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Wednesday, April 29, 2009

Time to Tax Sacramento with Tough Love

By Ron Getty
Mon, 27 Apr 2009

In Sacramento, it seems the issue of the day is always the need for more tax revenue. Unlike Oliver Twist, however, the legislators demand more taxes; they do not ask for more taxes, and they never say please.

The antithesis of Oliver Twist, Sacramento is the embodiment of a looting "Robbing Hood." Sacramento takes from the taxpayers and gives to the tax moochers, and has the effrontery to continue this looting by demanding that taxpayers vote yes on the coffer-filling Propositions 1A through 1E.

These five propositions on California's upcoming May 19 special election ballot are designed to save Sacramento from a fate worse than death — no money in the coffers to redistribute to moochers politically disguised as "those in need."

The recently approved budget to close the $41 billion deficit now has an $8 billion "tax shortfall." If three of the special initiatives fail, there will be another $6 billion in "lost revenue." That's a $14 billion hole in the shoe without a shoe repair shop in sight.

This month, Sacramento expects to raid paychecks of $8.9 billion in personal income taxes. That's $8.9 billion taxpayers could spend more wisely as a personal economic stimulus.

It's time for tough love lessons on taxes for Sacramento. Just vote no on Propositions 1A through 1E. (Vote yes on Prop. 1F, which denies pay increases to legislators during budget deficit years, although it's just a bone thrown to the "taxpayer dogs.")

How can California repair the $14 billion hole in the shoe?

The state employs 345,000 people who average $85,000 in annual pay and benefits. In comparison, private industry per capita pay and benefits averages $45,000. If state employees' pay and benefits were scaled to average that of private industry, the $40,000 reduction per state employee would repair the $14 billion hole in the shoe.

Another cost-saving measure would be to index the state private industry unemployment percentage rate and state worker furloughs. Whenever the private industry unemployment level exceeds 3 percent, which is about a half-million workers, an automatic furlough would kick in at all state agencies for each full percentage point above 3 percent. Why? Fewer private industry workers means lower income tax revenues, which mean less money to keep paying government workers.

The state budget could be further cut by reviewing each state department, division, bureau, board, and commission. The review would determine whether the taxpayer-funded government service should be discontinued, merged with other departments, or charge user fees to cover its budget, or whether the service should be competitively bid out at less cost to taxpayers.

Here are some other ways California could help taxpayers, especially those in lower income brackets:

  • Repeal minimum wage laws to reduce overall unemployment and to promote employment of low-wage workers, unskilled workers, visa immigrants, and those with limited education or job experience. Repeal prevailing wage laws to increase the number of workers hired on state construction bond projects and enact market-competitive hiring under right-to-work laws.

  • Benefit unemployed and low-wage worker families by exempting all food, drink, beverage, and clothing purchases in a single transaction of $500 or less from city and state sales taxes.

  • Exempt those ages 72 and over, and all fully disabled, and their life-partners, from paying income taxes or property taxes. Seniors and disabled who rent would receive property tax rebates.

  • Exempt K-12 teachers from state income taxes on their teaching income and property taxes on their home. Teachers who rent would receive property tax rebates. The massive $50 billion public school employment budget would be reduced as teachers would need less pay because they would keep what they earn.

  • Exempt home schooling parents from paying education property taxes, since they shouldn't have to pay to send someone else's children to government schools. Exempt home schooling parents from paying state income taxes on the amount of time spent on home schooling and the cost of materials against their earned income. Home schooling parents who rent would receive an education property tax rebate.

These few tax relief fixes are limited in scope against the ultimate fix of repealing all taxes and starting fresh. To paraphrase Marc Anthony in Shakespeare's Julius Caesar, "Cry 'Havoc' and let loose the 'taxpayer dogs' of war on taxes."

Finally, the taxpayers of California must send a livid message to the larcenous legislators of Sacramento and vote no on Props. 1A through 1E, in essence telling them, "Enough already!" Then taxpayers should vote yes on Proposition 1F, which denies pay increases to legislators during budget deficit years.

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