Noting that the state faces a budget gap of about $40 billion through July 2010, the following was reported in the February 3 Sacramento Bee:
• “A top GOP official has submitted a resolution for the Republican Party's convention later this month to formally censure any Republican who votes for new or higher taxes in a state budget deal. ‘If the Republican party loses the ability to say that we're the party against higher taxes, then we've been dealt a grievous blow,’ said Jon Fleischman, author of the resolution and a Southern California vice chairman in the California Republican Party.”
• “The proposed censure comes less than a week after one union leader threatened recall campaigns against any legislator who votes to roll back labor protections as part of a budget deal.”
• “For months, Democrats and Schwarzenegger have proposed a combination of tax hikes and spending cuts to close the budget deficit. So far Republicans, many of whom signed pledges to never raise taxes, have refused to go along.”
However, the Bee also noted: “Business groups are advocating new broad-based taxes, instead of none at all, and GOP lawmakers are signaling a willingness to talk.”
A January 17 Bee report noted:
“Key groups are now focusing their tax opposition on proposals that impact specific industries while remaining open to broad-based charges such as a temporary sales tax or vehicle license fee increase… California Chamber of Commerce President and CEO Allan Zaremberg said this week that his group is ‘not opposed to all taxes’ in the current budget environment.
“‘There's going to have to be a combination of revenues and real spending reductions,’ Zaremberg said. ‘But there are certain taxes that are going to hurt the economy worse than others, and those are targeted taxes that impact one industry disproportionately.’
“Zaremberg said the state chamber, which represents 16,000 businesses, opposes a proposed 9.9 percent tax on each barrel of oil extracted in California. It also opposes extending the sales tax to a number of services that the state currently does not charge, such as veterinary care, car repair and amusement parks. Zaremberg and other business leaders have said any new taxes should instead be broad in nature.”
That’s called surrendering. Unfortunately, I’ve seen too many state-based business groups over the years give up the fight, and open the door to higher taxes. Politicians then raise taxes, and later, those same business groups complain about how high taxes are in the state.
But the January 17 Bee story also noted: “Some groups remain opposed to all taxes, however. The Howard Jarvis Taxpayers Association continues to fight against any new tax increase, and its president, Jon Coupal, said ranking taxes is ‘academic’ because all hurt the economy.”
Quite correct.
And keep in mind how wildly non-competitive California already is when it comes to its public policy climate. On the latest edition of SBE Council’s “Small Business Survival Index,” which ranks the 50 states and District of Columbia according to their policy environments for entrepreneurship and small business, California ranked apathetic 49th.
Whether a Republican, a Democrat, a business owner or an employee, raising taxes still further in California will only inflict more economic damage.
Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council
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