Revising History to Fool Taxpayers

After Joseph Stalin took the reins of power in the Soviet Union in the mid 1920’s, his image suddenly appeared in paintings of important meetings of the Bolshevik revolutionaries – which was odd because he had attended virtually none of them. Later, after each successive Stalinist purge, group photos that included previously prominent, but now ostracized, imprisoned or executed communists, would be scrubbed, so as to appear that they had never existed.
Of course attempts by politicians to rewrite their history go far beyond just doctoring paintings and photographs.In Washington, D.C. we have the curious case of Jonathan Gruber. During the run-up to Obamacare, both then Speaker Nancy Pelosi and President Barack Obama sang the praises of the roll that MIT professor of economics Jonathan Gruber had played in crafting the legislation. Gruber has been described as the architect of Obamacare and, before that, the similar Romneycare in Massachusetts.Recently, videos surfaced online showing economist Grubber telling groups that the healthcare law had been written specifically in a way to deceive the “stupid” American public so that it would not be clear that it actually contained massive tax increases.When confronted with this evidence, now Minority Leader Pelosi, who famously said that lawmakers had to pass Obamacare to find out what was in it, did her best impression of a deer in the headlights and denied any knowledge of Jonathan Gruber. The president acknowledged Gruber, but dismissed his influence as an insignificant. Both Pelosi’s and Obama’s efforts to downplay Gruber’s role in drafting the Obamacare is so easily disproven by the facts that even the most left leaning journalists are incredulous.

In the recent California General Election, we saw almost humorous efforts by some candidates, who in the past opposed Proposition 13, to recast themselves as champions of the taxpayer protecting measure.

Perhaps the most egregious example occurred in Orange County, where former Assemblyman Jose Solorio was seeking a state Senate seat. Knowing the district included many homeowners, he tried to campaign as a protector of Proposition 13. He was even able to persuade Jerry Brown to record political ads intended to verify Solorio’s Proposition 13 credentials.

Sadly for Solorio and his band of revisionist historians, the Assembly keeps careful records and it was easy for taxpayers to document that he had voted more than once for measures that would have undercut Proposition 13’s taxpayer protections. With the truth out, his candidacy was overwhelmingly rejected by voters.

The lesson here is that when any politician makes claims about his or her record, because of the internet, voters can quickly check to see if they are being told the truth, or if, like Jonathan Gruber, the office seeker believes the public to be stupid.

Revisionists rely on deception and obfuscation. To expose them, it is therefore necessary for the majority of voters to have access to the truth and have the skills to discern its importance. In the words of Thomas Jefferson, “If a nation expects to be ignorant and free in a state of civilization, it expects what never was and never will be.”

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.

This piece was originally published at HJTA.org

For What Are Taxpayers Thankful in 2014?

“In this season of Thanksgiving, please don’t blame taxpayers if they are distracted by the injuries being perpetrated against them by our political class.”  These words were the preface of this column at the beginning of the holiday season in 2008 and, sadly, little has changed.  In fact, in many ways taxpayers are worse off now than they were then.

Six years ago, California’s tax burden was ranked 6th nationally.  Today we trail only New York as the worst state for taxpayers.   We now rank first in state sales tax, first in marginal income tax rates, first in gasoline tax and, even with Proposition 13, we rank in the top third in per capita property taxes.  Because Proposition 13 makes it harder for California to overtake New York as our nation’s number one taxpayer hell, one can expect new efforts by Sacramento politicians to undermine its protections in the new legislative session.

Some of our state leaders like to chirp happily about California’s declining unemployment rate, but only three states are worse off and our 7.3 percent rate is much higher than the national rate of 5.8 percent.  Still, all these figures are suspect because they do not count the discouraged who have stopped looking for work entirely.  And even those counted include many part-time workers for whom the best holiday gift would be finding fulltime employment.

Then there is the constantly growing, and largely ignored unfunded pension liability now estimated at several hundred billion. It stood at $6.3 billion just a decade ago.  As more government workers retire, this debt will come due and will have to be addressed by either reduced public services or tax increases or both.  The pressure for new revenue to support the retired workforce will provide an additional incentive to politicians to demolish Proposition 13’s taxpayer protections.

Nonetheless, while elected officials may be planning to put coal in taxpayers’ stockings as we approach Christmas, there are a few things for which we can all be grateful.

First is Proposition 13, which limits annual increases in property taxes and forces the tax raisers in the Legislature to get a two-thirds vote of their colleagues to raise state taxes.   We at the Howard Jarvis Taxpayers Association hear daily from those who are thankful for Proposition 13 and credit its most famous feature — limiting annual property tax increases to no more than 2 percent — for allowing them to keep their homes.

While during the session just passed, those favoring new taxes dominated the Legislature, the November election has turned out some fiscally irresponsible lawmakers and replaced them with some who understand the detrimental impact of new taxes on individual taxpayers and the overall economy, and who are likely to reject new taxes.  So taxpayers are grateful not only for Proposition 13 but for lawmakers who will defend their interests against great pressure for new taxes from special interests including public employee unions.

