Nothing that comes from government is free

Chitty Chitty Bang Bang is a Walt Disney classic from 1966 starring Dick Van Dyke as a quirky inventor who turns a broken-down Grand Prix car into a magical flying machine. Along with his two young children, they soar off to a fantasy land with the mission of rescuing the beloved grandfather being held in a strange make-believe city.

There’s a particularly creepy scene in the movie where the diabolical villain lures the two kids from their hiding place. He walks down the street yelling out, “Ice cream. Get some ice cream! Today, it’s all free!” The children can’t resist and they emerge from a building to get into a carriage where they are promised the sweets. Once inside, the curtains fall from the side of the carriage to reveal they have walked into a metal cage.

jerry-brownI was reminded of this scene when Gov. Jerry Brown signed Assembly Bill 19, which mandates freshmen at California’s community colleges be given free tuition. The legislation, authored by Assemblyman Miguel Santiago, D-Los Angeles, would expand the current fee waiver for low-income students. The new grant would waive the first year of fees for all first-time, full-time students attending a California community college, regardless of need.

The notion that citizens are entitled to “free stuff” from government is an unhealthy trend in America. While there is certainly a public benefit to education — which is why kindergarten through high school is free in the United States — students who move on to college should be expected to have some “skin in the game.”

At the national level, the push for tuition-free college is a potent movement. Groups such as College Promise Campaign celebrated the passage of AB19 as step toward the goal of free college education nationwide. Not surprisingly, openly socialist candidates like Sen. Bernie Sanders are big proponents.

Nobel economist Milton Friedman was fond of saying that “there’s no such thing as a free lunch.” Indeed, he published a series of his essays in a book of the same title. His point was simple: Nothing is free; someone — either voluntarily or under compulsion — has to pay. And it’s not just limited government advocates who recognize this brutal truth. As it relates to AB19, officials in the Los Rios Community College District in the greater Sacramento area are trying to figure out how they are going to pay for the tuition break. Perhaps this question should have been asked when the legislation was being considered.

Another dose of economic reality struck California’s far-left leaning Legislature this past session as progressive activists pushed hard for a state-run single-payer health care system. The price tag, $400 billion, or three times the current state budget, was so daunting that even the progressive Speaker of the Assembly Anthony Rendon had to pull the plug after it passed in the state Senate. The entire discussion of single-payer in California proves the maxim that “if you think health care is expensive now, wait until it’s free.”

Whether it is higher education, health care, cellphones, food or transportation, knowledgeable citizens ought to be wary of free stuff from government. Yes, we need basic public services paid for through taxes as well as a basic safety net for our most needy who cannot care for themselves. But increasing reliance on Big Brother government comes with a cost — lack of choice and a loss of freedom.

Free stuff from government only feeds higher expectations and a pervasive notion of entitlement. And the reverse, that which is earned through effort and innovation, leads to more fulfilling lives and self-empowerment.

Citizens, especially the young, ought to beware: A government big enough to give you everything you want is big enough to take everything you have.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.

This article was originally published by the L.A. Daily News

Politicians try to mask pain of gas tax hike

Gas-Pump-blue-generic+flippedHave you ever had a tooth extracted without Novocain or some other pain killer? When facing something painful, it’s always helpful to apply a numbing agent and, when administered by competent medical personnel, anesthesia provides effective relief. But when politicians try to mask pain, be skeptical.

The 12 cent increase in California’s gas tax which took effect this week has garnered a great deal of media attention, much of it negative. That explains why California Democrats have tried to mask the pain of the tax hike.

In perhaps their most deceptive move ever, California Democrats chose the same day that gas prices traditionally go down by 12 cents to increase them by 12 cents. Nov. 1 was the first day California’s cheaper “winter blend” gas can be sold which costs about 12 cents less a gallon. Nov. 1 was also the day that the 12 cent per gallon tax goes into effect statewide.

But this is just phase one of a yearly $5 billion tax hike on California families.

The largest gas tax hike in state history means drivers will pay a total of 50 cents a gallon in taxes to the state when they fill up. By 2019 it will have risen to 57 cents a gallon. Diesel truck drivers are getting hit too. Their price per gallon will jump 20 cents a gallon and will also include a 4 percent sales tax increase. Note that these figures do not include the excise tax from the federal government, another 18 cents per gallon.

