taxes – Page 23

CARB Must Listen to the People about Hidden Gas Tax

October 27, 2014 By John Kabateck 6 Comments

Last week, I was proud to deliver 115,000 signed petitions on behalf of my fellow Californians on the controversial “fuels under the cap” regulation at the California Air Resources Board’s (CARB) Diamond Bar board meeting.

I was joined by dozens of community and educational leaders, elected officials, business organizations and concerned drivers as we gathered outside the California Air Resources Board (CARB) meeting in Diamond Bar to urge the Board to listen to the voices of its constituents and delay its regulation scheduled to take effect next January. Along with the petitions to CARB, our group urged the Board to place its contentious “fuels under the cap” regulation on a public meeting agenda to provide an opportunity for the public to be informed and heard on the negative impacts of higher fuel prices of 16 to 76 cents per gallon come January.

Higher consumer fuel prices will reduce other spending by consumers and result in the net loss of 18,000 jobs and nearly $3 billion in economic output in 2015 alone, according to an economic analysis by Encina Advisors. Independent experts and CARB’s own advisors have raised concerns that the current design flaws in California’s cap-and-trade market could result in much higher allowance prices, in which case economic losses would balloon to 66,000 jobs and nearly $11 billion in economic activity. These projected losses take into account spending of allowance revenue by the State of California, which will grow to several billion dollars once the “hidden gas tax” takes effect.

According to the analysis, lower-income families will be hit hardest by this tax increase because they spend as much as 38 percent more as a percentage of their income on gas, and because they work in the retail and service sectors that will see the highest number of job losses.

Small businesses will be harmed twice by this policy. Not only will it hike the cost of doing business, which hurts jobs and business growth, it will also take more money from California consumers at the pump that they won’t be able to spend at retail shops, restaurants and elsewhere. Instead of infusing local economies, these dollars will flow to Sacramento to support billions in more government spending on items such as high-speed rail that result in little or delayed economic activity, meaning the “hidden gas tax” will result in a net economic loss to California communities.

CARB members may not be elected, but they still have a duty to serve the public’s interest to meet these goals in responsible ways that do not harm our communities or our economy.

We commend what we are observing to be an increasing bi-partisan trend in Sacramento for more careful scrutiny of the economic impact of regulations and the effectiveness of state agencies. With CARB meeting in the coming months, they should hold this gas tax to same important standard. There’s still time to act. Let’s hope CARB members do the right thing and listen to the people in an effort to protect and save California jobs.

John Kabatck is California Executive Director, National Federation of Independent Business

The article was originally published on Fox and Hounds Daily

Filed Under: Top Stories Tagged With: Cap and trade, CARB, Gas tax, taxes

Astounding number of tax increases on November ballots

October 22, 2014 By CPR Editors 4 Comments

When voters go to the polls November 4, they will decide the fate of a large number of school bonds, parcel taxes, sales taxes, utility users’ taxes and other measures that will impact their family budgets.

Despite the improving state economy that is increasing government revenue under existing tax rates, 53 jurisdictions are seeking sales tax increases, 40 are asking voters to approve parcel taxes, and school districts have placed 113 school bond measures on the ballot. If all of the school bonds are approved, taxpayers will have to repay more than $11.7 billion in new bond debt, plus interest.

While an overwhelming number of tax and bond measures have the support of local newspapers, as is historically the case, several of the measures on the November ballot have drawn opposition from newspaper editorial boards.

For example, the Santa Rosa Press Democrat, which often supports tax increases, urged readers to reject Measure N, a utility users’ tax increase that the newspaper said would “fuel a growing chasm between richly funded public safety agencies and all other city services.” The newspaper said a previous ballot measure set a guarantee for police and fire spending that has hamstrung the city because the measure “didn’t account for an historic recession or the skyrocketing cost of retirement benefits.”

As is often the case, many local governments are using taxpayer-funded resources to campaign for tax measures. The Albany Unified School District’s website, for example, has a “news and announcements” section that describes a parcel tax measure as the “Preserve Funding for Albany Schools Act of 2014,” and states that “concerned parents, educators, and community members are joining together to support a replacement parcel tax.”

