Reid: Kochs ‘Main Causes’ of Climate Change

From Politico:

Charles and David Koch are one of the “main causes” of climate change, charged Senate Majority Leader Harry Reid on the Senate floor.

“While the Koch brothers admit to not being experts on the matter, these billionaire oil tycoons are certainly experts at contributing to climate change. That’s what they do very well. They are one of the main causes of this. Not a cause, one of the main causes,” Reid said.

(Read Full Article)

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Keeping It Real About Tax Subsidies

Just two months ago this column criticized Sacramento for subsidizing those politically connected companies that are part of the “in” crowd with millions in tax credits while maintaining high taxes on less glamorous industries. Auto maker Tesla has recently been “gifted” $35 million in this fashion and both Democratic and Republican lawmakers are lining up to ingratiate themselves with movie moguls while bearing offerings of hundreds of millions in tax subsidies.

Now we have a new high profile recipient of state largess. The Legislature has passed a bill by Democrat Al Muratsuchi to give space firms a property tax break. One of the principal beneficiaries would be billionaire Elon Musk’s company, Space X, that builds rockets and spacecraft in California. That the bill would give his and other firms an exemption from property tax bills on launch vehicles, fuel and satellites, seems ironic in that many in Muratsuchi’ s own party argue that businesses are not paying their fair share in property taxes.

Looks like we can now add space firms to the card-carrying members of the Sacramento “in” crowd.

It is ironic that while the politicians scramble to entice favored business to remain in California, more ordinary companies like Toyota, which has just announced that it is moving its North American headquarters along with 3,000 jobs to Texas, are leaving with not so much as an “Hasta la vista, baby.” Toyota obviously lacks the cachet of Tesla and, from Sacramento’s perspective, the workers that will lose their jobs will hardly be noticed when added to the nearly two million Californians that are already out of work.

But it is not just large firms like Toyota that are disenchanted with California. The suffering of small businesses continues to be beneath the consideration of the Sacramento political class. A newly released report by the Small Business & Entrepreneurship Council confirms what numerous other studies and reports have indicated, that California’s small-business tax environment is the worst in the nation.

Human nature being what it is, it may be understandable that, given a choice, the political class would rather rub elbows with the manufacturers of exotic sports cars, space craft and the producers of hit movies and television programs, than they would with the owners of barbershops or bakeries. And it is not surprising that they justify their favoritism with arguments that the industries getting the subsidies will return benefits to the state that outweigh the cost to other taxpayers.

But here is the rub. Their self-serving, economic arguments have no connection to reality. A just-released report from the non-partisan Legislative Analyst’s Office says that the state’s subsidies to the Hollywood producers may not stem job losses to other states. And for every $1 of subsidy, the state gets back only about 65 cents.

Legislative Analyst Mac Taylor adds that other states can just increase their own movie industry subsidies, while cautioning, “This sort of competition can be characterized as a race to the bottom.”

The “race to the bottom” of course is not the only problem with such narrowly focused tax favors. For every new tax deal struck, other industries and interests will notice and, pretty soon, they will be hiring their own army of suits to lobby for their specific corporation or interest. The danger here for corruption is self evident. At a time when three California senators have been convicted or indicted for wrong-doing, maybe the Legislature should say no to a system which will, like fresh donuts in the break room, offer temptations hard to resist.

As the expression goes, let’s keep it real. It’s time for California to lower the tax burden on everyone, not just the favored few. Not only is that better tax policy, but it might also help to keep our elected officials on the straight and narrow. Lord knows they could use the help.

(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. Originally published on HJTA.)

Charter Chicanery

Teacher union sponsored bill is a serious threat to California’s charter schools.

It’s hardly a secret that teachers unions don’t like charter schools. These independent, publicly funded schools are typically not unionized (just 15 percent are in California), and therefore can avoid many of the burdensome rules and regulations which are chiseled into the state education code and burdensome, child-unfriendly union contracts.

There are currently 1,130 charter schools in California that teach 500,000 students, while another 50,000 kids sit on wait lists. Most studies show that these locally controlled schools do a better job than traditional public schools, especially with low-income students, English Learners, African-Americans and Latinos. There’s also mounting evidence that charter schools decrease dropout rates,increase college attendance rates and improve the quality of colleges that their graduates attend.

The teachers unions’ opposition to charters has led to attempts to snuff them out at worst, or at least to limit their growth. In 2011, the California Teachers Association’s AB 1172 would have allowed a chartering authority to deny a petition if it submits a written factual finding that the charter school would have a negative fiscal impact on the school district – but conveniently the bill lacked parameters or definition of that “impact.” The same year, the California Federation of Teachers’ AB 401 would have imposed an arbitrary cap of 1,450 charter schools in California through January 1, 2017. Thankfully, neither bill became law.