Phase two will hit when you re-register your vehicle next year. The average driver will pay $50 more than last year due to a brand new “transportation improvement fee,” though some could pay up to $175. Electric car owners aren’t off the hook either. They’ll pay $100 more a year to register starting in 2020. …

Click here to read the full article from the Orange County Register

Which legislators stood up for California taxpayers this session?

CapitolIn 2017, the California Legislature launched a sustained and withering assault on middle-class taxpayers. Its victories were numerous and significant: A $75 per document recording tax was approved, affecting up to 400 different transactions; a gas and car tax, which takes effect November 1, will cost California households another $600 a year; and an increase in environmental regulations, known as cap-and-trade, could increase the cost of fuel by an additional 70 cents/gallon by 2030.

In the face of such devastating policies, it is easy for taxpayers to question whether legislators will ever be held accountable. However, a useful tool to assist taxpayers is the annual legislative Report Card published by the Howard Jarvis Taxpayers Association. Introduced back in 2007, the point of the report card is to document how lawmakers have voted on issues important to taxpayers. Lawmakers tend to hide behind statements, often of dubious veracity, to justify their votes. The report card sets aside motives, politics and party affiliations and simply asks one question: did legislators stand up for the interests of taxpayers?  While politicians may obfuscate, the numbers don’t lie.

HJTA’s 2017 scorecard featured a list of 22 bills which, represents a broad sample size, making it easy to see who is either a friend to taxpayers or beholden to the special interests that pervade the state Capitol. Beyond the obvious tax increases listed above, other bills include those that make it easier for local governments to increase sales taxes, and allow for San Francisco Bay Area residents to increase bridge tolls. Attacks on the initiative process are another common theme highlighted in the scorecard.

Given the policy breadth of the bills listed above, it should come as no surprise that the 2017 scorecard was nothing short of abysmal. A record 79 legislators failed the scorecard while only 24 got a grade of “A.” Ten legislators received the coveted and difficult to get perfect score in 2017: Assembly Members Travis Allen, Brian Dahle, Vince Fong, Jay Obernolte and Jim Patterson. They were joined by State Sens. Joel Anderson, Patricia Bates, Jean Fuller, Mike Morrell and Jeff Stone. These legislators should be commended for their diligence on behalf of taxpayers. …

Click here to read the full article from the Orange County Register

Trick or treat, your property tax bill is here

property taxWhich is scarier showing up in your mailbox — Halloween movies from Netflix or your property tax bill? For homeowners, even “The Exorcist” can’t compare in terms of pure fright as the annual envelop from the tax collector’s office. Fortunately, however, homeowners are still able to count on Proposition 13 for protection.

While progressives in the California Legislature continue to target the struggling middle class for ever higher taxes, they have been unable to break Proposition 13. That landmark 1978 initiative limits increases in a property’s assessed value to 2 percent annually and provides most property owners a good idea what their tax bill will be even before opening the envelope.

This predictability in taxation allows homeowners to budget for their taxes and provides assurance against a sudden increase that could result in losing their home to the tax collector. Whether you purchased your property last week, or 30 years ago, Proposition 13 is maintaining a reasonable limit on annual hikes in your property tax.

Still, homeowners need to examine their property tax bill carefully because mistakes can happen. Taxpayers should understand the various charges and make certain that they are not being assessed for more than they are legally obligated to pay. The best way to check a tax bill is to have your previous year’s bill handy for reference.

For most California counties, the property tax bill will show three categories of charges. They are the General Tax Levy, Voted Indebtedness and Direct Assessments. …

Click here to read the full article from the Orange County Register

Taxpayers shouldn’t tolerate gas tax extortion by transportation interests

Gas-Pump-blue-generic+flippedA coalition of government entities and special interests which thrive on transportation dollars recently sent a threat letter to Republican members of Congress because those members have the audacity to oppose the huge tax increase passed by the California Legislature with the enactment of Senate Bill 1. The threat was not well received and, in fact, will likely backfire on the tax increase supporters.

