“An unlimited power to tax involves, necessarily, a power to destroy; because there is a limit beyond which no institution and no property can bear taxation.” -- John Marshall
A consistent theme has already begun to emerge for California’s 2013-14 legislative session. Over the past several months, as legislators conduct legislative hearing after legislative hearing, it has become readily apparent that California’s brush with austerity is all but a faded memory as the majority of both houses chisel away at the barriers that exist between government coffers and the taxpayer dollar.
By Any Means Necessary
As glimmers of light flicker through the heavy grey malaise of a lingering recession, the fact remains that the prolonged economic downturn has hammered all regions of the state in one way or another. Indeed, some counties are still suffering the heavy burden of unemployment rates well over 10%.
As such, local government officials and families alike have had to make difficult choices and tighten their belts. Yet there is a difference between the average citizen and government at all levels. As families undertake their own austerity movements to ensure that they can continue to pay the bills, feed the family and make ends meet, government’s voracious appetite for more money only seems to grow. As such, committee rooms throughout California’s Capitol are loaded with legislative proposals aimed at extracting more taxpayer dollars.
Break the Walls Down
While direct tax hikes are a primary vehicle for increasing “revenue” to the government, they are not the only method available when it comes to shifting more dollars to the general fund.
At times, the barrier between revenue to the general fund can be a higher vote threshold (i.e. a 2/3 vote), or a “more efficient way” to collect fees and penalties. At other times, governments simply move to authorize themselves another bite at the apple in the instance voters have rejected a locally proposed tax hike. Whichever the method, the goal of the legislative efforts is the same: take in more money.
Following is a small sampling of legislative revenue-raising efforts that have been proposed thus far in 2013. In no way is this an all-inclusive list. Rather, it’s intended to provide a snapshot of how expansive these efforts to gain access to the taxpayer dollar are, and how they touch virtually every aspect of the typical Californian’s life.
Just months after California voters rejected Prop 29, which would have increased the cost of cigarettes by $1 per pack, SB 768 (De León) moves to impose a new $2 per pack tax on cigarettes to pay for yet-to-be-specified health programs and causes, including promoting access to care and tobacco-related health services. If voters shunned $1, it just makes sense for the legislature to go for $2.
After voters in Alameda County rejected a local ballot measure to increase the local sales tax, AB 210 (Wieckowski) would, in essence, allow Alameda County (and allows Contra Costa County) to once again try and locally increase the 2 percent local transactions and use tax limit by 0.5%. Clearly, the voters did not read their ballot descriptions as hard as legislators.
Thinking about buying a house or refinancing? SB 391 (DeSaulnier) would impose a new $75 tax on every real estate instrument, paper, or notice requirement in an effort to fund affordable housing programs. It’s estimated this would increase a typical real-estate transaction by $375.
Connie B. Diekman, director of university nutrition at Washington University in St. Louis and a past president of the American Dietetic Association, noted that “generally, taxing food doesn’t change long-term behaviors with respect to appropriate food choices,” she said. It takes lifestyle changes and education. But who needs science when you have programs to fund? As such, SB 622 (Monning) would impose a $0.01 per fluid ounce tax on sweetened beverages.
Do any grocery shopping? SB 700 (Wolk) would impose a five-cent tax on paper or plastic shopping bags to raise money for parks and litter abatement. After all, carrying your groceries clearly contributes to state parks financial hardships, despite decades of hiding tens of millions of dollars in secret funds.
AB 683 (Mullin) would authorize local governments to impose a special assessment and to record a lien against real property for the purpose of collecting fines and penalties that have been incurred due to violating specified ordinances. Currently, local governments must go to small claims court to retrieve these costs, but that can be a hassle.
Then there is the veritable cornucopia of proposed Senate and Assembly Constitutional Amendments bent on gaining any access possible to taxpayer funds. The following measures all seek to reduce the voter-approved threshold for various special taxes from 2/3 to 55%. After years of attempting to remove voter approval for issuing bonds and special taxes and being stymied by Republicans, Howard Jarvis Taxpayers Assn., and Governors, the Democrats have decided on the “half-loaf” approach of reducing the voter-approval threshold in the hopes of gaining traction for the entire loaf.
SCA 4 (Liu, 2013) weakens Proposition 13's protections against excessive local government taxation by lowering the vote threshold from 2/3 to 55% for local governments to impose, extend or increase special taxes to fund local transportation projects.
SCA 7 (Wolk, 2013) is nearly identical to SCA 4 except that it also lowers the vote threshold from 2/3 to 55% for local governments to impose, extend or increase special taxes or parcel taxes to fund local public libraries.
SCA 8 (Corbett, 2013) shares a common method with both SCA 7 and SCA 4 by lowering the vote threshold from 2/3 to 55% for local governments to impose, extend or increase special taxes to fund local transportation projects.
SCA 9 (Corbett, 2013) weakens Proposition 13's protections against excessive local government taxation by lowering the vote threshold from 2/3 to 55% for local governments to impose, extend or increase special taxes to fund community and economic development projects.
SCA 11 (Hancock, 2013) Rather than an incremental approach to lowering the 2/3 vote threshold, this catch-all constitutional amendment lowers the vote threshold for local agencies imposing, extending, or increasing any special tax from 2/3 to 55%.
ACA 3 (Campos, 2013) lowers to 55% the threshold to approve both bonds and special taxes to fund emergency services within cities, counties and special districts.
ACA 8 (Blumenfield, 2013) lowers to 55% the threshold to approve both bonds for public safety facilities and improvements.
Lest We Forget
There is no such thing as government money. Governments have no money; they have only what they take from their citizens, either in taxes, penalties or fees. And if government accrues profit it can only have done so by taxing too much or eroding the value of the citizens' income and savings -- in either case doing harm, not good, to the people who have created it for the advantages such a common effort is presumed to bestow.[i]
While some committees in the legislature have adopted a policy of amending all measures proposing tax cuts and credits with a sunset and study to determine their effectiveness, the same policy is non-existent for tax or fee hikes.
In other words, it’s a one-way deal for revenue while at the same time rejecting the good sense Thomas Jefferson had when he wrote to his friend, John Wayles Eppes:
"Taxes should be continued by annual or biennial reenactments, because a constant hold, by the nation, of the strings of the public purse is a salutary restraint from which an honest government ought not wish, nor a corrupt one to be permitted, to be free."
"We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle." -- Sir Winston Churchill
Increased taxes, fines and fees are a poor substitute for doing the heavy lifting of re-thinking, reorganizing, and re-prioritizing government. Moreover, every additional tax increase represents an increase in the size and scope of government and a corresponding decrease in freedom and individual responsibility. Onerous tax liabilities change the incentives for people to work hard, save their salaries, invest in new opportunities and exercise the entrepreneurial spirit, the bedrock of a prosperous society.
The current economic situation requires new and innovative ways to ensure that we get the most from our finances; but this will only happen when taxpayers demand accountability from their policy makers. Until then, California's majority run legislature will continually strive to break down the barriers between the taxpayer dollar and the general fund.
[i] Edwards, Mickey. “The Difference Between Business and Government.” The Atlantic. June 2012. Web 10 June. 2013.
For more information on this report or other Local Government issues, contact Ryan Eisberg, Senate Republican Office of Policy at 916/651-1501.