Taxpayers are also thankful for all individuals, regardless of party affiliation, who make the personal sacrifice to run for office and present their ideas to voters.  A functioning free republic relies on individuals who are willing to step into the arena, even in those instances where their chances of prevailing are small.

Finally, complaints against government at all levels are an American birthright.  But we are mindful that billions of souls around the world risk imprisonment or death for speaking out against their despotic governments or leaders.  So, in keeping with the season, let us be thankful that we live in a country that, despite her faults, remains the last, best hope for mankind.

Californians Vote for More Taxes and More Borrowing

It has been argued that California’s voters defy their political stereotype when it comes to taxes. California’s property tax revolt in 1978 resulted in the passage of the historic Prop. 13, which limits property tax increases to 2 percent per year. As recently as 2009, California’s Legislature joined with Gov. Schwarzenegger to place Propositions 1A through 1E on the state ballot. All of them would have raised taxes, and all of them were defeated by voters.

That was then.

In 2012 Californians voted to raise sales and income taxes through Proposition 30, which supposedly was designed to collect an additional $6 billion per year to fund public education. And while 2014 did not include major new tax proposals on the state ballot, in cities, counties and school districts throughout California, tax and bond proposals were placed before voters. Most of them passed.

In the June 2014 primary, 47 local bond measures were proposed, with 36 of them passing. Also in June, 44 local tax increases were proposed, and 36 of them passed. That was just a warm-up for the November 2014 election, where 118 local bonds – most of them for public education – were proposed, along with a staggering 171 local tax increases. At last count, 72 of the bond proposals were passed, 15 were defeated, and 31 remain too close to call. Of the 171 local tax proposals, 98 were passed, 45 were defeated, and 28 are still too close to call.

These local tax proposals are necessary to meet runaway employee compensation costs, especially for pensions. These local bond measures are largely to fund deferred maintenance, activities that might have been funded through operations budgets if it weren’t for excessive compensation and benefit costs.

In Stanton, a city where local firefighters average $221,000 per year in pay and benefits, and local sheriffs average $112,000 per year in pay and benefits, a 1 percent increase to the local sales tax was approved by 54 percent of the voters. In Palo Alto, where the local firefighters “only” receive pay and benefits that average $181,000 per year, and the local police officers earn pay and benefits averaging $164,000 per year, a 2 percent increase in their hotel tax was approved by 75 percent of voters.

In California in 2014, based on returns so far, if a local city or county wants to raise taxes, there is a 72 percent chance voters will approve them. If a school district wants to borrow money – over $11 billion just this November – there is an 81 percent chance voters will approve them. And if the proponents of more taxes and borrowing are unlucky, they can always try again the next election. The odds are in their favor.

Local taxes and borrowing matter. California has relatively decentralized governance. Of the roughly $430 billion in estimated state and local spending in California for the fiscal year ending 6-30-2015, only $107 billion of that is state government spending. Estimating total state and local government debt in California is nearly impossible because the largest single borrower, K-12 school districts, have not submitted their financials to the State Controller for consolidation since 2002. But a California Policy Center study from April 2013 estimated total state debt from all sources at $132 billion, whereas the same study estimated total local government debt in California at over $250 billion. That estimate relied on 2011 and 2012 data, grossly underestimated K-12 bond debt, and did not include any unfunded liabilities for pension and retirement healthcare.

When it comes to taxes, borrowing, and overspending, most of the action in California is at the local level. And there should be no question that current spending levels are financially unsustainable. If all California’s state and local pension systems had to do was account for their liabilities according to the same rules that have governed private sector pension plans for years, California’s state and local debt – including unfunded liabilities – would be well over $1 trillion. Moreover, such reforms – playing by the same rules as the private sector – would grossly increase the ongoing normal cost to funding pensions for state and local government employees.

Sooner or later California’s taxpayers are going to wake up. Because the Government Accounting Standards Board, Moody’s Investor Services, and eventually the U.S. Congress, are being compelled by financial reality to enact reforms to pension and retirement healthcare accounting, asset management, and funding. Once government entities have to follow the same rules as the private sector, spending will skyrocket or services will be scuttled. What we’ve seen so far, grievous though it may be, is nothing compared to what is to come.

There is an alternative. A bipartisan will to defeat government unions by an awakened populace. It may take a few more years, but it is inevitable – the hidden agenda behind all of these tax increases and new borrowings will be plain for all to see.

Ed Ring is the executive director of the California Policy Center.

Reprieve for Prop. 13

By now, most Californians have read dozens of analyses from experts and partisans alike about the meaning of last Tuesday’s election. Analyzing the national scene is not rocket science.  Republicans romped and Democrats took a shellacking.

But understanding the impact here in ever-so-blue California is a bit more complicated.  While it is true that Republicans, who tend to be more taxpayer friendly, did not win a single statewide seat, the news for fans of Proposition 13 is actually quite good.

