(PR) Tax Commission Report Is Positive For Prop. 13 and Income Tax Worrisome For Business Tax

Howard Jarvis Taxpayers Association Issues Statement on Release of Tax Commission Report

Sacramento ‰ÛÒ In response to the release of the California Tax Commission report Jon Coupal President of the Howard Jarvis Taxpayers Association released the following statement today:

We are pleased that the California Commission for the 21st Century Economy has arrived at proposals which do no violence to Proposition 13. It should be noted that the original charter for the commission was to deal primarily with the issue of revenue volatility. Of the three major revenue streams to government in California the property tax under Prop 13 is the most stable. Thus it has not only saved taxpayers from being taxed out of their homes it has proven to be a moderating influence during economic turmoil.

It should also be noted that revenue volatility is by itself not a problem. It is only a problem in California because our politicians do not have the discipline to save money in boom years. As you would never leave an alcoholic in a room alone with a bottle of whiskey our Legislature simply cannot help itself to spend every penny that comes into the treasury even in years where revenue far surpasses projections.

We have concerns about the business net receipts tax. First it is unclear what the rate of tax will be. This could easily be a multi-billion dollar tax increase violating one of the initial ground rules for this commission which was that the proposals were to be revenue neutral. Second this tax has some of the indicia of a European-style value added tax. The problem of course is that such taxing schemes effectively hide the true scope of the tax burden from the ultimate consumer. Taxes should be obvious and painful ‰ÛÒ not hidden. Consumers should know for every purchase of retail goods or services exactly how much of what they are paying is going to government.

The proposals to flatten out the income tax rates are worthy of serious consideration. You cannot tax high income individuals like Tiger Woods once they have moved out of state. Flattening the income tax rates will help to slow the exodus of California’s best and brightest individuals whom should be encouraged to stay in the state.