And now we have AB 1531, yet another bill cooked up by CTA which, at its core, would “require that the initial chartering authority appoint a majority of the members of the board of directors” of a charter school. This is nothing but a transparent attempt by the folks over at CTA command central to recover lost power by giving local school boards, which typically are the “initial chartering authority” – and frequently comprised of union-backed members who are hostile to charters – power over those schools. Lance Izumi, Director of Education Studies at the Pacific Research Institute, adds:

If charter-school organizers know that local school boards have the power to pass final judgment on who sits on their governing boards, they will be less likely to nominate people who possess talent, vision and commitment, but who are not likely to be confirmed by the local school board. Only people politically palatable to the school board will likely be nominated. There will be a chilling effect on the variety of people put forward to serve on charter-school governing boards, with the result that governing boards would end up becoming extensions of the school board.

In other words, charter schools would not be charter schools as we have known them. (You can’t remove the cherries from a cherry pie and still call it a cherry pie.)

CTA justifies the bill by claiming that it will protect teachers.

… CTA-sponsored AB 1531 by Ed Chau (D-Monterey Park) would ensure that employees of public charter schools are covered by the state’s public pension systems and by collective bargaining law.While the first provision would help protect their retirements, the second would ensure that they are protected by laws that give voice to educators. These protections are vital to helping public schools – charter or regular – attract and keep the highly qualified educators our students need. 

While the pension angle may sound reasonable, it is ultimately a red herring being played up by the union to make its power play seem altruistic. The IRS and Department of Labor have allowed charter school teachers and other school employees to participate in government pension plans since 1995. But in an entry beginning on page 69,180 of the November 8, 2011 Federal Register, the IRS issued advanced notice of proposed new regulations which include a redefinition of what is and is not a government entity. These things go through a public comment process and refinement before adoption, and can take many years to finalize. And absolutely no one knows how all this might affect charter schools.

This disastrous bill is best summed up by William Melton, president of the Albert Einstein Charter Academies, which is comprised of two charter schools in San Diego. He says that if AB 1531 becomes law, it would

… eliminate the autonomy of AEA’s Board of Trustees and would undo 20 years of education progress and choice for California’s parents and students. Essentially it would mean that AEA’s schools would convert to being district schools. AB 1531 is an attempt to take our communities back to 1991 when there were no charter schools in California and parent choice did not exist. (Emphasis added.)

Undoing 20 years of education progress and choice for California’s parents and students is just what CTA is attempting to do. Introduced in January, AB 1531 was recently approved by a narrow 4-3 vote in the Assembly Education Committee and now must pass muster in Appropriations later this month. Here’s hoping it dies there.

(Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers with reliable and balanced information about professional affiliations and positions on educational issues. Originally published on Union Watch.)

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Reid Compares GOP to ‘Greased Pigs’

From Politico:

Majority Leader Harry Reid compared his Republican colleagues to “greased pigs” on Tuesday as the Senate erupted in frustration over lack of progress on an energy bill and the Keystone XL pipeline.

“For all those who don’t know what a greased pig contest is, here’s what it is: The organizers get a little pig, piglet, and they cover this little animal with tons of grease. It’s a greasy little pig,” Reid said. “The reason I mention this: Oftentimes working with my Senate Republican colleagues reminds me of chasing one of these little pigs in a greased pig contest. Regardless of all of our efforts, any time we get close to making progress, it seems as though we watch it slip out of our hands.”

(Read Full Article)

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Sriracha Gets Bipartisan Support

From The Sacramento Bee:

California’s latest political darling comes in a clear plastic bottle with a green top and tastes good on eggs.

Sriracha hot sauce has won the eager endorsement of politicians from both sides of the aisle in recent weeks as the manufacturer has talked about leaving Irwindale amid a regulatory battle over whether the plant sends a spicy smell into nearby neighborhoods.

(Read Full Article)

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House Prepares Lois Lerner Contempt Resolution

From The Daily Caller:

The House rules committee convened Tuesday on Capitol Hill to prepare the contempt of Congress resolution for ex-IRS official Lois Lerner, which the full House of Representatives will vote on Wednesday.

Tensions ran high as Democratic Ranking Member Rep. Louise Slaughter and other Democrats grilled Republican House oversight Chairman Rep. Darrell Issa, who represented his committee in recommending contempt. The committee considered resolutions both to hold Lerner in contempt and also to call Attorney General Eric Holder to appoint a special prosecutor in the case. Democrats in the hearing consistently expressed certainty that the contempt citation against Lerner will pass Wednesday.

(Read Full Article)

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Steinberg Must Clean Up Scandal-Ridden State Senate

From The Sacramento Bee:

So what’s next for the scandal-ridden state Senate? And what should be next?

