California Tax Hike Touted as Landmark Tax Reform

Senator uses futuristic lingo to push old ideas: taxing and spending


SACRAMENTO — "The dignity of the word, to be sure, consists in this: through the word is accomplished what no other means can accomplish, namely, communication based on reality,"wrote German philosopher Josef Pieper, in his book "Abuse of Language, Abuse of Power."Pieper warned of the modern trend toward sophistry, that is, distorting words to dupe the public.

Pieper would have had a field day in California's Capitol, where the simple word "reform" means something very different than the dictionary definition: "make changes … in order to improve it." This is particularly true when one is talking about California's convoluted tax system, which is routinely the subject of reform discussions.

People from across the political spectrum complain about California's steeply progressive tax structure. Liberals are fine with the rich shouldering the burden, but complain that the capital-gains-based system distorts budgeting because of boom-and-bust cycles. Conservatives argue the top-heavy tax burden chases job creators to other states.

Indeed, the top one percent of income earners pay more than 50 percent of the state's overall revenues, according to the Legislative Analyst's Office. The state's tax structure would top the list of any issues ripe for serious bipartisan deal making. And a recent study makes the issue more pressing.

"We've found that income inequality between the top one percent and bottom 99 percent rose with economic growth and fell with economic slowdowns," according to Autumn Carter, of the reform-oriented California Common Sense. "California has staked the bulk of its annual budget on the one ercent's ability to keep growing its income through taxable income like capital gains. We're actually balancing our state budget on income inequality."

Along comes the "Upward Mobility Act" (SB 8)—a major tax "reform" bill introduced in December by state Sen. Bob Hertzberg, the Van Nuys Democrat with a reform-oriented reputation. Anything Hertzberg promotes garners serious interest, given that he's often mentioned as the next possible Senate leader.

"California has long been known as the land of opportunity, the republic of the future," wrote Hertzberg, USC law professor Edward Kleinbard and economist Laura Tyson, in the Los Angeles Daily News. "Inequality continues to rise – even though California has one of the most progressive tax structures in the nation. Something more is needed." They call for "a new philosophy of governance" and "modernizing our tax system" to boost upward mobility.

As the legislation explains, California's $2 trillion economy has shifted dramatically since the 1950s and 1960s, when the framework for the current tax system was put in place. Back then, the economy was heavily based on manufacturing and agriculture. Today, the bill explains, information and services make up 80 percent of the economy.

A typical "reform" idea is to apply sales tax to services and simultaneously reduce corporate and personal-income taxes. But that's not what's going on here. SB 8 would do the first part – apply sales taxes to legal, real estate, accounting, political consulting, yoga classes and most other services (health care, education and smaller businesses are exempt) in exchange for, get this, "evaluating the corporate income tax to determine whether it is meeting its intended purposes" and examining "the impacts of lowering and simplifying the personal income tax while maintaining progressivity."

In other words, we raise taxes now—and talk about lowering them later (with the stated goal of lowering personal income taxes mostly for lower- and middle-income people). Critics aren't sure how burdening service-oriented businesses with new taxes will increase growth and upward mobility.

Hertzberg admits his bill is a work in progress, but his stated goal is to raise $10 billion in state taxes to spend on education, infrastructure and aid to the poor. Any future revenue reduction "would be phased in only when it is clear that new revenues are sufficient to replace any revisions to the personal income tax and corporate tax."

Is this a futuristic plan to increase upward mobility or the oldest idea in Sacramento: Increasing taxes to fund more government spending? "(Hertzberg's) first bill is a huge, historic tax hike," explained columnist George Skelton, who supports it. I disagree with his conclusion, but am glad someone finally is using words based in reality.

NEXT: Stop Pretending to Be Offended by Everything

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  1. What else are they going to do? Cut spending?

    Besides, the rich aren’t paying their fair share. How could they? They’re still rich!

    1. I’ve made $64,000 so far this year working online and I’m a full time student. I’m using an online business opportunity I heard about and I’ve made such great money. It’s really user friendly and I’m just so happy that I found out about it. Heres what I’ve been doing

  2. Taxes create civilization, right? So this will make California super-civilized! Prog harder!

  3. “through the word is accomplished what no other means can accomplish, namely, communication based on reality,” wrote German philosopher Josef Pieper

    You know who else communicated based on reality?

    1. Max Headroom?

      1. Well, I was thinking “Don Juan”, but your answer works.

        1. Don Juan ?

    2. Baron von Munchausen?

  4. ? ? ? ? LIFETIME OPPORTUNITY ? ? ? ? ?
    My friend’s step-sister makes $72 /hour on the computer . She has been unemployed for ten months but last month her pay check was $14639 just working on the computer for a few hours. Pop over to this web-site ???????

