Another Tax Increase Initiative: When Will It Stop?

Monday, January 12, 2004

Page 7

IN MY OPINION (Column)

Another Tax Increase Initiative: When Will It Stop?

By JON COUPAL

(The writer is an attorney and president of the Howard Jarvis Taxpayers Association.)

During and after the recall campaign, Arnold Schwarzenegger repeatedly stated that he would raise taxes only as a last resort in case of major catastrophe. With major fires and an earthquake behind us and still no tax increase, he apparently meant what he said. This has left the tax-and-spend lobby fuming. It has also left them with the initiative process as the only realistic mechanism to pursue their big government agenda.

And use it they have. This March, Proposition 56 will appear on the ballot. This abysmal measure would lower the vote threshold for passing new taxes from two-thirds vote of each house to 55%. In addition, the powerful California Teachers Association is sponsoring a “split roll” property tax increase initiative targeted for the November ballot.

Now we have a new threat. The “Mental Health Services Funding and Expansion Act” is yet another tax increase proposal that is planned for the November ballot. Sponsored by left-wing Assemblyman Darrell Steinberg and those with a vested interest in the mental health care industry, the proponents are pushing this initiative as a fix for the problem of homelessness, mental health issues, and crime on the streets. But—like so many high sounding proposals—what this really is is a tax increase.

Billed as a tax increase on the wealthiest one percent of California income earners, the money will be funneled into the bureaucracies that currently administer mental health services to Californians. And with that money, new programs of those bureaucracies will be established to provide broad ‘treatment’ of psychiatric needs in every corner of California. Those eligible to reap the benefits of this new fund will be, according to the campaign’s own website, anyone “showing signs of mental illness”—a standard usually so broadly defined as to include nearly anybody.

The tax burden that comes with this proposal is enough to make any taxpayer paranoid. (And thus presumably eligible for funding). From the very beginning, the statute will impose a tax increase of over $600 million per year onto our already over-burdened economy, with large built-in increases every year after that. The proponents recognize any talk of tax increases is not popular in one of the most heavily taxed states in America. Therefore, they target the ‘rich’. Unfortunately, they don’t realize that those who are the wealthiest among us are also shouldering most of the tax burden in this state, and schemes like this are precisely what are driving them—and their tax dollars—out of California in record numbers.

The lessons of the past have been lost on the proponents of this measure. People change their behavior to adapt to a hostile tax climate. It is well known that there is nothing more mobile than wealthy people and capital. Efforts to target the “rich” in California result in more rich people—and their wealth—in Nevada. This results in less, not more, tax revenue for the Golden State.

Most Californians are aware that our state government has a profound spending problem. Red ink spilling out of Sacramento, large and clumsy bureaucracies, and spend-a-holic politicians have only made the situation worse. We can’t afford risking our fragile economic recovery on ill-conceived schemes that will drag it down even further.

The initiative feeds and expands an ineffective system of treating mental illness. Without fixing the structure of these services, the cycle of dependence by those who need them will only be repeated, not repaired. After all, building on a problematic bureaucracy doesn’t make it better, .just bigger. As the government’s own recent report on the Metropolitan State Hospital reveals, fraud and waste, not success and efficiency, are the unfortunate attributes of this broken system.

In addition, this measure is only the latest in a string of “ballot box budgeting” proposals. By locking in a fixed, higher tax for a specific program, it deprives the Legislature of its normal responsibility to set spending priorities.

So while the initiative might satisfy powerful special interests that have a significant stake in propping up the current system of mental health treatment in California, it does not reform that system in a meaningful way. Like most tax increase initiatives, this is a thinly veiled payoff to special interests. Rather than solving real problems, it has the effect of maintaining them.