With the latest session of the California legislature over, now is the time of year when various groups and organizations release their “scorecards” — assessing how legislators performed based on how they voted on key pieces of legislation that were of interest to that group or organization. Yesterday one such group to release its ratings of the legislature was the California Taxpayer Association — or “CalTax” as they are known in political circles. You can see their ratings here. If you peruse the lengthy list of bills that CalTax uses to rate legislators, they picked out a bevy of bills — many of them atrocious and worthy of being scored for a “no” vote — and many of them good, certainly appropriately scored as a “yes” vote. There is a lot of good information there, representing a lot of work to put together.
That having been said, since the name on the door says “Taxpayer” Association, it worthy of note that two of three major tax increase bills that were being opposed by taxpayer groups like the Howard Jarvis Taxpayers Association and Americans for Tax Reform were left completely off of the CalTax scorecard. The two tax increases ignored by CalTax were AB 1492, which passed, and will impose a permanent, annual $30 million statewide sales tax on lumber- and SB 1455, which would have extended existing car taxes for seven more years at a cost to automobile owners of well over $2 billion.
With both of these pieces of legislation, you had a very critical and important public policy question before us — if the legislature by majority vote passes regulations that severely and negatively impact an industry or a group of industries, should broad-based taxes be raised so that some or all of the revenues generated by such tax hikes can be redistributed to those negatively impacted industries through subsidies or credits? Note: I consider it raising taxes when current law calls for a tax to end, and a law it proposed that would reinstate that tax for some extended period of time. I submit to you that the answer to that question is easy – of course not.
With AB 1492, which actually was passed by the legislature and signed by Governor Brown, the state’s beleaguered and almost extinct timber industry was in desperate need of reforms that would reduce their legal liability if their activities sparked wildfires, as well as some relief from environmental reviews. The legislature should have listened to the plight of the timber industry, and rushed to their aide with regulatory and legal relief. A “no-brainer” for sure. But Brown and legislative Democrats were simply unwilling to just pass these needed reforms on their merit. Instead, they insisted that such relief must come with a vote to create a tax on lumber, to generate an estimated $30 million a year, that will now go to “regulatory oversight” of the California timber industry (it should be noted that this tax is not just on California harvested timber, but on all timber bought by California consumers, including lumber from other states or other countries). This is a terrible way to do business, and an organization like CalTax should have been on the forefront of opposing AB 1492, but they weren’t. And it should have been on their scorecard, but it isn’t. Consequently from the Republican side of the aisle, State Senators Bill Emmerson and Tom Harman as well as Assemblyman Cameron Smyth, the three of whom provided the necessary GOP votes to (along with every Democrat) get to the two-thirds threshold, get a “pass” from CalTax. This despite their decisive votes to raise taxes.
SB 1455 was a bill that was “gutted and amended” about a week before the end of session, and suddenly included language that would have taken a bunch of taxes on automobiles that are set to sunset in 2015, and extend them out to the year 2023. Yes, you read that right — there was a last minute, stealth move, to raise car taxes when there was no urgency. This legislation could have (and no doubt will, since it failed to pass) come to the legislature next year (or the year after) and go through the normal legislative process. But as we know, the frenzied days of the end of session are exactly when the taxpayers are the most at risk. This is another situation where the majority party has passed onerous regulations that impact a host of specific industries (many are regulations promulgated by the California Air Resources Board to meet arbitrary energy standards set by the legislature). The car taxes we are talking about here add up to hundreds of millions of dollars a year, and a good portion of that money is taken in by the state and then doled out to over-regulated groups to help subsidize their costs to comply with onerous regulations. Thus you had a “who’s who” of the over-regulated, combined with all of the environmentalist groups who would just a soon tax every car off the road anyway, lobbying intensely for this massive tax increase. When the focus needs to be on repealing the onerous regulation, instead efforts to plunder a broad group of taxpayers to subsidize the over-regulated, is undertaken. Fortunately this effort failed (two Democrats in the Senate did not support it, making the difference). But again an organization like CalTax should have been on the forefront of opposing SB 1455, but they weren’t. And it should have been on their scorecard, but It wasn’t. Again, this had the effect of allowing five GOP legislators who voted for this massive tax increase to “hike” behind their new CalTax rating when Senators Bill Emmerson (yes, he voted for both taxes) and Jean Fuller as well as Assemblymembers Katho Achadjian, Kristin Olsen, and Cameron Smyth (another double-taxer) should have had that marked against them. And Democrat Senators Correa and Wright should have gotten credit for not supporting the taxes, but they didn’t.
CalTax does get credit for putting Speaker Perez’s AB 1500 on their scorecard, which was the third major tax increase bill being pushed in the final week of the session. This legislation, if passed and signed into law, would have changed the way that business income tax liability is computed, which would have had the net results of raising taxes on businesses who employ, sell goods and sell services to Californians (which no doubt would have let to increases in the price of their products and services).
Why weren’t these significant tax increase bills — top targets for defeat by the venerable Howard Jarvis Taxpayers Association — on the CalTax scorecard? Well, you will have to ask them that question. But I will throw this out there for you — while they like to say that they are not technically affiliated with the California Chamber of Commerce, let it suffice to say that anyone engaged in the process knows that CalTax largely “follows the lead” of the CalChamber. Because of this I have noticed over the years that many times when there is a tug of war between what is in the best interest of the taxpayer in general, versus what may be in the financial best interest of specific industries or areas of business, it’s not unheard of for CalTax to be silent, or even side with the business interests. They have endorsed tax increases in the past.
On a closing note, I will say that consistently the legislative scorecard that I look to the most often, because its authors not only seek out critically important bills to rate, but also understand what is going on in the Capitol and seek to rate bills where the pressure is oN, is the California Republican Assembly scorecard. I am looking forward to their new ratings to come out in the coming days, and seeing how legislators performed. The CRA scorecard can be found here.