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Taxing semantics

Brown During last year's campaign, then-Atty. Gen. Jerry Brown promised to let voters decide whether taxes should be increased to help close the state's yawning fiscal gap. The budget  he proposed this week, though, doesn't raise taxes so much as it keeps the current, elevated rates for sales, vehicle license and income taxes in place longer than the Legislature originally planned.

In other words, Brown wants voters to continue the status quo for a few more years rather than cutting taxes at a time when the state is drowning in red ink.

That's not how the anti-tax group Americans for Tax Reform views things, however. According to the Sacramento Bee, ATR's Patrick Gleason warned Republican lawmakers  that voting to put Brown's proposal on the ballot would violate the pledge they took not to raise taxes.

ATR seems to be running counter to its own reasoning on the Bush-era tax cuts. Last year the group made its arguments in favor of extending the cuts from the point of view of 2010 tax law. Allowing the cuts to elapse, it argued, would amount to "the largest tax hikes in history."  From the point of view of 2011 tax law, though, what Congress was debating was a reduction in taxes, pure and simple. That's because individual income tax rates were set to revert to pre-Bush levels in 2011, so voting to renew the Bush rates amounted to a tax cut.

From the 2010 point of view, Brown hasn't proposed to raise taxes; he's called for postponing a tax cut. Yet ATR prefers to view Brown's proposal from the perspective of what the rates will be after current law expires. In other words, it argues that Brown wants a tax hike.

I don't mean to practice sophistry here. What the governor has proposed to put on the ballot would, if passed, result in people paying higher sales, vehicle and income taxes than they would if the law were left unchanged. And the most perceptive taxpayers among us may notice that the state started withholding 0.25% less from their paychecks as of Jan. 1, when the income tax increases expired. That translates to $10 less in taxes out of every $4,000 earned.

The bigger-ticket items for many people, though, are the sales and vehicle taxes, which aren't scheduled to drop until July 1. That's why Brown's proposal won't feel like a tax hike to most Californians -- they're already paying those rates.

Whether Brown has struck the right balance between revenues and spending cuts, or whether he's picked the right sources of revenue, are separate questions that lawmakers should debate. It's also worth asking whether Brown is asking lawmakers to break a promise on tax rates that voters said in 2009  they wanted to be kept. But pressure from groups like ATR will probably frame the debate in much simpler terms: Not whether the state can afford to cut taxes but whether now's the time to raise them.

Related:

Budget gamble

A reality-based budget

How would you balance California's budget?

-- Jon Healey

Credit: Hector Amezcua / Sacramento Bee/MCT

 

Comments () | Archives (33)

The comments to this entry are closed.

Greg Maragos

The writers of the Los Angeles Times seem more or less uniform in their opinion that Jerry Brown will get the tax raise he is asking for.

But what if he doesn't? Perhaps THIS would be a worthy topic to write on.

tomdavis

Who in their right mind would vote to extend tax increases while our legislators are driving around in $50,000 cars paid for with taxpayer money?

T. Edward Langan

More cuts like the 48,000 cell phone pull-back are in order! No tax increase or extension of increases until Brown and his collages show fiscal discipline. The hugh shortfall can be easily addressed by cutting the size, salary, benefits, of state government. They are so out of control -- I can do it, call me!!! I'm not voting for any tax increase or extension !!!!!!!!!!!!!!!!!!!!!!!!!!!!!

jsa26

In LA county and surrounding areas Sales Tax varies from just under 10% to over 11%. 2 years of this plenty. What has it solved? From my perspective it's maybe delayed the day of reckoning for the Legislature.

It's a big burden on the economy to pay those outrageous rates on almost everything we buy.

Ask yourself if $45 Billion (over 5 years) in hands of the Legislature will make your life better than $45Billion in the hands of the taxpayers before you vote please.

Sophistry? This editorial reminds me of my favorite budget slight of hand, the moving of payday from June 30 to July 1 and calling it an 8% savings. So if the election were held on July 1 you'd call it a tax increase but on June 30 it's an extension. Even if we give you the "angels dancing on the head of a pin" argument what difference does it make?

