Thursday, January 10, 2008

California Tax Increase Needed, But What Kind?

I have to hand it to Gov. Arnold Schwarzenegger and to Los Angeles Times consumer columnist David Lazarus: Both want to rile up the people of California with foolish schemes and impossible proposals. On taxes, this morning, only Times state political columnist George Skelton is at least somewhat sensible.

Schwarzenegger, in undoubtedly what is a ruse, proposes spending cuts as an alternative to a tax increase. He would cut $3 billion from the schools, release up to 50,000 prisoners, slash the courts, close 48 state parks, including Will Rogers, San Clemente, Carlsbad, Bolsa Chica and San Onofre. But L.A. Times writers Evan Halper and Jordan Rau quote insiders as saying this is just a plan to so alarm Californians that they will realize a tax increase is mandatory.

Lazarus, meanwhile, writes it is time to get rid of Proposition 13's limits on property tax increases. This would, of course, force hundreds of thousands of elderly people on fixed incomes out of their homes. Lazarus more reasonably suggests it might only be done on commercial property, but this could depress the economy, close businesses by the thousands and increase unemployment. What Lazarus may like, for all I know, is the prospect of newly homeless thousands crowding the streets, so he can have an excuse not to drive in to work in the morning.

Skelton, meanwhile, is so at least partially responsible, he should be governor. He writes that an increase in the state income tax, for middle class as well as the wealthy, extension of the sales tax to services, and taxing commercial property closer to market value are the necessary adjustments. "The state of the state is unstable and sinking," Skelton concludes.

Well, unfortunately, there does need to be a tax increase, due to the ramifications of the subprime mortgage crisis, brought to us by the greed of the financial institutions and the stupidity of the regulators, such as Alan Greenspan. The economy is in a downturn, the markets are in a correction, and California state revenues have fallen far below projections. Schwarzenegger's experts now foresee a $14 billion budgetary shortfall.

So, what to do?

The answer is really fairly simple. Taxes have to be raised, and the fairest raise is an increase in state income taxes. This centers the burden on those who can most afford it. Extending the sales tax, already a whopping 8% plus in most areas, and raising taxes on business is less desirable. A sales tax, in particular, is retrogressive. And it doesn't get at the people like me, who don't spend the money they earn, except on fabulous cruises like the one I'm about to take around Africa.

Usually, when income tax hikes are proposed, the talk is that they should be confined to the top 10% of the income earners. Skelton, however, points out this morning that this top 10%, the people earning $119,000 a year or more, already pay 80% of the taxes. Since Schwarzenegger is not Lenin, he will never go for that, and neither will the legislators, so beholden to campaign contributions from the wealthy. So, it is inevitable that when the ax falls, it will have to fall on middle income people as well as perhaps a commensurate increase for the wealthy.

The governor, in his inimitable ineptitude, is also suggesting that there be a fee, or state surcharge, on property insurance. This in effect puts him in the Lazarus camp. He would put Proposition 13 in a meat grinder, and pare the 1978 ballot measure down a little, while perhaps avoiding the popular vote that presumably would be necessary to do away with Proposition 13.

Meanwhile, on the local level, in order to cuddle up to the federal government and get $648 million in federal transportation aid, the authorities are preparing to bow to federal wishes and institute tolls on some freeway car pool lanes which were built at public expense, thus taxing drivers twice and introducing new class distinctions in a state that needs more highways and rail lines rather than more tolls.

It's a mess, no question. We have a foolish governor who has allowed state expenditures to climb at a rate higher than the properly recalled Gov. Gray Davis did. We have a dysfunctional and corrupt Legislature, with the House Speaker gallivanting around the world spending his campaign contributions on luxuries while failing to stay in Sacramento to do his job. And we have an increasing number of elderly prisoners living high off the hog when they could be released and go back on the tax rolls, if they got jobs.

Something is going to have to give here.


The New York Times had a review yesterday by William Grimes of the poignant book by Zarah Ghahramani. "My Life As A Traitor," about her time in the dread Evin prison in Iran, listening to others being tortured while suffering herself in a six-by-five foot cell with no bed. Ghahramani's crime in this fundamentalist Muslim state was her proclivity for wearing brightly-colored clothes, lots of jewelry and pink shoes. For that, she was arrested and incarcerated.

This beautiful young woman is now in Australia, where, presumably, she will be a lot happier and can wear any clothes she likes, or, on the beaches, nothing. But, in the meantime, she is another Muslim hero, someone willing to stand up against the oppressive dictates of fanatic believers in an out-of-date religion. Salutations and best wishes to her.

The New York Times reports this morning that the evil Iranian regime of Mullahs has executed 23 people and amputated the left arms and right legs of five just since the New Year began.


Sen. Barack Obama's presidential campaign is not done yet. Today, we learn that Obama has picked up the endorsements of two senators, including Sen. John Kerry, the Democratic 2004 nominee for president, and the influential Culinary Workers union in Nevada.

The Kerry endorsement is a mixed blessing. It reminds me of Winston Churchill's observation when he heard that Italy had joined the Axis: "Well, it's only fair, they were on our side the last time." Obama should use Kerry carefully, not permitting him to open his mouth and make bad jokes about the troops in Iraq the way he did in the last congressional campaign. However, Kerry did say Obama can use his e-mail lists, which could be quite helpful.

Also, Gail Collins in the New York Times this morning has a useful column pointing out that normally Sen. Hillary Clinton is dull, dull, dull.



Anonymous Anonymous said...

The increase is only to be for three years, right. Once they get used to the money it will never stop. The increase in cars fees is crazy. We already pay more than any other state. Where does the money go. I live in Washinton state due to my career path. I still have property in California. I always know when I cross the state line on 5, there is a pothole there the size of a 67 Beetle. Calfornians stop smoking, lost that revenue, and taxed us again. When does it stop. Who are they to manage our money, they hire others to manage thiers.

11/06/2008 9:57 PM  
Anonymous Jon said...

The money goes to the over-inflated government salaries, pay increases and benefits. Living-allowances, retirements of 80% to 90% of their previous salaries, serving only one term to collect retirement, collecting retirement across multiple government jobs, traveling first class in presidential suites that cost a premium, are only a few of many abuses that have been on going in the government.

The government has adapted the attitude that "the people are here for the government". Not that "the government is for the people", which is what it's suppose to be, but clearly isn't.

11/07/2008 12:45 PM  
Anonymous Anonymous said...

California doesnt need to increase taxes, it needs to stop spending more that it takes in.
Last year California spent 56 billion dollars on welfare alone. They need to weed out the abusers and fraudulent recipients.

There. An idea that would help and would be the right thing to do instead of raising taxes and abusing the taxpayers who have been making adjustments to their spending.
California government should do the same, but pays no attention to reality and only focuses on getting more and more money.

1/15/2009 11:14 AM  
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1/18/2010 1:33 AM  

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