Tax Schizophrenia on the Ballot
Taxes have become the featured player this election season. Most of the tax talk revolves around Governor Schwarzenegger’s hardcore no new taxes pledge — a position that appears warmly embraced by the California electorate if polls are any indication. But many of the ballot propositions also propose new taxes or affect existing ones including Props 1A 86 87 88 and 89.
Even though all but two of the propositions involve tax or fiscal issues that doesn’t mean that they are similar in substance or merit. Props 1A and 86 in particular present a striking contrast in how voters should treat taxes on certain products. In a nutshell Prop. 1A reflects rational tax policy while Prop. 86 reflects the worst of a distorted plan for taxing one group to enrich another.
Prop. 1A would prohibit lawmakers with some exceptions from future raids on gasoline tax money. The logic behind such a measure is that voters expect specialty or "excise" taxes to be used for a purpose related to the tax. For the gas tax that money is supposed to go to improving roads and other aspects of California’s transportation network. Prop. 1A would close the much-maligned loophole that allows lawmakers to siphon gas tax money into the General Fund for any purpose.
The Prop. 1A message is simple: an excise tax on gas should benefit those paying the tax. Prop 1A is if truth be told simply an effort to bring the law into compliance with what most voters think the law is already. Motorists filling their cars at gas stations are shocked to find out that the gas tax does not automatically go for transportation.
Prop. 86 is Prop. 1A’s polar opposite. Prop. 86 would inflate the tax on tobacco products by 300 percent from 87 cents per pack to $3.47 per pack. The $2.1 billion that Prop. 86 is projected to generate in its first year would be divvied up by California hospitals which would receive 40 percent of the money and two dozen various health programs.
In fact Prop. 86 commits only 10 percent of the money for smoking prevention and cessation programs. In other words Prop. 86 backers are proposing to levy the highest tax of any state in the nation but provide essentially nothing to help those paying the tax (i.e. smokers).
The Prop. 86 message is complicated: let’s tax smokers to help fund a smorgasbord of bureaucratic health programs including obesity and nutrition programs nurse training and emergency room care while doing little to help smokers quit. But voters seem to be less and less enamored with such special-interest tax proposals on the ballot. In June they turned away Rob Reiner’s attempt to fund universal preschool by taxing high income earners (Prop. 82).
Hospitals — a powerful special interest in their own right — are backing Prop. 86 in an effort to improve their bottom line by recovering the costs of serving undocumented immigrants that are overwhelming emergency room facilities in many communities. This is a serious issue that should be addressed but it is unreasonable and unfair to single out a minority of the population to bear the entire financial burden
Two years ago voters rejected a tax on cell phone users to pay for emergency room services. Interestingly the hospitals behind that measure (Prop. 67) are the same ones behind Prop. 86 although this time they want about twice as much — nearly $800 million.
The real kicker on Prop. 86 other than the disconnect between the tax and the programs the tax will be used for is that it would fund a broad expansion of health programs with a steadily declining revenue source.
Tobacco use is down and has been for quite some time. Most people the vast majority of whom are nonsmokers think that’s great. The backers of Prop. 86 would lead voters to believe that their top priority is reducing smoking even more. But in reality Prop. 86 is much more about what special interests can do with smokers’ money than it is about improving smokers’ health. Indeed the perverse incentive of Prop 86 is that the backers have a big reason to keeping smokers lighting up to fund their special nterest programs!
And when the smokers’ money runs out California taxpayers will be looking down the barrel of two dozen health programs that have become even more bloated and looking for a fix.
On Election Day voters will decide whether special taxes should fund related programs or as in the case of Prop. 86 California’s tax policy should approve of robbing Peter to pay Paul.
Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest taxpayer organization — which is dedicated to the protection of Proposition 13 and promoting taxpayers’ rights.
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