After watching the state suffocate from a lack of monetary oxygen, California Democratic Governor Jerry Brown has taken the tepid move to propose selective temporary tax hikes for the November 2012 election.
Brown wants voter approval of temporary taxes that will increase by one percent the obligations of those making $250,000 and even higher obligations--two percent--for those making $500,000 annually, along with a sales tax hike of one half percent. Combined, these tax increases will erase about half of the $13 billion deficit anticipated by the Legislative Analyst by June 30, 2013.
In other words, Brown proposes to go after the usual suspects, and nothing more.
Left out were any thoughts of increasing corporate and bank taxes as well as taxing areas heretofore untaxed (think oil severance taxes) or undertaxed (think tobacco and alcohol taxes). Rather than go after those areas and their powerful lobbyists, Brown stuck to the tried and true.
One has to wonder about Brown's thinking. Yes, voters are likely to warm up to the idea of increasing taxes on the wealthy, without considering that income taxes already contribute to more than half the general fund revenue. And yes, the sales tax is an easy mark, although as presently defined, the sales tax applies to only about 40 percent of the products and services sold in California. In short, these are safe proposals.
But are they enough?
The answer is a resounding "no." Brown's proposals will address only half the shortfall. They will fall far short of what California needs to do to remain solvent. In other words, another band aid for the state's fiscal cancer.
Instead, California has to both spread the tax burden and extend the tax burden to those areas currently protected by the state's tax collection system. That means considering such ideas as broadening the sales taxes to services and proposing taxes to areas currently untaxed or undertaxed. Such ideas may be hard to promote, but that's why we elect a governor--to help us understand the magnitude of what we must do to conquer our problems.
These issues should not be swept under the rug. Instead, California needs to be bold about its taxation choices and face up to them. And the voters need to accept the outcome if they want the state to reverse direction from its deteriorated condition.
More of the same will not do it for California. Ideas new and fresh might work. It's time to be creative.
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