Remember the $12.6 Billion Tax Hike!

In this era of instant gratification and short attention spans it is easy to think of one year ago as “ancient history.” However it is important to remember that it was only 12 months ago that the California Legislature slammed taxpayers with a $12.6 billion tax increase — about $1200 annually for the average family — because if given the chance they will do it again.

Before last year’s massive tax increase Californians were paying the highest sales income and car taxes in the nation. Now if you have a job a child drive a car or buy gas you pay much more.

But even after inflicting this extraordinary harm to taxpayers and to the California economy lawmakers weren’t done. Reaching into their bag of tricks they placed Proposition 1A on a special election ballot touting it as budget reform while trying to hide from voters that passage would trigger another $16 billion in taxes. There was no mention of taxes in the ballot title and summary or support arguments all of which were drafted by legislators. Backed by a $28 million dollar advertising blitz funded by special interests including some government employee unions the fix appeared to be in.

However alert voters saw through this chicanery and rejected Proposition 1A last May with a resounding 66% of the vote. In many respects this victory for taxpayers has had a profound impact on Sacramento’s political culture. A budget revision was approved four months later that included no new taxes and thus far legislative Republicans and the Governor appear to be holding the line against even higher taxes in 2010. Still there are no guarantees and as we saw last year the change of just a handful of votes could mean taxpayers get slammed again. It is only fear of the wrath of taxpayers that prevents some of these lawmakers from choosing the easy “solution” to budget problems by agreeing to new taxes.

Looking to the future and the budget and tax options the Legislature may choose it is worthwhile to examine what was accomplished by last year’s “St. Valentine’s Day Massacre” tax increase. Have we solved our $20 billion deficit? Did we get significant and permanent reductions in state payroll? Have we suspended or repealed AB 32 and other regulations in order to provide a more hospitable climate for business and allow the private sector to provide more jobs in a state that has one of the highest unemployment rates in the nation? The answer on all counts is no.

There are important lessons to be learned from last year’s record tax increase and the subsequent rejection by voters of even higher levies.

Although most under the Capitol dome seem slow to catch on taxpayers understand that government cannot tax us into prosperity. The only way to eliminate the ongoing $20 billion deficits is to recognize that government needs to lower taxes limit spending and get out of the way so that the private sector can create jobs and the prosperity that not coincidentally will also boost government revenues.

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.