    1. But I live in Cali, so my pay check would actually be negative.

  5. California Tax Hike Touted as Landmark Tax Reform

    Finally, citizens! We can rest peacefully knowing that we will be unburdened of our wealth that’s been weighing us down and holding us back.

  6. my friend’s step-aunt makes $73 hourly on the internet . She has been out of a job for seven months but last month her income was $19815 just working on the internet for a few hours. pop over to this web-site….,

  7. “Inequality continues to rise ? even though California has one of the most progressive tax structures in the nation. Something more is needed.”

    Trying the same thing over and over and expecting different results… The very definition of insanity.

  8. I gotta get out of this fucking state.

  9. “California has long been known as the land of opportunity, the republic of the future,” wrote Hertzberg, USC law professor Edward Kleinbard and economist Laura Tyson, in the Los Angeles Daily News. “Inequality continues to rise ? even though California has one of the most progressive tax structures in the nation. Something more is needed.”

    Definition of insanity.

  10. The left doesn’t have a clue. Raising the top tax rates is a sure-fire way to increase income inequality. They can’t understand that government cannot increase the amount of wealth, but they keep trying. Bless they’re precious, little, twisted hearts. Imagine the thickness of a skull that must be penetrated to comprehend that reducing income inequality requires lower taxes on the wealthy. That thickness is a distance too far for them to travel in one lifetime. They’re digging a hole to find sunlight.

  11. So, if I read this right a progressice tax isn’t making enough money for the state, and instead of looking at its fiscal policy it is going to raise sales tax? I am having a hard time understanding how these two policies are going to do anything other than screw over the middle class a bit more.

    “The measure’s goal is to reduce the income tax rates imposed under the Personal Income Tax personal income tax rates for low-and middle-class-income households so that families earning $100,000 pay only $1,000.”

    I also read it to mean that becasue my wife and I have a combined income in the $125k range, and that given the price of child care (over 6k a year) and total tax we pay it may be advantageous for one of us to not work full time in order to have a net gain in free time and a lessened tax burden. Obviously this a math problem, but you get my point that if one of us isn’t working full time we may be better off in terms of quality of life when free time versus income comes into play.

    “Health care services and education services would be exempted from the tax, and very small businesses with under $100,000 gross sales would be exempted from the sales tax on services.”

    I take this to mean that small busines owners would now have to take into account the extra tax burden versus the benefit of expanding their business over $100,000 in gross sales. This seem like it would stifle these businesses from growing, but I’m not economist.

  12. All 50 states and District of Columbia have regressive tax systems. A regressive tax system means, the working poor, the middle and retirees pay a bigger portion of their income to satisfy state, county, and local levies, thus, the rich pay a smaller portion of their income to satisfy state, county and local levies, measured as a percentage, (%), of income. California’s tax system is still regressive, though not as regressive as most other states, but, the rich still pays a smaller share of their income to satisfy all California based obligations. With growing income inequality, the paradox is, the rich have more and more money to fund the state budget, while still having an overall lower California state/county/local tax burden than the non-rich, presented as a percentage of income. The rich are not sharing. Since the year 2000, wages are purchasing less and less, about 10% less, for the lower 95-percenters, so this group cannot afford to fund more and more of any budget.

  13. “Inequality continues to rise ? even though California has one of the most progressive tax structures in the nation. Something more is needed.”

    This is telling. Where is all this money going? Unions? Politicians?

    1. It’s not a real mystery. The upper one-percenters own 25% of the U.S.A. economy for themselves. The WalMart family has more wealth than the lower 40% of Americans put together. Former Clinton Labor Secretary Robert Reich says, since the end of the recession in 2009, the upper one-percenters have pocketed 95% of the economic expansion for themselves. The rich are not sharing, unless they are made to share, and most elected officials have little appetite for that. Mostly everyone else are not making more money, as pay increases are meager and fringe benefits continue to disappear. Who is there left to fund the budget, it’s the upper one-percenters. If you look at all levels of government, the $50K earner has about the same tax burden as the person with $5M of income, but the $50K earner is quiet, and the $5M person is vocal about paying too much in taxes. The states only have very limited control over this, as this is a macroeconomics situation, created by those in Washington D.C.. Bringing down the unions plays right into the hands of the upper one-percenters, and those who advocate for the upper one-percenters.

  14. Google pay 97$ per hour my last pay check was $8500 working 1o hours a week online. My younger brother friend has been averaging 12k for months now and he works about 22 hours a week. I cant believe how easy it was once I tried it out.
    This is wha- I do…… ??????

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