Arnold's sales tax plan
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| Also listed in: Courage Campaign Staff |
A few months late and several billion dollars short, Arnold has finally gotten around to making a serious revenue proposal - a 1 cent increase in the sales tax for a duration of three years. The SacBee reports this is expected to raise around $4 to $5 billion.
Not one to offer a solution without strings, Arnold insists that this would only happen in exchange for "long-term budget fixes" such as a rainy-day fund. A rainy day fund is a good idea but that needs to come AFTER we fix the structural revenue shortfall.
The problem with Arnold's proposal is that as most people recognize, sales taxes are a very regressive form of taxation. The Democrats' tax plan would have relied on income and corporate taxes and would have generated nearly $10 billion in revenue, greatly easing the current crisis.
Instead Arnold, in typical fashion, thinks the poor and working Californians should suffer for the budget to be fixed. A smaller sales tax increase might not be a bad idea, but income and corporate taxes are the better solution, as those kind of tax increases promote more economic growth and provide more stability for state revenues. Another solution would be sales tax modernization, where goods and services currently exempt would be included to reflect a 21st century economy. That would provide more stable revenues while also spreading the burden out more fairly.
Democrats are in a stronger position than they realize on this. The public wants smart, effective solutions on the budget, and they want their services to be protected. Let's hope they stick to those values.
PS: John Chiang tears yet another hole in Arnold's ridiculous wage and jobs cut: the state does NOT actually face a cash crisis, Chiang told a Senate committee. Chiang is emerging as a hero on this, and Arnold's attack on the workers is being revealed for the shock doctrine-style assault on wages and jobs that many of us always suspected it to be.
The LA Times has more details:
That last part is troubling. I'd love to see a more progressive tax structure in California, and more reliance on income, corporate, and property taxes as opposed to the sales tax. But to turn this into yet another tax cut, outside of an overall and comprehensive revenue solution, is only going to make matters worse.
The Times also has more on the budget reforms Arnold is demanding:
I wonder if those new powers would even be constitutional. In any case they're very unwise. Separation of powers seems unfashionable these days, but it matters. The Legislature, as the most direct representatives of the people, must never cede this power to the executive branch. A line-item veto is bad enough. No governor should have unilateral power to make cuts.
Ultimately all of this shows that Arnold isn't really interested in budget solutions, but instead wants to use the crisis to ram through far-right solutions that would otherwise never be accepted. Arnold is a textbook example of the shock doctrine that Naomi Klein so ably described in her recent book. Perhaps every Democrat in the Capitol needs a copy?
Not one to offer a solution without strings, Arnold insists that this would only happen in exchange for "long-term budget fixes" such as a rainy-day fund. A rainy day fund is a good idea but that needs to come AFTER we fix the structural revenue shortfall.
The problem with Arnold's proposal is that as most people recognize, sales taxes are a very regressive form of taxation. The Democrats' tax plan would have relied on income and corporate taxes and would have generated nearly $10 billion in revenue, greatly easing the current crisis.
Instead Arnold, in typical fashion, thinks the poor and working Californians should suffer for the budget to be fixed. A smaller sales tax increase might not be a bad idea, but income and corporate taxes are the better solution, as those kind of tax increases promote more economic growth and provide more stability for state revenues. Another solution would be sales tax modernization, where goods and services currently exempt would be included to reflect a 21st century economy. That would provide more stable revenues while also spreading the burden out more fairly.
Democrats are in a stronger position than they realize on this. The public wants smart, effective solutions on the budget, and they want their services to be protected. Let's hope they stick to those values.
PS: John Chiang tears yet another hole in Arnold's ridiculous wage and jobs cut: the state does NOT actually face a cash crisis, Chiang told a Senate committee. Chiang is emerging as a hero on this, and Arnold's attack on the workers is being revealed for the shock doctrine-style assault on wages and jobs that many of us always suspected it to be.
The LA Times has more details:
The increase of one cent per dollar would take effect soon after a budget is signed and last three to four years; after that, the tax rate would gradually drop. It would ultimately settle at a level lower than the current statewide rate of 7.25%.
That last part is troubling. I'd love to see a more progressive tax structure in California, and more reliance on income, corporate, and property taxes as opposed to the sales tax. But to turn this into yet another tax cut, outside of an overall and comprehensive revenue solution, is only going to make matters worse.
The Times also has more on the budget reforms Arnold is demanding:
The proposal, floated in meetings with the Legislature's leaders and their staff, hinges on lawmakers agreeing to automatic spending restraints and new powers for governors to cut programs whenever the state falls into the red.
I wonder if those new powers would even be constitutional. In any case they're very unwise. Separation of powers seems unfashionable these days, but it matters. The Legislature, as the most direct representatives of the people, must never cede this power to the executive branch. A line-item veto is bad enough. No governor should have unilateral power to make cuts.
Ultimately all of this shows that Arnold isn't really interested in budget solutions, but instead wants to use the crisis to ram through far-right solutions that would otherwise never be accepted. Arnold is a textbook example of the shock doctrine that Naomi Klein so ably described in her recent book. Perhaps every Democrat in the Capitol needs a copy?