CalTax’s table summarizes the local tax and bond measures on the ballot in every county where such a measure will go before voters: www.caltax.org/homepage/101714_elections.html

This article was originally published on Fox and Hounds Daily.

Filed Under: Top Stories Tagged With: 2014 Election, Tax Measures, taxes

Hurray for Hollywood Tax Credits?

October 20, 2014 By Steven Greenhut 3 Comments

Is California’s political establishment trying to crush the Golden State’s economy and punish Hollywood movie moguls? That’s one interpretation of Governor Jerry Brown’s decision to sign a $330 million movie tax credit into law, but only if you take seriously the argument that tax increases—as opposed to tax credits—have driven the so-called California Renaissance. Recall how Brown, legislative leaders, and prominent columnists lauded voters’ approval of Proposition 30, which significantly raised sales and income taxes two years ago. The best businesses, they said, don’t mind California’s high tax burden so long as the weather stays nice. But if that’s so, then why the giveaway to Tinsel Town?

The Film and Television Job Creation and Retention Act more than triples the current $100 million-a-year movie tax credit for five years beginning in fiscal year 2015–16. The new law allows studios to use the credits for television pilots and eliminates a lottery system for selecting beneficiaries. It also removes the existing credit’s cap of $75 million on production budgets, according to a state senate analysis.

The California Teachers Association opposed the bill for self-interested reasons: the union doesn’t want any money potentially taken away from public schools, which currently eat up more than 40 percent of the state’s general fund. Despite the CTA’s opposition, the legislation enjoyed broad bipartisan support. Republicans usually argue that tax credits are much less important than a more favorable overall tax climate, but they agreed to these special credits, just as they supported tax credits for a proposed Tesla electric-car battery plant, which wound up going to Nevada. More unusual was the support from the otherwise tax-credit-averse Democrats. “This legislation will keep the cameras rolling in California and strengthen our position as the entertainment capital of the world,” claimed Kevin de Leon, a Los Angeles Democrat and new leader of the state senate. Governor Brown, who had criticized the credit in the past, said at the bill signing that SB 1839 “helps thousands of Californians—from stage hands and set designers to electricians and delivery drivers.” At least Democrats are tacitly recognizing the value of lower taxes—even if only for a handpicked industry that happens to support them.

But politicians’ assertions notwithstanding, the nonpartisan Legislative Analyst’s Office in April released a report questioning the effectiveness of the existing tax credit. The LAO argued that studies promoting the credit’s economic benefit “vastly overstate” its advantages: “A return of $0.65 in state tax (excluding unemployment insurance) revenue for each $1 in tax credits may or may not be a good return compared with other state programs. However, it is incomplete—and, arguably, not accurate—to claim that the tax credit program pays for itself.”

Tax-credit supporters point to the loss of 16,000 California film-industry jobs over an eight-year period and blame other states, such as New York, for offering large subsidies that are supposedly stealing away movie productions. Just because other states lavish subsidies on movie companies doesn’t make it a great economic idea. “The state government in New York has dished out well over $2.5 billion in film industry tax incentives since their program began in 2004,” noted Christopher Thornberg, founder of Beacon Economics in Los Angeles. “And for that payout, New York has ‘stolen’ a total of roughly 10,000 jobs from California . . . Do that math! New York has paid $250,000 for each new job.”

The LAO pointed out another flaw in the case for Hollywood giveaways: “Other industries—such as manufacturing or software development—also could become the target of aggressive state subsidies. If this were to occur, would California also provide subsidies to retain these businesses? Doing so could be prohibitively expensive. Instead of approaching economic policy on an industry-by-industry basis, the Legislature may take actions that encourage all businesses to stay or relocate to California, such as broad-based tax reductions or regulatory changes.”

Unfortunately, a political party addicted to taxing and regulating happens to control California’s legislature. It’s funny how Democrats can rationalize tax hikes on the one hand and tax credits on the other. Pulitzer Prize-winning writer David Cay Johnston mocked claims that higher taxes destroy jobs: “Some research into tax rates indicates that high tax rates have the opposite effect: People may work harder, trying to make more money to achieve a desired after-tax income and may slough off if tax rates are lowered.” In other words, high tax rates aren’t detrimental to the California economy—they may even be the cause of its recent growth.

