Editorial Round-Up: Tax Initiatives in California

California Gov. Jerry Brown has made raising taxes a priority for his administration as the state continues to confront a substantial budget deficits.
by , | December 6, 2011
 

California Gov. Jerry Brown has made raising taxes a priority for his administration as the state continues to confront a substantial budget deficits. On Monday, he officially announced he would push to collect signatures to place an increase on income and sales taxes on the 2012 ballot for voter approval, rather than contend with partisan gridlock in the state capitol. Brown has said the new revenue would be funneled to schools and help local jails house more inmates to take pressure of state prisons.

His plan has been greeted with a wide range of responses from the state's newspapers, from skepticism to support.

Brown's proposal to raise the state sales tax by 0.5 percent and state income tax on Californians making more than $250,000 annually is "distressingly conventional," the San Diego Union-Tribune wrote on Dec. 4. "We think the last thing California and its staggered economy needs is just the government status quo but with higher taxes," the newspaper said. Instead, according to the Union-Tribune, Brown should focus his energy on overhauling the tax code altogether, and a bipartisan state commission has already laid the groundwork for such a plan. Income taxes would be streamlined, the sales tax would be eliminated, as would corporate taxes, and the lost revenue would be replaced by a new "business net receipts tax," a 4 percent charge on the difference between the materials that a business buys and how much it charges when its products or services are solid.

"The result would be the first tax code ever devised primarily to increase revenue by helping the economy," the newspaper argued. "Special interests on the left and right who would see their burdens change oppose the plan. But it remains vastly preferable to raising taxes while ignoring how the government inhibits growth."

The Sacramento Bee warned in its Dec. 3 editorial, after Brown's intentions of proposing a tax increase for the next election were reported, that Brown and others who support a tax hike should be wary of the political ground they're treading. If there is a slew of tax increase initiatives on the ballot next year, "voters almost surely will reject them all," the Bee asserted. The newspaper noted that each of the circulating proposals has strong points and weak ones. Increasing the sales tax, for example, would inevitably have a greater impact on low-income residents. But there must be a compromise that would satisfy all parties and put the state on the path toward paying its debt, the Bee said.

"Time is running short to fashion a compromise that would be politically viable, would satisfy legitimate concerns of proponents, and, most importantly, would end California's perennial fiscal crisis," the newspaper concluded. "The governor needs to persuade the factions to compromise. No issue is more important for the state. He needs to focus on it."

"In the newspaper business, the term 'standing head' denotes a headline used over and over because the information beneath it is predictably unchanging. The news it heralds is entirely expected," the Orange County Register said in opening its Dec. 1 editorial that described Brown's plan and others as "as wrongheaded as (they are) ill-timed." The Register observed that previous governors had unsuccessfully tried to take statewide tax increases to the voters.

"What is needed in California is precisely the opposite of what is proposed. Mr. Brown and cohorts should boldly reduce tax burdens, not increase them," the newspaper argued. "Rather than siphon money out of the economy and lavish it on bloated, often-unneeded government spending, more should be left in private hands. That would stimulate economic growth and, ironically, generate higher tax revenue. When people make more, they pay more in taxes."

If tax initiatives are going to be placed on the ballot, then voters needed to be given a clear understanding of what they're voting for, the Long Beach Press-Telegram said in its Dec. 4 editorial, and they must be assured the state government has done all it can to cut spending. Proponents should also be wary of putting too many tax increases on the ballot, as voters might instead opt to simply reject all of them, the newspaper insisted. In the meantime, Brown and the state legislature should work to resolve the state's pension crisis, a popular headline of late, and take any necessary measures to reduce the state's financial burden before bringing a tax increase to the electorate, the Press-Telegram said.

The San Francisco Chronicle saw an opportunity for tax increases. "After years of shouting no, California voters may be ready to say yes to higher taxes," the newspaper claimed in its Dec. 3 editorial. The Chronicle noted that there are issues with each proposed increase: income taxes tend to fluctuate with the economy, while sales taxes could place an unfair burden on low-income families. Politicians, including Brown, should therefore considering expanding the number of transactions that are taxable, the newspaper argued. "Legal work, tax advice, medical treatments and even yoga classes and haircuts: None are taxable," the Chronicle reminded its readers.

So, as lawmakers and interest groups continue to finetune their proposals, they must be certain that they are making the best possible pitch. "Blow this chance and you probably won't get another opportunity," the Chronicle cautioned the state's policymakers.

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