The SB1 tax hike, imposed without voter approval, is very unpopular according to virtually all public and private polling. (A more recent poll claims that repeal of the gas tax is not supported by a majority of Californians, but that poll is suspect for several reasons, not the least of which is that the hike has yet to take affect.) Realizing how unpopular the gas tax is, several Republican members of Congress are contemplating support for a measure to repeal that tax.

Had the letter stuck to issues of transportation policy — such as why California needs to have the highest gas taxes in the nation — it would still have been wrong but at least it wouldn’t have been offensive. Unfortunately, supporters of the tax decided to take the low road and issued a thinly veiled threat that would have been more fitting for an episode of the Sopranos. Specifically, the letter stated, “We don’t think your objective is to create new political adversaries.” Moreover, the letter states that the coalition would “mount a robust and powerful effort in opposition to this initiative, using the voices of California’s business community to counter your efforts.”

As distinguished from the self-interested motivations of the tax increase proponents, including big construction corporations, the California Republican congressional delegation has decided to put the interests of middle-class taxpayers first and they should be commended for it. Indeed, in their written response, they demolish the arguments advanced by the special interests. …

Click here to read the full article from the Orange County Register

Take a scalpel to $345 million in California’s stem-cell research waste

Stem Cell researchJust as good scientists are drawn to conclusions by solid data, the decision whether to spend another $345 million by California’s state-run stem-cell research project should be based on an objective analysis as to whether it would be cost-effective. A rigorous cost-benefit analysis is not only fiscally prudent, it avoids being drawn into the moral dilemmas posed by stem-cell research, especially with respect to cells from human embryos.

Created in 2004 with the passage of Proposition 71, the California Institute for Regenerative Medicine was authorized to spend $3 billion in bond proceeds. But as is typical with most bonds, the interest payments would double the cost to $6 billion. CIRM has made $2.4 billion in grants and used $255 million for administration and prepaid interest — leaving $345 million remaining to disburse.

Should CIRM distribute the remaining $345 million (which, with interest, would amount to $690 million in repayment costs)? Should this remaining pool of funds be doled out?

To read the entire column from the Orange County Register, please click here.

Will the Trump tax plan help California?

donald-trump-2As most people are now painfully aware, California’s progressive political majority has just hit middle-class taxpayers with billions of dollars in new taxes. As a direct result of these actions, the state will soon have the distinction of having the highest taxes in the nation in the following categories: Highest income tax rate; highest state sales tax rate; highest vehicle tax; and the highest gas tax (and that doesn’t even include the added costs of cap-and-trade regulation). For the wealthy, California can be a lovely place to live. For normal folks, life in the Golden State can be a struggle. According to a recent article in the Sacramento Bee, California lost more than 1 million people in net domestic outmigration between 2004 and 2013.

Other than leaving the state, perhaps the only relief available for California’s middle class is tax reform at the federal level. And while there’s a lot to love in the “Unified Framework for Fixing Our Broken Tax Code” embraced by both President Trump and the Congressional Republican leadership, there is also a very big caveat.

First, the good stuff. The plan calls for lowering the income tax rates for individuals and families. It would shrink the current seven tax brackets into three — 12 percent, 25 percent and 35 percent — with the potential for an additional top rate for the highest-income taxpayers.

Second, it would roughly double the standard deduction so that typical middle-class families will keep more of their paycheck. The plan also significantly increases the Child Tax Credit.

Third, while it eliminates some loopholes, it does preserve the cherished tax incentives for home mortgage interest and charitable contributions, as well as tax incentives for work, higher education and retirement security.

Fourth, it repeals the death tax and Alternative Minimum Tax which forces many Americans to calculate their taxes twice.

In addition to helping middle-class Californians, the reform package would also help the state’s small businesses by limiting the maximum tax rate for small and family-owned businesses to 25 percent — significantly lower than the top rate that these businesses pay today.

For larger businesses and corporations, the framework reduces the corporate tax rate to 20 percent — below the 22.5 percent average of the industrialized world. It also ends the perverse incentive to offshore jobs and keep foreign profits overseas.