Common Sense

The oil companies can jack the prices of gas up to whatever they want and nobody can do anything about it but whine. But put a few more cents per gallon to help balance the budget and the right wing nuts protest in the streets.

Peter

I will never vote to extend current taxes that are set to expire. What will keep the democrats from using those taxes as they are always do. Providing goverment give-aways for thier allies.

I have better use for MY my hard earned money!!!

Peter a hard working over taxed Latino in Pasadena.

Tom

We must all remember that a governor can only propose or recommend any tax or spending issue. ONLY the legislature has the power to tax or spend. As our state is now completely controlled by Democrats, he has more of a chance to get things accomplished, but we'll have to wait to see if the legislature does what he asks.

Ha!

"sophistry"? No, you're trying to say ATR is dishonest because they prefer lower taxes. If ATR is consistent on a principle (that you invented), they would want higher taxes. Correct?

People want lower taxes. ATR wants lower taxes. That's the point.

Jon Healey

@Ha! -- No, I didn't say ATR was being dishonest, hypocritical or anything like that. I'm just noting the inconsistency in how it characterizes changes in tax law.

Ha!

"I'm just noting the inconsistency in how it characterizes changes in tax law."

How about they have different circumstances and leave it at that?

"From the 2010 point of view, Brown hasn't proposed to raise taxes; he's called for postponing a tax cut."

Goodness, it is the "postponing a tax cut" and the RAISING of taxes from what it would be in 2011 (from the July 1, 2011 point of view).

I don't know about you, but if I was expecting to pay lower taxes after July 1st, I would feel like I was ripped off after July 2nd when I'm paying a higher rate.

GrandInquisitor

This is all a lot of semantics about weather it’s an increase or continuation. The bottom line is that Californians will have less of their own money than they otherwise would have. As long as we are playing word games here I would like to point out that the author states that this would just be a “few” years of additional taxes. I believe a “few” means two or three. Five years would be “several” years of higher taxes. Finally the author suggests that this tax increase is really no big deal. If this is the case then wouldn’t pension reform also be no big deal?

DontStressMeOut

The LA times seems to think that if a thief has been stealing your posessions for a couple of years that you shouldn't be concerned if they plan to do so for an additional five more years.

Get a grip LATimes. If you believe in tax increaes so much, then write them a check out of your own pockets out of the goodness of your hearts. But stop stealing money from my family.

Frink Stink

The premise of this opinion is flawed. Let me tell you why it will feel like a tax hike. When it was first increased, I voted to oust Davis. When the first round of "temporary taxes" came around, I bit¢hed and complained about the increase and made a note of how much it was increased and when it would be returning to normal.

I'm waiting for these tax hikes to expire. I am NOT used to paying the raised taxes.

If nothing else, this article clearly illustrates the way things work in state government:

1. Overextend spending
2. Cry gloom and doom
3. Temporarily raise taxes
4. After first year, claim everyone is now used to the taxes so letting them go on won't feel like a tax increase
5. ...PROFIT

Jon Healey

@GrandInquisitor -- good point. "Several" it is. And BTW, GI, the LAT editorial board in general and myself in particular have been strong supporters of public-sector pension reform.

Cherie A

I don't trust them yet. I want to see more waste clean, like the cellphones. I want to see the state pension fund addressed and seriously looked at to reduce future costs, like putting a cap on it, increasing the retirement age (why do they get to retire at 55 and I have to work to 62+), and make employees put more of their own money into their plan, like the rest of us. Our 401k plans are not going to support us 100% for the rest of our lives. We have to plan and save beyond that, why are State employees suppose to be well cared for, for the rest of their lives?

snarf

The state is "drowning in red ink" because it repeatedly ignored adonitions from its citizens to stop spending so much.

The last time we agreed to "temporary" tax hikes, the state, like a drunk promising to get sober if we buy one last drink, laughed at us for our credulity.