Rather than focus on the statewide races, the Howard Jarvis Taxpayers Association was laser focused on using our political muscle to prevent the tax-and-spend majority party from securing the dreaded two-thirds supermajority in both the California Senate and Assembly.  The reason why a two-thirds supermajority is so dangerous is two-fold.  First, under Proposition 13, taxes imposed by the state cannot be imposed without the two-thirds vote.  As long as the minority Republicans hold firm against tax hikes, Californians will be protected.  (And it’s not like California needs higher taxes.  We already have the highest income tax rate, the highest sales tax rate and the highest gas tax in America).

Second, it takes a two-thirds vote of each house to place a proposed amendment to the California Constitution on the ballot.  Had the majority party achieved the supermajority, it could have placed anti-Proposition 13 measures on the ballot at will.  But, because the Democrats were thwarted in their efforts, they will have to convince their political allies – principally the public sector unions – to spend several million dollars to collect the necessary signatures to qualify such a proposal.

Another observation about this year’s election is that, as if there were any doubt, the branding of Proposition 13 has never been stronger.  Both true Proposition 13 defenders and pretenders used Proposition 13 as a talking point in their campaigns.  Turns out that those candidates who were true Proposition 13 defenders – meaning they had the endorsement of the HJTA Political Action Committee – did very well.  So much, in fact, that most of the endorsed candidates won, even those whom the pundits thought had little chance of victory.

That Proposition 13 itself was such a centerpiece of this election cycle is astounding.  This landmark measure was on the ballot more than 35 years ago and yet incumbent legislators who had bad Proposition 13 votes while in the Legislature suddenly felt vulnerable.  A former legislator who was openly anti-Proposition 13 lost badly to an HJTA endorsed candidate, Janet Nguyen, in a contested Senate seat.  Her opponent, Jose Solorio, was in such deep trouble that Governor Brown cut one of his very few television ads this election cycle in a failed attempt to save him.  As in 1978, Jerry Brown was bested by Proposition 13.

But to those who think that these political victories allow us a chance to rest, think again.  Already, the enemies of Proposition 13 are conducting extensive political research – both polling and focus groups – to determine how best to dismantle these critical taxpayer protections.  And left leaning anti-taxpayer groups have intensified their efforts to convince local governments and school district boards to pass anti-Proposition 13 “resolutions.”  These resolutions may be non-binding, but our adversaries are laying the groundwork for a repeal of Proposition 13 in 2016.  That much is very clear.

But for now, let’s enjoy the victories just achieved.  Just in time for the coming holiday, taxpayers and homeowners in California have much to be thankful for.  And while we realize our reprieve will be short and that we must prepare for battle anew in a few short weeks, these victories give us the much needed hope that California can, once again, become the Golden State it once was.

 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.

This piece was originally published on HJTA.org

Greater Transparency on Threat to Property Owners

Legislation just signed by Gov. Brown may help alert homeowners to the threat posed by per parcel property taxes. Parcel taxes have become one of the most insidious threats to home ownership because they can be imposed over and above the property tax limits set by Proposition 13.

Supported by a broad coalition lead by the California Taxpayers Association and the Howard Jarvis Taxpayers Association, Assembly Bill 2109 requires the Controller to maintain a publicly accessible data base relating to the imposition of locally assessed parcel taxes, including the type and rate of a parcel tax and the number of parcels subject to or exempt from the parcel tax. Finally, taxpayers will be able to see the extent of parcel taxes throughout the state and the costs to property owners.

Parcel taxes came about as a result of politicians never ending effort to circumvent the property tax limitations contained in Proposition 13. Howard Jarvis and Paul Gann, Proposition 13’s authors, intended that taxes on property be limited to one percent of the taxable value and that the taxable value on the assessor’s books could not be increased by more than two percent annually.

To squeeze more from homeowners, local officials came up with the parcel tax, usually a uniform tax placed on each parcel of property within a community –although it can also be based on size. By imposing a uniform charge for the privilege of owning property within a community, they were able to persuade the courts that it did not violate Proposition 13’ prohibition against additional ad valorem (value based) taxes.

Parcel taxes are extremely regressive, bearing no relationship to ability to pay. The young couple in a starter home, the elderly couple in a bungalow and a multimillionaire in a mansion, all pay the same amount. There is no restriction on the dollar amount of these taxes that exceed Proposition 13’s limits, or on the number of such proposals that can be placed on the ballot. And while bonds — also paid for by property owners — must be used for “brick and mortar” construction, parcel taxes can be used for any purpose including increased pay and pensions for government employees.

Adding insult to injury, there has been a major push in the Legislature to reduce the two-thirds vote needed to approve parcel taxes. Although this would clearly undermine Proposition 13 by making it easier to increase property taxes, backers of a lower approval threshold respond innocently, “We are not trying to raise taxes, we are just making the process more democratic.” The threat of course is that by making it much easier to impose new taxes on property owners, home ownership could again be threatened as it was prior to Proposition 13 when taxes were going up so fast that many owners were forced to give up their homes.

Thanks to Assembly Bill 2109, more attention can be brought to the burden that parcel taxes impose on California homeowners and it will help make the case that not only should they be defeated individually as they appear on the ballot, but they should be banned outright.

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.

This article originally appeared on HJTA.org