Finally, in a commonsense proposal, the framework would allow “repatriation” of American dollars by imposing a one-time, low tax rate on wealth that has already accumulated overseas so there is no tax incentive to keeping the money offshore.

Now, here’s what will undoubtedly cause some Californians heartburn. The proposal calls for the elimination of the deduction for state and local taxes. Currently, Californians are able to deduct from their federal tax returns both property taxes paid to local governments and income taxes paid to the state. Because California is a high tax state, the loss of the deduction would be very significant. In fact, some estimates show that Californians, in total, currently deduct over $100 billion in taxes from their federal tax liability.

Losing this deduction will have less of an impact on working families and the middle class, particularly when balanced against the middle class tax relief under the framework. But as one moves up the economic ladder, California’s more wealthy taxpayers will take a bigger hit.

While some have suggested that the Republican Tax Reform Framework is revenge against high tax, mostly Democrat controlled, states, the reality is that there are legitimate policy reasons for reducing or eliminating the deduction. In essence, low tax states are currently subsidizing high tax states with funding the federal government.

Moreover, the loss of this deduction might spur high tax states like California to rethink their own tax policy and pursue lower taxes as part of tax reform efforts at the state level. In California, that is long overdue.

Finally, a bit of irony for high-tax California. Because property taxes are included as part of the federal deduction, if it were not for Proposition 13, Californians would be threatened with an even greater loss of deductibility. So as bad as getting rid of the deduction might be for some, it could be worse. And for that, we can thank Prop. 13 which, once again, rides to the rescue of California taxpayers.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.

This article was originally published by the Orange County Register

Will taxpayers trust the GOP again?

TaxesThe California GOP is rapidly approaching the edge of a black hole from which there is no escape. But rather than reverse course by appealing to the needs and aspirations of average Californians, the response by some Republicans in the Legislature is to rush forward to throw themselves into the abyss by supporting policies that punish the middle-class.

Only a quarter of California voters are registered Republicans, barely more than those declaring no party preference. In the Legislature, Republicans number less than a third of lawmakers in each house.

There was a time when even some Democrats in the Legislature supported a healthy economy, taxpayers’ rights and Proposition 13. If any still exist, they are hiding under their desks. Over the last two decades, that party has lurched to the left and those now in Sacramento are devoted to serving the interests of government (aka public sector unions), the ever-expanding entitlement class and the wealthy denizens of coastal enclaves.

For taxpayers, criticizing Democrats is almost too easy given how thoroughly they have abandoned the middle class. But Republicans have traditionally been held to a much higher standard when it comes to taxation and fiscal responsibility. The question now is the extent to which taxpayers can trust Republicans at all.

With Republican support, the California legislature passed several bills slamming California’s ever-shrinking middle class. First, there was perhaps one of the most unpopular bills in California history, Senate Bill 1, imposing $52 billion in permanent new gas taxes and user fees on California drivers. Next was the infamous “cap-and-trade” legislation, Assembly Bill 398. In a few short years, drivers could be paying a buck and a half a gallon just in taxes and climate fees when added to the already sky-high levies imposed by the state. Last, but certainly not least, is Senate Bill 2, part of the California’s ineffective and counterproductive response to the housing shortage. The bill would impose a $75 to $225 “recording fee” on all real estate transactions and generate as much as $258 million annually. Only in California and Monty Python movies would a tax on real estate be considered a rational response to a housing shortage.

Let’s be clear. Those legislators who best defend taxpayers are still Republican. But unfortunately, those faithful few are being smeared by association with those who bend with the wind, succumb to the next big campaign contribution or promise of some “juice committee” appointment or lobbying gig. Note that the reverse is true as well: Some Republican legislators who stood firm for taxpayers were punished by having their committee assignments revoked or banished to the smallest office in the Capitol.

Average taxpayers understand how painful these tax hikes are. But they probably don’t understand how politically incompetent the Republican leadership was in getting them passed. Republican support for tax hikes allowed targeted Democrats in marginal districts (those where a Republican has a chance of winning) to vote against the tax hikes. These Democrats can now seize the mantle of fiscal responsibility even though everyone knows that, had their vote for the hikes been necessary for passage, they would have voted yes. Time and time again, Republican support of tax hikes allowed the “lifeboating” of Democrats in swing districts. To use a phrase by one party leader, this was “felony stupid.”

