California taxes could go up – again. That’s if the speakers have their way from a March 27 conference at the state Capitol, “Funding California’s Future: Building a Strong Revenue System.” It was sponsored by the Service Employees International Union, the California Budget & Policy Center, the California Tax Reform Association and GRACE – End Child Poverty CA.
Based on viewing a video of the event, what struck me most is that the presenters didn’t seem to understand that higher taxes on corporations can yield unfavorable outcomes like higher costs for consumers as the cost of taxes are passed down. Or, more severely, some corporations might respond to higher taxes by relocating to another state. Some might even go bust.
First speaking was Sam Wilkinson, senior policy associate of End Child Poverty. She pointed out the child poverty rate increased from 11% in 2021 to 18.9% in 2023, “the highest in the nation,” and that one in three households cannot afford a decent standard of living. All of which brings a “disparate impact on Black, Brown, Indigenous and immigrant families”
What Wilkinson left out is that the massive amount of money the government has to help the poor is not being spent sensibly. A report a year ago by state Auditor Grant Parks looked at $24 billion in homeless spending from 2018-19 through 2022-23 and found, “The State lacks current information on the ongoing costs and outcomes of its homelessness programs.”
Nevertheless, Wilkinson said the state needs to “map out what it takes to raise revenues equitably at the state level…. The fight to end poverty, to raise revenues, has been ongoing for many years.”
She also attacked President Trump’s budget cuts and decried extending his 2017 tax cuts, which will expire next year. “All of that is going to fund billionaires’ tax breaks, all of which is despicable.” Actually, I got a $1,000 yearly tax cut and I’m middle-class – lower level in ludicrously expensive California.
Next up was Kayla Kitson, senior policy fellow at the California Budget & Policy Center. She talked about “why it’s critical to raise revenues and how we can go about doing that” so the wealthy can “pay their fair share.” She warned of “state budget deficits looming on the horizon as well as massive federal cuts,” but also didn’t point out that the state’s problem is that it overspends.
Kitson called for closing the “water’s edge loophole,” which enables corporations the option to avoid about $3 billion in state taxes by shifting profits overseas. Instead of the 8.84% flat corporate tax paid by most companies, she wants a graduated tax similar to the income tax. If she got her way, many businesses will just leave.
Then spoke an old opponent of mine, Lenny Goldberg of the Tax Reform Association. For four decades he’s pushed for a “split roll” property tax, almost as long as I’ve written editorials opposing that. It would gut the 1978 Proposition 13 property tax limitation that has undergirded what remains of the state’s prosperity. A split roll would keep Prop. 13’s limit on home property increases to 1% of assessed value a year, but allow commercial property taxes to be reassessed every year, bringing huge tax increases.
At the conference, he called for a variation: A reassessment when there’s a “change of ownership” of properties between corporations.
He also backed a 10% severance tax on oil production and a chart he showed read: “Specious arguments against: would shut down oil production/raise prices.” Actually, with Philipps 66 ending refining here by the end of the year due to attacks on the oil industry by Gov. Gavin Newsom and the Legislature, it’s not at all unrealistic that oil companies could keep leaving.
Not satisfied with all of these taxes, Goldberg also called for taxing “digital products, whether it’s music or streaming services.”
Better binge watch your favorite series now before you can’t afford to.
John Seiler is on the SCNG editorial board.
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