Taxpayers Take On L.A. County’s Unconstitutional Grocery Bag Tax

From Flash Report:

With inflation eating away at Californians’ buying power, going to the grocery store has become an increasingly expensive activity for the average family. But in their quest to create an environmentally-friendly utopia, California liberals don’t seem to care that families are struggling to pay those hefty grocery bills. The most blatant example of this insensitivity is the imposition of a new grocery bag tax.

Several cities and counties across the state have passed or are considering plastic bag bans in order to placate the demands of the environmental elites. As part of the bans, local municipalities also impose a 5 or 10-cent tax per bag if customers fail to bring their own grocery bags to the store.  This tax increase was never brought before voters and as such is a violation of last year’s Proposition 26, which specifically precludes a new tax—or euphemistically referred to as a “fee” to skirt tax laws—without a two-thirds vote. Los Angeles County passed such an ordinance in its unincorporated areas and it went into effect July 1.

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Hollow Holiday Economy

U.S. economy added 80,000 jobs in October, fewer than expected

From the LA Times:

The nation’s economy continued to grow sluggishly in October, adding just 80,000 jobs as concerns about the future weighed on employers and consumers, curtailing both hiring and spending. 

The unemployment rate dipped slightly, to 9.0% from 9.1% the month before, and the government revised upwards employment figures from both August and September. But the economy still isn’t creating the 125,000 jobs a month economists say are needed to bring down the unemployment rate.

“Employers are riding a turtle when we were hoping they’d get on a Thoroughbred,” said Patrick O’Keefe, a former assistant secretary at the Department of Labor who is now director of economic research at accounting firm J.H. Cohn.

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Fail-ifornia: Other Than the Weather, What’s So Golden about California?

Restoring California Competitiveness

California was a place originally known for its opportunities, beauty, wilderness, open roads, Gold Rush mentality, freedom, and innovation. Eureka, the state’s motto, means “I have found it!”  But this place of dreams is now the land of wishful thinking: a consummate nanny-state of over-regulation, command and control.  From the profoundly and absurdly huge ideas (saving the planet from climate change while China and India march to a different tune) to the silly (mandating fitted sheets in hotel rooms).  And we’re so over-regulated, that I guarantee, right now, you are breaking some California law this very minute.  (Did you install your CO2 monitor required in every home July 1? No? $200 fine is on its way.)

Where unemployment at over 12% is one of the highest in the nation–two million people out of work–the state’s bond ratings flirt with junk status, and private investors are wary of a constantly changing and uncertain regulatory environment.  Where governors from other states proactively seek and invite the relocation of our best businesses.  And what’s to stop business from leaving? California has ranked 49th or 50th on numerous national lists as the worse place to do business for the last several years.  According to Dun & Bradstreet, 2,565 businesses with three or more employees have relocated to other states since January 2007 and 109,000 jobs left with those employers.

How can we restore California’s competitiveness?

With less.

Less government, less regulation, less mandate, less taxes.  We need to “let my people go!” as Moses would say.

One of the most difficult challenges posed by legislators to the weary regulated community is to name which offending regulations to change.  There are so many—each individually and independently approved with such good intentions—but piled one on top of the other, have produced a morass of laws and prohibitions that stifle investment, strike fear into the hearts of small business start-ups, and ultimately kill jobs before they’re even offered.

How many folks lost the opportunity for employment because—instead of hiring–thousands of hotels must now buy replacement fitted sheets for flat sheets?  Yes, that’s the law now proposed.

Let my people go.  Let my people work.  Simply, until businesses can predict with relative certainty what regulations they will be subjected to, (and litigated) and what their tax burden will be, at all government levels, they will not invest or grow or hire.  If business isn’t investing, growing or hiring, the state isn’t receiving tax revenues.  If business isn’t investing, growing or hiring, public employee pensions like CalPERS aren’t earning fair returns on their portfolio, entirely invested in stocks, bonds, mutual funds, real estate:  in BUSINESS!  The more elected leaders forget these time-honored facts, propose more taxes to fund government, or favor the flavor of the day in eco-thought without regard to economic benefit, the more this state will sink into a black hole of red ink.

To return California to economic competitiveness, every regulator at every level must do one thing now:  any proposed regulation must be subjected to an independent economic impact analysis.  What laws will it affect?  What jobs will it create/destroy/impact?  What other departments or agencies have competing or conflicting regulations?  What is the true cost/benefit analysis?  How does this relate to competing/complicit federal regulations?  You get the picture.

The independent economic impact analysis must be paid for by the agency or lawmaker proposing the law.  Don’t have funding to do this?  Don’t propose the regulation.  The economic impact analysis must be done by an outside, independent company—not by the lawmaker or agency in-house.  This analysis must be on the same level of sophistication as a CEQA environmental impact report for a proposed real estate development project, including formal public review, peer review and comment processes.