Johnston’s pro-tax argument is popular in Sacramento. Recently, Senator Hannah-Beth Jackson, a Santa Barbara Democrat, argued in support of a bill that would base corporate tax rates on CEO compensation—with higher rates imposed on companies that pay executives more. Yet Jackson joined her colleagues (only two voted no in both houses) in supporting the Hollywood tax credits.

Tellingly, policymakers have been unwilling to consider less costly ways to encourage film production in the state. None of the discussions surrounding SB 1839, for instance, pointed to the pernicious effect of Hollywood’s union-dominated work rules. Think of the TMZ, or Thirty-Mile Zone, the radius the various movie and TV unions use to determine per diem rates and driving distances for crew members. Nor did any of the bill’s sponsors have a word to say about the creative accounting Hollywood studios employ to show profits and losses.

So even as they peddle the fiction that California is booming because of high tax rates, legislators feel compelled to subsidize one of the state’s signature industries. Maybe they should have raised taxes on Hollywood instead. After all, it would be good for the economy: the higher taxes would make the studios work harder.

Steven Greenhut is the California columnist for U-T San Diego(formerly the San Diego Union-Tribune.) He is based in Sacramento.

This article was originally publish on City-Journal.org

Filed Under: Top Stories Tagged With: California Teachers Association, CTA, Hollywood, Jerry Brown, tax credits, taxes

City of Stanton Proposes Higher Taxes Instead of Cutting Pay and Benefits

October 9, 2014 By Ed Ring 1 Comment

On November 4th, voters in Stanton, California, will be asked to vote on a 1 percent sales tax increase, which if approved will raise their sales tax to 9 percent – the highest in Orange County. Nestled in the heart of Orange County, tiny Stanton, a city of barely three square miles in size with a population in 2012 of 38,915 residents, is an unlikely candidate for the spotlight, when California’s local ballots are about to be inundated with over 140 local tax increases affecting many cities and counties that are ten times bigger. But Stanton is ground zero in a battle over how to manage municipal budget deficits, because if their voters approve this tax increase, cities throughout Orange County will follow suit.

We’re not talking small potatoes here. Stanton currently only retains 1 percent (one-eighth) of the 8 percent sales tax they currently collect. According to Stanton’s Consolidated Annual Financial Report for the fiscal year ended 6-30-2013 (page 9), their total sales tax revenue for that year was $3,683,199. If they increase their sales tax rate from 8 percent to 9.0 percent, they should double the amount of sales tax collections retained by the city. A spokesperson for the city of Stanton confirmed they project the new sales tax will add $3.1 million to their projected annual sales tax revenues. How does that compare to their spending?

According to Stanton’s “Measure GG,” the city “now faces a $1.8 million structural budget deficit.” This means the sales tax increase is expected to eliminate their budget deficit with $1.3 million left over. But if you evaluate Stanton’s expenditures, there is an alternative to new taxes. How does the city spend most of their money?

To answer this, again, look no further than the “Whereas” section of Measure GG. The third “Whereas” states “public safety is a top priority in Stanton and represents over 70 percent of the City’s General Fund budget, and without a local funding source the City will be forced to significantly cut public safety services.”

It’s quite clear that Stanton has already cut everything else. Based on information reported to the California State Controller’s Office, in 2012, the City of Stanton had 26 full-time non-safety personnel. Their average base pay was $74,146 per year, with negligible overtime, and “lump sum” payments averaging $4,700 per year, mostly to management. The lowest full-time regular rate of base pay was $42,359 for an administrative clerk. When you pile on the employer payments for retirement health care (average per year $8,691) and for their 2 percent at 55 pensions (average per year $15,693), the total pay and benefits for Stanton’s 26 non-safety employees in 2012 averaged $104,990. Nice work if you can get it. But it represents less than 18 percent of Stanton’s estimated direct personnel costs.

