Tax Hikes Loom for 2016 Ballot

Tuesday, December 30, 2014

Page 7

IN MY OPINION (Column)

Tax Hikes Loom for 2016 Ballot

By JON COUPAL

Although it may seem far in the distant future, there has been a great deal of speculation regarding what ballot propositions might appear on the 2016 General Election ballot in California. Focusing on just those proposals having the potential for real harm to taxpayers, here is our short list:

SALES AND INCOME TAX EXTENSION—An extension of the temporary sales and income tax increase voters approved with Proposition 30 in 2012 is being advocated by public sector labor leaders. The proponents will argue that, since Californians are accustomed to paying these higher rates, it should be more palatable to voters to make these tax increases permanent as opposed to some “new” tax.

OIL SEVERANCE TAX—An oil severance tax— taxing petroleum as it is extracted—is likely to be advanced by those who see an opportunity to soak an unpopular industry. They will count on the public not noticing that these taxes will be passed on to California drivers in the form of higher gas prices.

SPLIT ROLL PROPERTY TAX—Those on the far left are salivating over the prospect of an increase in property taxes for commercial property. This attack on Proposition 13 would split the tax roll so that business property will pay much more. The impact on small business and jobs will be glossed over with the usual platitudes like, “It’s for the children.” They will totally ignore that higher taxes on businesses are passed through to consumers in the form of higher costs for goods and services.

TOBACCO TAX—A tobacco tax is also in the offing. The state tax on a pack of cigarettes is 87 cents. Those wanting more tax revenue would like to add another two dollars and will probably also claim it is a blow for public health because it will help smokers quit. Even if one opposes smoking, it has to be acknowledged that tobacco taxes are highly regressive as well as leading to more black market commerce which, by the way, goes untaxed.

LOWERING OF THE TWO-THIRDS VOTE FOR BONDS AND/OR PARCEL TAXES—Of greatest concern to California homeowners is the possibility that the two-thirds vote requirement for local bonds and parcel taxes will be eliminated. These levies are repaid only by property owners. How realistic is this threat? Considering that, for the first time since Prop 13 was passed in 1978, a house of the California legislature actually passed this anti-13 proposal (ACA 8) the threat is very real.

BAG TAX—The “bag tax”—a charge on single use bags – is actually not a tax increase proposal. Rather, this tax was enacted by the legislature but is now subject to repeal via the referendum power by those opposed to the tax. The tax reflects “nanny government” at its worst.

Here are a couple of observations about this potential tax “tsunami” at the ballot box. First, the threat from anti-taxpayer initiatives is even higher than in prior years because, for 2016, it is much easier to qualify initiative measures generally. This is due to the fact that the signature requirement is based on the most recent election’s voter turnout. 2014’s historically low turnout means that initiative measures now need far fewer signatures to qualify than in previous years.

Second, what happens if all these tax hikes appear on the ballot? Would this be the ultimate “Dooms Day” for taxpayers? Perhaps. But, in an odd way, it might be a positive development. By overreaching and asking for the moon, the tax-and-spend crowd might ensure defeat of all the measures as voters begin to add up how much these proposals, in the aggregate, are going to cost.

Third, while Californians in the last election were fairly generous in passing local tax measures, this does not necessarily translate into support for state tax hikes. Voters’ recent support for Proposition 30, discussed previously, was based on a perceived crisis for education if the taxes were not approved. Plus, the hikes were sold as “temporary.” Those conditions are not currently present. Californians are increasingly aware that we live in a high tax state and resistance to higher taxes will be high for the foreseeable future.

In any event, expect to see the groundwork laid for these and other tax raising initiatives very soon. It will be important for taxpayers to pay close attention and to keep a tight grip on their wallets.