Will California’s taxpayers ever pay enough?
Every day it seems like the California Legislature careens further off the rails, and we’re not just talking about the state’s infamous high speed rail project. The rapidity of tax increase proposals that would punish both citizen and business taxpayers is breathtaking. Particularly astounding is the fact that new revenue simply isn’t needed given our highest-in-the-nation income tax rate, state sales tax rate and a litany of other tax metrics that cause residents of other states to fall to their knees in gratitude that they don’t live here. (That is especially true for the millions of former Californians who have escaped to lower tax states).
Even more ironic is that these tax increase proposals are being advanced in a state with a massive $15 billion budget surplus and a recent series of corporate IPOs that will bring billions more into state coffers. When is enough enough?
Since January, new tax increase proposals include a tax on soda (AB138); car batteries (AB142); residential water use (AB217); firearms (AB18); automobile tires (AB755); pain medication (AB1468); oil severance (SB246); inheritances (SB378); and a sales tax on services (SB22). Combined, these proposals, plus several more, would impose hundreds of billions of dollars in higher taxes on Californians. If state politicians are trying to depopulate the state, they’ve come up with a pretty good plan. It is unknown how many of these tax hikes will advance all the way through the legislative process to enactment. A significant hurdle is Prop. 13’s requirement that taxes imposed at the state level receive a two-thirds vote of both the Assembly and Senate. But with Democrats having achieved that threshold in the 2018 elections, the odds are better now than they have been in 40 years.
The requirement for a two-thirds vote of each house also applies to proposed constitutional amendments. And for that we can be thankful. It also brings us to the most dangerous of all the legislative proposals being offered at the Capitol. Assembly Constitutional Amendment No. 1 is a direct attack on one of Prop. 13’s most important taxpayer protections — the requirement that special taxes at the local level receive a two-thirds vote of the local electorate. Special taxes include sales taxes as well as parcel taxes, a particularly insidious form of tax that is especially threatening to homeowners. ACA1 would also repeal the century-old requirement that local bonds, repaid only by property owners, receive a two-thirds vote of local voters.
The supermajority requirement ensures a broad community consensus before government exercises its most draconian power — the power to tax. Moreover, the two-thirds vote requirement for bonds protects property owners who will be paying taxes for those public debts long after a city council or county board of supervisors has voted to place them on the ballot. While everybody pays sales taxes, only property owners pay for local bonds and parcel taxes. The latter of these is very regressive in that a property owner typically pays the same amount regardless of the size of their home or business.
It is certainly not impossible to meet the two-thirds threshold to approve special taxes, if appropriate justification is made to voters. Hundreds of such measures have been approved over the last decade.
Last week, this column addressed the issue of “Taxuration,” the phenomenon of taxpayers being saturated with new tax hikes. If ACA1 passes in the Legislature, we will surely be soaked. The good news is that ACA1 would still have to go on the ballot and be approved by a majority vote in a statewide election. The question is, are voters paying attention?
Jon Coupal is president of the Howard Jarvis Taxpayers Association.