Finding information as to just how much Stanton pays for police and fire protection is not easy, but a reasonably accurate estimate is possible. According to Stanton’s city website under “Fire Services, we learn “there are a total of 21 firefighters who serve the City of Stanton.” Under “Police Services,” we learn “the Sheriff’s Department provides 44 staff members to the City of Stanton.” If we make just one assumption – that the rates of pay earned by the sheriffs and firefighters assigned to Stanton are representative of the rates of pay earned by all Orange County sheriffs and firefighters, we can estimate how much Stanton incurs in direct personnel costs for public safety. Pay for Orange County sheriffs can be found using 2012 data reported by Orange County to the CA State Controller. Pay for Orange County firefighters can be found from 2013 data recently obtained by the California Policy Center directly from the Orange County Fire Authority. Here goes:

Based on the data and assumptions as noted, on average, Stanton’s 21 firefighters earn a direct pay and benefits package of $217,956 per year; Stanton’s 44 sheriffs earn an average direct pay and benefits package of $186,682 per year. The source data used for these calculations and others cited in this post can be downloaded here “Stanton_2014_Statistics.xlsx” and readers are invited to point out any errors in calculations or reasoning therein.

There are a lot of takeaways here. For example, if Stanton were to join with other Orange County cities who contract for their police and fire protection and negotiate a 14 percent decrease to the average total pay and benefits their police and firefighters earn, they would eliminate their structural deficit of $1.8 million – and their firefighters would still earn average pay plus benefits, after the reduction, of $187,285 per year, and their sheriffs would still earn average pay plus benefits, after the reduction, of $160,412 per year. The average household income in Stanton during 2012 was $48,146.

A final observation – CalPERS has announced a 50 percent increase in required annual pension contributions, to be phased in between now and 2017. If Orange County’s independent pension system follows suit, and there is no evidence their financial imperatives differ significantly from CalPERS, then Stanton’s annual required pension contributions will increase by $2.2 million per year – nearly all of that for public safety. So even if Measure GG passes, the projected surplus of $1.3 million will probably be more than offset by increased pension contributions. Expect more taxes, or start cutting pay and benefits.

It is always important to emphasize that public safety employees deserve to be paid a premium to compensate for the risks they take to protect the public. But Stanton’s citizens and elected officials, and their counterparts in cities throughout Orange County, will have to decide where to draw the line on that premium. Perhaps the facts should speak for themselves.

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

Filed Under: Top Stories Tagged With: CalPERS, Ed Ring, Orange County, pensions, Public pension, Sales Tax, Stanton, taxes

What incumbent candidates conveniently leave out of campaign ads

October 1, 2014 By Jon Coupal 2 Comments

Humorist Will Rogers observed, “This country has come to feel the same when Congress is in session as when the baby gets hold of a hammer.” If Rogers were a Californian today, he would say the same thing about the state Legislature.

Fortunately, for average citizens, the Legislature adjourned a few weeks ago so its ability to inflict more harm on taxpayers, property owners and businesses is on hold until the first of the year.

Lawmakers are no longer in Sacramento listening to high-powered lobbyists for special interests that back more taxes and spending. Most have returned to their home districts to beg for votes. They are likely to be attending local events and some will actually be walking in neighborhoods to convince voters they deserve to be returned to the Capitol. And, of course, they will be invading your mail box, television and radio with their political ads.

The majority of candidates for reelection will be bragging that they and their colleagues have achieved a balanced, on time budget and the state is on the right track. Their accomplishments, they will claim, entitle them to continue in office.

However, here are some things that most will not mention. California continues to have one of the highest unemployment rates in all 50 states. Our state ranks first in marginal income tax rates, state sales tax and gasoline tax. Businesses, and the jobs they provide, continue to flee the state. Even firms like Tesla and SpaceX that have been provided massive tax subsidies by Sacramento, have chosen to expand their facilities outside of California – Tesla to Nevada and SpaceX to Texas. And the Legislature continues to support subsidies to Governor Brown’s bullet train that may end up costing taxpayers nearly $100 billion.

Another topic that most incumbent lawmakers will not want to discuss is their efforts to pass ACA 8, an amendment to the California Constitution that would make it much easier to increase property taxes to pay for infrastructure bonds. Passage of this, and other proposals that fell just short of approval this year, could have resulted in increased property taxes totaling billions of dollars, once again putting homeownership in jeopardy as it was prior to Proposition 13, when there were no limits on annual increases in the tax bill.