Southern California Association of Governments (SCAG)—the metropolitan planning organization for two-thirds of the state’s population—recognized this year that planning for future growth meant nothing without a strong economy.  Earlier this year, under the work of seven economists, developed its first ever Southern California Economic Recovery and Job Creation Strategy (www.scag.ca.gov) concentrating specific recommendations to expand the region’s economic base and increase the flow of funds driving the regional economy.  Fundamental to the strategy is the maxim that “stronger economic growth will help every community.”

To their members’ credit, SCAG approved this strategy unanimously.  190 cities and counties–with the strong support of the business community–threw down the gauntlet with job-creating action strategies that include:

(1) Oppose new legislation that negatively impacts jobs in the private sector;

 

(2) Support legislation that allows agencies…the flexibility to finance early delivery of project and at the same time create jobs;

 

(3) Eliminate or reduce regulations that inhibit expedited project delivery; and

 

(4) Require new state regulations be accompanied by an independent economic impact analysis…Any legislation considered to significantly impact jobs would be opposed;

 

This is outstanding work that recognizes California’s return to competitiveness begins with jobs that result from less government.  The State has both the need and wherewithal to develop a comparable strategy to create jobs, stimulate the economy, reduce regulations, and ultimately increase California’s competitiveness. Let my people go.

 

(Lucy Dunn is President and CEO, Orange County Business Council)

Amazon Tax backfires

 

As is now the expected norm in California, the State Legislature and Governor do not want to leave money on the table.  And a budget shortfall of $28 billion is giving them plenty of incentives to stick taxes into every corner of the state economy that they can.

Democratic lawmakers passed ABX1 28, the “Amazon Tax”, which was signed by Jerry Brown on June 29th in an effort to raise $200 million from online retailers who sell products through Amazon.com.

But as is the case with “revenue generation” in Sacramento, it never takes into consideration that businesses, people, capital, and incentives are fluid.  Businesses can leave.  Employment can and will rise and fall as a direct result of spending decisions decreed by Sacramento.  The weather is great, but nobody is forced to stay in California and fight for decreasing job opportunities.  In fact, lawmakers should know this, as they met in Texas to find out why California companies relocate there mere months ago.

Amazon.com has a network of retailers who use the well-recognized company to sell products.  For example, if you were a small business owner who wanted to sell apparel online, you could set up an account with Amazon.com to allow online users to find your apparel and purchase it online.  The payment is facilitated by Amazon.com, you earn a profit, and the buyer is shipped the good.  This is great for California.  With such a high cost of living, it affords entrepreneurial citizens and taxpayers the ability to earn an above national average standard of living in California and while having access to literally a world of consumers.

Under ABX1 28, Amazon.com and other online retailers like Overstock.com (who has even spent money to have their name on the Overstock.com Coliseum in Oakland) have to collect the 7.25% from anyone purchasing a good from California because Amazon.com’s affiliates are located in California (not Amazon.com, located in Seattle).  So in an effort to not pay taxes, Amazon.com has severed it’s ties with over 10,000 smaller business in the state to be free of the economically disastrous laws of California.

Lawmakers state that they want an even playing field for both online retailers and brick-and-mortar retailers like Wal-Mart.  Of course, as Charles Dudley Warner said, politics makes strange bedfellows.  The only way Sacramento would defend Wal-Mart is to justify a supposedly $200 million revenue stream to the capitol.  It’s an excuse that is intended to sound fair.

And here’s where outcomes become less than stellar.  With Amazon.com severing ties, the state will collect significantly less than anticipated because the online transactions that drive sales revenue will not take place.  The products from those retailers will not be available to the online world of consumers.  Individual firms will lay off staff, which, on top of less than anticipated online sales tax revenue, equates to less state income taxes collected.  And with continual job destruction in a state with an unemployment rate of 11.7% (as of May 2011), further income uncertainty will lead to less discretionary spending and, thus, less sales revenue, on brick-and-mortar retailers in the state.  And property values, both commercial and residential, fall as a result of falling aggregate incomes.  Consider this on top of California ranking as the worst state to do business and the 47th most expensive state to do business.

Every municipal, state, and federal government needs to realize that job creation is the root of economic problems.  Creating jobs leads to increased revenues to the state.  While balancing budgets are a noble and right goal, squandering future economic opportunity to pay for a budget shortfall today and keep public employee unions happy only kicks the ball down the road when economic growth looks grim.

Amazon.com and online retailers can fight the law in court, stating that having affiliates does not constitute a physical presence of the company and fight the interpretation of a “long-arm statute” by the State Board of Equalization.  But in an effort to hedge against a legal system run by the same California political class, Amazon.com is now collecting signatures to qualify a measure on the February 7th ballot to overturn the law.

When issues like these are no longer considered politics as usual, California will be making progress.