programs.  
Proposition 26, also on the statewide ballot, would clarify the definition of a tax and restore existing taxpayer protections to the meaning voters intended them to have. Proposition 26 will require the state government to obtain a 2/3-majority in the Legislature (or voter approval at the local level) in order to enact or increase fees that are really just taxes in disguise. However, the measure would continue to allow the Legislature and local governments to enact true user fees, such as an admission charge to enter a park for camping, by a simple majority vote.
As any small business owner can tell you, the fees can add up. California’s small businesses now operate in the nation’s third-worst tax climate and Californians pay the sixth-highest per capita tax burden in the nation, according to the Tax Foundation.  In good times or bad, it makes no sense to leave open a loophole that allows state and local politicians to increase taxes without a 2/3-majority vote or a vote of the people. But in this economy, where small businesses have to contend with 12 percent unemployment and an 81 percent increase in bankruptcies, leaving Californians vulnerable to stealth tax hikes is especially dangerous.
Moreover, Proposition 26 will help bring the rampant overspending by state and local government under control. By clarifying and strengthening California’s existing tax accountability mechanisms,   elected officials will have incentives to refrain from turning to fees and look for savings elsewhere by, for example, eliminating waste and keeping the budget manageable.
Californians have been pummeled by years of huge deficits and burdensome taxation. The politicians responsible for this mess should not be rewarded with the authority to make matters worse. Taxpayers who agree would protect themselves from further harm by voting “no” on Proposition 25 and “yes” on Proposition 26.
 

For years, the actions of the politicians in Sacramento have run California into the ground through unaffordable spending and unconscionably high taxes. But rather than allow the state’s economy to shake off the dust and get back on its feet, some politicians are poised to deal the state a few more crushing blows – unless voters say “no” on Proposition 25 and “yes” on Proposition 26 on Nov. 2. 

Proposition 25 on the statewide ballot would eliminate the 2/3 majority vote requirement for passing the state’s budget in the Legislature and reduce lawmakers’ pay for every day the budget is late. Although Proposition 25 sounds like an effort to improve efficiency and accountability in government – which Sacramento badly needs – it is actually a thinly-veiled attempt to get around the voter-approved protection against runaway tax increases that has been in effect since 1978. 

Requiring a timely budget is not the same thing as requiring a more responsible budget; the latter is what the current 2/3-majority requirement does by encouraging consensus building while discouraging knee-jerk revenue-raising ploys.  By allowing a budget to pass the Legislature with a simple majority, Proposition 25 would give Sacramento a
license to further increase wasteful spending and impose billions more in taxes with far less deliberation. Californians will only see larger, more frequent deficits and more fiscal irresponsibility in the years ahead as politicians have fewer hurdles to rewarding special interests and funding pet projects. Perhaps this explains why government-employee unions, who demand more generous taxpayer-funded compensation and benefits, are spending millions to enact Proposition 25 and why pro-taxpayer groups like the Howard Jarvis Taxpayers Association and the California Taxpayers Association oppose the measure. 

But how can we be certain that Proposition 25 will make the state’s finances worse? Because even with a 2/3 tax-hike safeguard, politicians have pursued other revenue sources through the back door. In fact, the state and local governments in California have enacted or discussed $10 billion in fees in recent years on items such as food, grocery bags, cellular phones, and cars. While there is nothing inherently wrong with a properly designed user fee, such as a proportionate charge for a building permit, the funds generated from these fees have often been used to provide for unrelated programs.  

Proposition 26, also on the statewide ballot, would clarify the definition of a tax and restore existing taxpayer protections to the meaning voters intended them to have. Proposition 26 will require the state government to obtain a 2/3-majority in the Legislature (or voter approval at the local level) in order to enact or increase fees that are really just taxes in disguise. However, the measure would continue to allow the Legislature and local governments to enact true user fees, such as an admission charge to enter a park for camping, by a simple majority vote.

As any small business owner can tell you, the fees can add up. California’s small businesses now operate in the nation’s third-worst tax climate and Californians pay the sixth-highest per capita tax burden in the nation, according to the Tax Foundation.  In good times or bad, it makes no sense to leave open a loophole that allows state and local politicians to increase taxes without a 2/3-majority vote or a vote of the people. But in this economy, where small businesses have to contend with 12 percent unemployment and an 81 percent increase in bankruptcies, leaving Californians vulnerable to stealth tax hikes is especially dangerous.

Moreover, Proposition 26 will help bring the rampant overspending by state and local government under control. By clarifying and strengthening California’s existing tax accountability mechanisms,   elected officials will have incentives to refrain from turning to fees and look for savings elsewhere by, for example, eliminating waste and keeping the budget manageable.

Californians have been pummeled by years of huge deficits and burdensome taxation. The politicians responsible for this mess should not be rewarded with the authority to make matters worse. Taxpayers who agree would protect themselves from further harm by voting “no” on Proposition 25 and “yes” on Proposition 26. 


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