Taxpayer advocates take no joy in the slow immolation of the Republican Party.

The loss of any effective opposition from a minority party is a loss to all Californians. A strong democratic process relies on the competition of ideas. Moreover, one party rule has led to an extraordinary abuse of power in several areas including campaign rules, shutting down debate and jerry-rigging agencies and commissions in ways to crush political opposition. The loss of a vibrant Republican Party in California will accelerate the state’s metamorphosis into a Venezuela-like banana republic.

In order to have a chance against the power and money of the Democrats, Republicans need to distinguish themselves on critical matters of policy. Unlike social issues — as important as they may be — the fiscal issues of economical government, reasonable taxation and protection of Proposition 13 have been the rock to which Republicans have wisely clung as California’s political skies have turned from purple to blue. A return to these principles is a necessary first step for the GOP to repair its damaged reputation.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.

This article was originally published by the Orange County Register.

California Legislature abandons middle class

CapitolDoes anyone honestly think that the California Legislature’s complete abandonment of the middle class is unrelated to the state’s highest-in-the-nation poverty rate?

This past week presented a stark contrast in the Golden State. First, the controller reported state tax proceeds from all categories are exceeding budget projections. Specifically, the state brought in almost $9 billion in August, exceeding projections in the state budget by over $340 million. All three of the major sources of state revenue — personal and corporate income tax plus sales tax — were up over last year. While a substantial portion of this uptick in economic activity can be attributed to the Trump recovery, there is no denying that California remains an economic powerhouse in its own right.

However, about the same time as we were getting cheery news about state revenue, the U.S. Census Bureau reported that over 20 percent of Californians live in poverty. The “Supplemental Poverty Measure,” which takes into account California’s absurdly high cost of living, gives us the highest poverty rate in the country while the rest of the nation has shown improvement.

So how is it that the most economically powerful state in the union has a poverty level that would make even Mississippi blush? In large part, the answer lies in California’s toxic mix of crony capitalism with mindless pursuit of progressive policies. And both were on full display in the final week of this year’s legislative session.

Few bills moving through the last hectic hours at the Capitol could be remotely characterized as helping the middle class. For example, Assembly Bill 1250 is a complete sop to labor interests. It would prohibit counties from contracting out for services “customarily” performed by county workers unless 14 complicated requirements are met. This would drive up the costs of county government — ultimately paid by taxpayers — and would hurt nonprofits which provide low cost, effective services to county governments. Fortunately, it appears that AB1250 has been stymied this year but will be pushed into 2018.

On a more grand scale, little compares to the various bills moving through the Legislature to deal with the housing crisis. Special interests have formed a conga line outside the governor’s and legislative offices to get a slice of the public pie (baked, of course, with taxpayer dollars). First, is a massive housing bond. Keep in mind that a $4 billion dollar bond will likely incur $8 billion in taxpayer costs after interest and the cost of bond underwriting (Wall Street loves California debt). Second, labor once again wants any public dollars spent on housing to be subject to costly labor restrictions such as Project Labor Agreements or prevailing wage requirements. Who pays for the higher costs? Why, taxpayers, of course.

Overall, California’s housing policies being pursued are designed to reward special interests rather than increase housing stock in any significant way. It is totally lost on our elected leadership that the best housing policy would be for government to reduce regulations that stand in the way of housing construction rather than increase regulations. One bill, Senate Bill 35, does provide a little relief from burdensome CEQA requirements but it contains 18 separate provisions that developers must meet in order to qualify for the expedited permit process for residential development.

The only bill of which we are aware that would have significantly helped housing affordability was Assembly Bill 1100, co-authored by Assemblymen Phil Chen, R-Brea, and Matthew Harper, R-Huntington Beach, to increase both the current homeowners exemption (which provides homeowners with a scant $70 of annual tax relief) and the renters credit. This proposal would require no new government program nor impose new regulations, which probably explains why it lacked popularity in the Capitol. However, it would have put immediate cash into the pockets of all Californians who have to pay for the roof over their heads. That’s what we call middle-class tax relief.