It is also unlikely they will want to discuss their rejection of legislation that would have slowed the implementation of carbon fees, fees that are likely to add somewhere between 15 and 40 cents to the cost of a gallon of gas after the first of the year. This is no less than a war on the poor, who already can barely afford to put fuel in their cars due not only to high prices, but also to the highest gas tax in the nation. And California has plenty of poor. We lead all 50 states in the percentage of those living in poverty.

Voters who have the opportunity to meet candidates for office, whether they are incumbents or aspiring challengers, should be prepared to ask a few questions.

Here is a good question for all candidates, “Do you believe it is fair that Californians pay the highest tax rates in nearly every category?” An excellent follow-up question would be, “Where do you stand on an extension of the Proposition 30 income and sales tax increase, set to expire in the next several years?” And, of course it is always revealing to get answers to this question, “Do you support the governor’s bullet train that could cost taxpayers a hundreds billion dollars or more?”

Honest answers to these questions would provide a good gauge of how well a candidate understands that their actions have real consequences for average Californians. Some may show that they genuinely respect those they serve, while others, who are likely to equivocate when responding, will reveal that they are motivated by self-interest.

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.

Filed Under: Top Stories Tagged With: 2014 Election, Campaign, Jon Coupal, Legislature, Sacrament, SpaceX, taxes, Tesla

Toyota driven out of CA

April 30, 2014 By CPR Editors 1 Comment

James Lacy, author of “Taxifornia: Liberals’ Laboratory to Bankrupt America,” explains how high taxes and onerous regulations drove Toyota to uproot and move its headquarters to Texas.

Filed Under: Top Stories Tagged With: James Lacy, regulations, taxes, Toyota

Is Texas the new California?

June 28, 2011 By Brian Calle Leave a Comment

Originally published in the Orange County Register on June 24, 2011

Chart courtesy Esmael Adibi, Chapman University

Written by Brian Calle

Is Texas the new California? A bustling economy, housing at affordable levels and some of the most aggressive examples of business-friendly public policies in the country make Texas desirable not only for entrepreneurs and retirees but also right-leaning voters desperately searching for some hope for a fiscally responsible public-policy renaissance and a new face for a Republican Party that needs one.

California, once a Republican stronghold (believe it or not), helped steer national political discourse and boasted its viability as an economic leader among states. But with a mass exodus of both business and job seekers, a confining regulatory infrastructure and a high cost of living, California appears to be riding off into the sunset, economically speaking.

Today, Texas is the big state leading the pack and, based on its public policy approaches, it should. The parallels though between today’s Lone Star State and the Golden State of the 1960s, 1970s and 1980s are apparent. So much so, in fact, Texas seemingly has become the new California – that is, the economic engine of the country, the innovation capital and perhaps, its political powerhouse, too.

Comparisons of the politics, economics and public policy of California and Texas have become en vogue, and rightly so. Both states are big, iconic and yes, eccentric. California is the largest state by population in the United States; Texas is second. By area, Texas is the second largest state and California is third. (Alaska is first.) Both states have significant (and growing) Latino populations. And both states share a border with Mexico.

In some ways, both states represent the broader future, and possible directions, of the nation – demographically, politically and economically. One a blue state. One a red state. One liberal in public policy, the other conservative in political approaches. One faltering, the other thriving. While the Gold Rush has seemingly ended for California, Texas is in high growth mode. In fact, since the start of the nation’s economic recovery, more than one-third of new jobs came from Texas, according to the Federal Reserve Bank in Dallas.

Texas governor Rick Perry put it this way in a email to me: “Here in Texas, we’ve worked hard to create an economic environment that allows people to risk their capital and get a good return on their investment by focusing on keeping taxes low, maintaining a reasonable and predictable regulatory climate and fair legal system – which was further strengthened with the passage of loser pays legislation this session – and developing a skilled workforce. These principles, combined with competitive investments from the Texas Enterprise Fund and Texas Emerging Technology Fund have helped attract investment dollars and thousands of jobs to our state, and top researchers to our universities.”

As Chapman University economist Esmael Adibi recently noted, since California’s 2007 employment peak, the state has lost nearly 1.4 million payroll jobs. Meanwhile, Texas is boasting a job boom of more than 200,000 new jobs the past two years. From 2000-10, California has seen a net employment loss of 100,000 jobs whereas Texas saw a net gain of 1.4 million payroll jobs. Moreover, from 2005-09, California saw a net loss of 870,000 residents. People are leaving the state for three reasons, according to Adibi: jobs, housing prices and taxes, both state and local – all factors that play to the advantage of Texas.