Darrell Steinberg, the Senate president pro tem, fired a sergeant-at-arms last week after learning – from a Bee reporter – that the aide had used drugs prior to a shootout at his house that left one person dead and three others injured 17 months earlier.

On Tuesday, the Senate’s chief sergeant-at-arms for the last three decades, Tony Beard Jr., resigned, presumably at Steinberg’s behest, after keeping the drug aspect of the case a secret for many weeks.

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Only Seven Percent Of Reporters Are Republicans

From The Daily Caller:

Seven percent of reporters are Republicans, according to a study that does not surprise you.

“Oh, there’s a shocker,” you murmur to yourself, eyes rolling, as you read this story on a report by two journalism professors who found that the number of Republicans in the press has been steadily declining.

(Read Full Article)

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CA Dems Seek New Corporate Tax

A new bill would hike taxes on corporations with the biggest spread in paid wages.

The legislation, Senate Bill 1372, was recently introduced by state Sens. Mark DeSaulnier, D-Concord, and Loni Hancock, D-Oakland. It passed the Senate Governance and Finance Committee late last month.

Rather than raising state corporate taxes across the board, SB1372 exaggerates California’s targeted approach to business taxation. The state already taxes financial institutions at a special, higher rate — a 10.84 percent levy on income instead of the 8.84 percent applied to other corporations. Now, DeSaulnier and Hancock want to single out corporations that pay their CEOs the most relative to the median income paid to their employees.

Instead of the flat rates currently imposed by law, SB1372 would create a complex sliding scale. The legislative counsel’s digest sums up the proposed changes in the following chart. Numbers in the left column refer to the percentage that CEO pay exceeds pay for a corporation’s median employee:

If the compensation ratio is: The applicable tax rate is:
Over zero but not over 25 7% upon the basis of net income
Over 25 but not over 50 7.5% upon the basis of net income
Over 50 but not over 100 8% upon the basis of net income
Over 100 but not over 150 9% upon the basis of net income
Over 150 but not over 200 9.5% upon the basis of net income
Over 200 but not over 250 10% upon the basis of net income
Over 250 but not over 300 11% upon the basis of net income
Over 300 but not over 400 12% upon the basis of net income
Over 400 13% upon the basis of net income

In other words, SB1372 does two things. Not only does it penalize some corporations for their pay structure — it rewards others for their own.

Critics have argued that the bill’s approach is unwise because it’s bad for business. If California is going to use tax policy to modify behavior, they say, legislators should create incentives that create jobs. As the state continues to suffer high-profile job losses, pro-business advocates in California fear that higher rates and more complicated tax interventions will discourage new business formation and relocation.

A national battle

At the same time, broader concerns persist. California Democrats targeting CEO pay are pursuing an agenda that’s integrated with a national election-year strategy focused around the so-called income inequality issue. At the federal level, that involves a synchronized push for higher minimum wages. (One California Democrat, Rep. Barbara Lee, wants a $26 an hour minimum wage.)

Labor unions, meanwhile, are playing a significant role in the campaign. The AFL-CIO, for instance, recently focused on pay disparity in its annual “Executive Paywatch” report. One prominent talking point emphasized that, for S&P 500 companies, the average profit per employee topped $41,000. The report implied that high-end CEO pay unjustifiably spends company profits on executives, not workers.

The report, however, obscures one reason for pay disparity that SB1372 also does not take into account. Profit per employee may be an important new metric in business analysis, as the influential consulting giant McKinsey has pointed out. Understanding CEO pay scales, however, requires a detailed comparison between types of business models.

Profit per employee varies dramatically across industry sectors. Data collected in 2009, for instance, shows that finance, media and tech companies reap in excess of $150,000 per employee. In the food, airline and pet industry, by contrast, profit per employee falls far below $25,000.

The significance of these differences shows up in how much workers would stand to gain from redistributed CEO salaries. To take one example, Oracle CEO Larry Ellison’s chart-topping salary of $78.4 million would translate into just $930 a year in extra pre-tax income for each of Oracle’s employees. In industries with much narrower profits per employee, the cash value to employees of redistributed CEO pay can be vanishingly small.

As a result, the effect of SB1372 would be to penalize corporations without regard to their profit per employee. That’s at odds with its intended goal of using tax policy to pressure companies to improve their employees’ economic fortunes. Especially in industries with a low profit per employee, narrowing pay disparity will have no measurable effect.

For that reason, SB1372 is likely to meet stiff resistance, despite its support among high-profile national Democrats. Although Republicans are weak in California, nationwide opposition to wage legislation is powerful and well-organized.

(James Poulos is a contributor to CalWatchdog. Originally published on CalWatchdog.)