Middle-class Californians have a choice. Stay in California and continue to be the piñatas for progressives and special interests or bail out to other states. Increasing numbers of California’s middle class are choosing the latter.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.

This article was originally published by the Orange County Register

California attorney general failing to create fair and objective initiative titles and summaries

xavier-becerraThe attorney general of California has the responsibility of preparing the “title and summary” for ballot measures to be submitted to the voters. Pursuant to that authority, California Attorney General Xavier Becerra issued the title and summary for one of the most anticipated ballot initiatives for the 2018 election. Here is his description: “Eliminates recently enacted road repair and transportation funding by repealing revenues dedicated for those purposes.”

Confused? Try this excerpt from the ballot summary: “Eliminates Independent Office of Audits and Investigations, which is responsible for ensuring accountability in the use of revenue for transportation projects.”

If you have no clue that this is actually the initiative to repeal the gas tax you wouldn’t be alone. As drafted, the title and summary make every effort to hide the fact that the measure is targeting one of the most unpopular laws in recent California history. Though the words “gas” and “tax” are not in the ballot title, they do at least appear in the ballot summary. But they are followed by the suggestion that the initiative also acts to eliminate the Independent Office of Audits and Investigations — an office that does not yet exist.

This obvious effort at obfuscation, and ultimately voter confusion, flies in the face of a promise Becerra made during his confirmation hearing. Asked last January what he would do to ensure the objectivity of ballot titles and summaries, which is the constitutional responsibility of the attorney general to produce, Becerra testified that “the words I get to issue on behalf of the people of this state, will be the words that are operative to everyone.”

Becerra’s readiness, just months later, to depart from this approach in order to protect the gas tax — which was championed by his own party — is just the latest example of how attorneys general use their influence over the ballot to manipulate voters and advance the interests of their allies. To put an end to this damaging practice, Assembly Constitutional Amendment 3, by Assemblyman Kevin Kiley, was introduced earlier this year, a measure that would strip the attorney general of the power to write ballot titles and summaries, and transfer that authority over to the nonpartisan Legislative Analyst’s Office.

Unlike the attorney general, the Legislative Analyst is not a politician. A trusted source of impartial information since its creation in 1941, the LAO’s primary mission is to provide the state Legislature with reports on fiscal and policy issues. The office is also tasked with preparing the fiscal analysis for ballot initiatives, making it well suited for the responsibility of writing titles and summaries, too.

Since the introduction of ACA3, the Sacramento Bee, Los Angeles Times and Orange County Register have all endorsed the measure, arguing that, no matter the party in power, the temptation to manipulate a ballot initiative’s language is too great for an attorney general to resist.

Their concerns are supported by a long history of abuse that stretches back to at least 1966, when Attorney General Tom Lynch, tasked with describing the initiative to create a full-time Legislature, at first misleadingly framed it as a measure to raise legislative salaries. More recently, in 2013, Attorney General Kamala Harris drew criticism for describing public pension reform as the “elimination” of state constitutional protections for pensioners, using language that had been poll-tested by opponents of the initiative. Other examples abound, from both sides of the aisle.

The high stakes of the initiative process make any attempt at reform difficult, particularly when the party controlling the Legislature also holds the Attorney General’s Office. When ACA3 was brought before the Assembly Elections Committee earlier this year, the bill had the support of every major good government group in the state, including the Howard Jarvis Taxpayers Association, California Common Cause and the League of Women Voters of California. The only opposition was a representative from the Attorney General’s Office. Nevertheless, the bill failed 2-4 on a party-line vote, with one Democrat abstaining.

Initiatives are powerful tools of direct democracy, allowing the people of California to take direct control over the state’s political destiny when the Legislature has failed. But this is only possible when voters have an accurate description of what they are voting for. ACA3 would assure just that, and when it returns for consideration next year, we urge legislators on both sides to support this measure to redeem direct democracy in California.

Jon Coupal is the president of Howard Jarvis Taxpayers Association. Kevin Kiley represents California’s 6th Assembly District, which includes parts of El Dorado, Placer and Sacramento counties. You can follow both on Twitter @joncoupal and @KevinKileyCA.

This article was originally published by the Orange County Register.