FLASHREPORT

THE GOVERNOR'S BUDGET: BAD FOR WORKING FAMILIES, GOOD FOR HOLLYWOOD MOGULS

Assemblyman Chuck DeVore

It was only two years ago this month that Governor Arnold Schwarzenegger, in full campaign mode, said that he trusted “the people” to spend their own money while the Democrats trusted government.  “We want to expand the economy; they (the Democrats) want to expand government,” Schwarzenegger said, emphasizing a bedrock Republican principle. 

What a difference two years makes.

Once upon a time, Gov. Schwarzenegger opposed all tax increases, correctly saying that that taxes increases would harm California’s economy.  Now, after five years of pledging not to raise taxes, Gov. Schwarzenegger has become the highest profile proponent for increasing taxes. 

With a five year record of growing California state government spending by 40 percent, so much for expanding the economy instead of expanding government. 

To pay for all that new government, Gov. Schwarzenegger is pushing to increase sales tax revenue by 14%, increasing the state sales tax rate from what is already the nation’s highest at 7.25 percent, to 8.25 percent – a whopping $5 billion a year transfer of wealth from working Californians’ pockets into the government treasury. 

With inflation seeing its highest levels in almost 20 years, the last thing California’s families need is additional inflation in the form of the government taking an additional penny of every purchase of goods while their house payments go up and their home values go down. 

With many families already having a hard enough time affording back-to-school clothes and supplies, and a sales tax increase will be about as welcome as a broken air conditioner on a hot Sacramento day. 

The Governor claims his tax increase will be temporary.  Temporary taxes rarely are.  Exhibit one: the “temporary” 3 percent tax on phone service passed in 1898 to pay for the Spanish-American War – it was rescinded – 108 years later.  

Meanwhile, not to let a little matter like consistency and intellectual honesty stop him, Gov. Schwarzenegger is still proposing massive tax credits for Hollywood movie moguls to halt so-called runaway production.  You can’t make this stuff up.  California’s governor, a once and future Hollywood actor, wants to stiff working Californians out of $15 billion in new taxes over three years while at the same time showering his Hollywood buddies with millions of dollars in tax credits so they will make movies in Hollywood as they’ve been doing for 95 years.

California has the highest income taxes in the nation, the highest state sales tax rate, the highest gas tax, the highest corporate tax in the West, while California’s property taxes are only at the national average.  Add it together, and California has the fourth-highest tax rate in the nation – is it any wonder Hollywood accountants (known to be more creative than most Hollywood writers) advise their clients to move out of state?  If California’s taxes were more reasonable for everyone, then everyone, including movie moguls and working Californians, would benefit by having a stronger economy and keeping more of their own hard-earned money.  

Instead of trying to cut a deal for special tax treatment for his Hollywood friends while raising taxes on everyone else Governor Schwarzenegger should look at his political highlight reel and return to his anti-tax, pro-working families Golden era.

Assemblyman Chuck DeVore (R – Irvine) is the Assembly’s lead Republican on tax policy as Vice Chairman of the Revenue and Taxation Committee.  He retired from the Army National Guard with the rank of lieutenant colonel.

You can e-mail Assemblyman Devore, via the FR, here.