Cheering for Taxes: There They Go Again

Grabbing their pom-poms the Los Angeles Area Chamber of Commerce has run out in front — again — cheerleading for a tax increase. Jerry Brown’s plan for an increase in the sales income and car tax is A-OK with them just as it was two years ago when with the support of Governor Schwarzenegger these taxes were placed on a special election ballot as Proposition 1A.

In 2009 the L.A. Chamber was joined by major business groups including the California Chamber of Commerce and CalTax. This may be happening again but so far this year most business organizations are still on the sidelines testing the political winds. Those who backed taxes last time are likely exercising caution due to the drubbing they received from voters who two years ago rejected new taxes by two-to-one even after backers spent over twenty million dollars to convince them to do otherwise. (Note that the National Federation of Independent Business California was the only statewide business group which took a principled stand with taxpayers back in 2009. It seems that small business owners actually understand that tax increases hurt the economy).

As business groups consider which side to take they should be reminded of the risks of feeding the alligator.

The phrase “feeding the alligator” is a metaphor for the dangers of appeasement.

One may be able to buy temporary peace by feeding a threatening alligator but the problem is that the alligator will sooner or later get hungry again. And because it was previously fed it is now larger and more dangerous.

Regrettably the California business community has often chosen to feed average taxpayers to the ever growing alligator of government when it comes to important political battles. Thirty-three years ago California business interests were united in their opposition to Proposition 13 due to fear that if homeowners received tax relief the Legislature would try to make up the difference by raising levies on them. For short term protection for themselves business was willing to feed homeowners to a ravenous tax predator.

This certainly explains the motivation of the Los Angeles Chamber. While backing the 2009 version of these massive tax increases Gary Toebben chief executive of the Chamber summed it up this way “We’re concerned that if this doesn’t pass the Legislature will come back and pass taxes that are more targeted toward business.” The Chamber’s position today could be described as “ditto.”

And make no mistake business interests are being threatened by the tax-and-spend lobby.

To get business on board Democrats are posing the threat of a split roll property tax if a June tax measure fails. Senator Joe Simitian (a long opponent of Prop. 13 and the two-thirds vote requirement to increase taxes) is quoted as saying: “As I talk to business leaders one of the points I’ve made to them as we ask for their support on this June ballot measure to continue this broad-based system of generating revenue is if it fails efforts for a split roll [property tax hike] will be coming their way very quickly.”

This illustrates that the tax raisers know how to apply pressure to the business community to get them to come around. Evidence that this approach may be working is shown in recent comments by Allan Zaremberg California Chamber president that a “comprehensive” budget solution would be good for the economy while reminding reporters that his group backed the 2009 tax increase measure.

This may be a signal to Republican lawmakers who are considering jumping ship to the pro-tax side and helping to place Brown’s tax increase on the June ballot that the business community will provide cover. But there is a real danger in this. Businesses themselves might provide financial resources for an anti-taxpayer ballot measure but as Prop 1A demonstrates they don’t have the votes. A coordinated opposition campaign from conservative Republicans Tea Party Activists and talk radio would as it did in 2009 more than likely defeat such a plan. (It’s no secret that the proposed tax increases are polling very poorly).

While it remains unknown how the majority of the business community will come down on Brown’s tax proposal tax-and-spend liberals seem to be making progress. Taxpayers must counter these threats by being clear that if major business groups turn their backs on ordinary taxpayers yet again it will not be ignored or forgotten. The assumption that taxpayers will automatically join in a coalition to stop business targeted tax increases in the future may prove to be false.

If the business community is serious about doing what is best for California it should be united with taxpayers in forcing government to live within its means. After all it’s a very large alligator.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.