California is a notoriously high-tax state, 49th in the United States in overall taxation (New York is 50th). California inflicts a flurry of taxes on residents including a state sales tax that is the second-highest in the nation and the third-highest state income tax, according to an analysis by the Tax Foundation. By comparison, Texas ranks ninth overall; it has no state income tax; and ranks 14th of 50 states for sales tax. To be fair, California scores better than Texas on property taxes because of Proposition 13, which became law in 1978, when the state was at least somewhat fiscally sane.

Even though property taxes are less-high in the Golden State, housing is not nearly as affordable as in the Lone Star State. During Chapman University’s recent economic forecast update, Adibi said that housing in Texas costs a fraction of what it does in California. The median 2009 home price in Austin was $187,400, compared with Orange County’s 2009 median home price of $477,200. “In other words, the median home price in Austin is about 60 percent cheaper than what it is in Orange County,” Adibi said in an email.

Unemployment in Texas is at 8 percent, below the national of 9 percent – while California has the second-highest rate of joblessness, 11.7 percent in May, according to the U.S. Bureau of Labor Statistics.

Regulation also plays a major role in whether a state declines or surges. California’s onerous labor standards, especially for overtime pay, are a disincentive for businesses to come to the state, or to stay and grow. For instance, California requires overtime pay after eight hours in a day; the federal law allows more flexibility, starting the overtime clock after 40 hours in a work week. Texas’ overtime laws are in line with federal standards. Texas is also a right-to-work state, meaning workers cannot be required to join a union or pay dues or fees to a union; California is not.

The cherry on top for Texas, though, is the recent passage of loser-pays legislation, which tends to curb frivolous lawsuits and will likely attract new businesses, especially in the medical field.

Even politically, California has lost ground and influence to Texas, especially within the Republican Party. In the 1960s, ’70s and ’80s California Republicans helped set the tone for national policy and political discourse. Two Republican presidents were elected (two times each) in that time frame from the Golden State – Richard Nixon and Ronald Reagan. The most recent Republican president, though, is from Texas and given recent events, perhaps the next one will be as well.

The Nixon and Reagan eras of the presidency parallel political realities today. The Watergate scandal’s impact on the Republican Party, including Nixon’s resignation, led to Jimmy Carter winning the presidency in 1976. Carter won Texas that year while Republican President Gerald Ford won California. (How times have changed.) Four years later, Reagan ousted Carter and became the 40th president, perhaps a testament to the ideological and public policy leadership from California politicos at the time.

Fast forward to more recent presidential politics: President George W. Bush’s time in the White House ended with a public seemingly fed up with the leadership of the former Texas chief executive and the broader Republican Party, perhaps not to the extent it was with Nixon, but still enough to help usher in the presidency of Barack Obama – a president, some would argue, who is in the same mold as Jimmy Carter.

Current Texas Gov. Perry appears to be weighing a presidential run. If he does decide to announce his candidacy, some, including me, believe he would become the instant front-runner. Not only because the rest of the presidential field is, well, bland, but because Texas, which Perry has governed 10 years, enacted sane economic policy and conservative approaches to government – and is thriving.

While California legislators of the past few decades should serve as examples of how not to govern, Texas is perhaps one of the best examples of how more free-market, fiscally conservative approaches to public policy work to propel economies. It is a message that needs exposure, especially now, and perhaps the best endorsement for a Perry presidential campaign.

Of course, Texas is not without its challenges nor is Perry without his questionable policy choices, but when comparing the failed policies of California, those akin to the type of big government philosophy President Obama has brought to Washington, to the taxpayer-friendly approaches deployed in Texas, the choice is clear: Texas, Texas, yeehaw!

Brian Calle is an Opinion Columnist and Editorial Writer for the Orange County Register, a Senior Fellow at the Pacific Research Institute, an Unruh Fellow at the Jesse Unruh Institute atthe University of Southern California and editor of the California Political Review. He can be contacted at bcalle@ocregister.com.

Filed Under: Top Stories, Trending News Tagged With: Brian Calle, California, Employment, taxes, Texas