It did nothing to stop UC professors from retiring at the old age of 50. fifty! (new ones will retire at the tired old age of 55, --55!!--but the present crop of old ones won't).

UC administrators cry for more state money and it turns out dozens are making 245,000 and demanding hiked pensions of their own. (for once i agree with the unions-fire those administrators).

Meanwhile UC has hiked tuition by over 40%. Way to go there regents.

The state did nothing to prune its bloated workforce: it kept hiring in 2007 and 2008 as the economy was cratering.

It did not cut the 96,000 cellphones paid for by the state, until Brown, in a purely symbolic gesture (it was nice but it is minor), promised to do so this year. 96,000 paid for cellphones?

It purchased new vehicles each year for legislators, and did it again in 2010.

Pensions continued to be awarded on salaries inflated with overtime, deferred vacation and more. Little if anything was done to increase the pension contributions by state workers. Nope. the taxpayer is on the hook for them in perpetuity.

Pensions remain "defined benefit"--meaning a guaranteed payout--instead of providing state workers with a 401K like everyone else.

The state's credit rating is at risk and we are paying more interest to borrow than before. Debt payments are rising too, like they do when a person has big balances.

Now Brown-who gave us a unionized workforce in 1978 for the first time--wants to extend the taxes that we were promised were "temporary."

We all know what that means: as long as the State is propped up by those taxes (have another drink) it will NEVER take needed steps to control its spending. Ma and Pa taxpayer are there to bail it out.

Don't bet on the taxes passing this time.


djack80

I will be shocked if a big enough percent of the populus vote for a tax hike. I can guarantee that less then 50% of the taxpayers will vote for it. Jerry has to hope that he can get all the deadbeats, welfare brood mares and illegals to head to the polls. It will no doubt cost him a lot of government cheese but its free right?

Yourstruly

It's like paying child support for 18 yrs and then finding out you'll pay the same amount for the next 5 years. What a deal ! Perhaps the editor would be better off telling us about how the Gov. should be cutting pensions for those who intend to make more in retirement than they did while working. Maybe, just maybe, that should be an area of concern for the "just found Jesus" crowd of liberals claiming a new day in budgeting. How about a special election to vote on public employee pensions ?

roninkai

All these comments about "stealing your money", pay your taxes, and shut-up I say.
Republicans have run our entire nation into the ground and then cry like the spoiled cowardly brats they are when ANYONE tries to fix the problems THEY created.
Like roads that don't crumble? Pay your taxes, and shut-up.
Lie bridges that stay up? Pay your taxes, and shut-up.
Like affordable foods that won't kill you? Pay your taxes, and shut-up.
Like the fire department? Pay your taxes, and shut-up.

Just pull your weight for ONCE.

jsa26

I'm sorry but I can't resist.

Ronnikai: Shut up

susan

No , hell NO. Think of another plan Brown. Where is the pain for the unions? The elephant in the room?

susan

I'm sorry but I can't resist.

Ronnikai: Shut up

Ditto, I hope ronnikai donates all his money to the state, leave enough for a home in your car ronnikai. We won't vote for the tax increase. The Dems got us in the fix we are in, let them figure out how to fix it without taking anymore of our money. We all know it is the unions breaking the piggy bank Jerry, Why are you so clueless?

teri

Its simple math. The illegals are costing Ca, around 20 billion a year. Do that cut and we would have Ca. back in so many ways

waldobinney

When does the union contract of ALL state employees run out ???
The true colors, and state of mind, for our legislators will come out in the open if they do not heed the will of the taxpayer.
Same goes for the teachers union, all county union and city unions representing 'our civil servants'...
The civil servants of this state are our inmates running the asylum....and getting richer by the minute at the taxpayer expense.

Mitchell Young

I seem to remember back in the early 1990s our sales tax being 6 percent. Then some earthquake or another was taken as an opportunity to press for a 'temporary' increase to 6.5%, then the LA Riots or something led to another 'temporary' increase to 7%, then I left the state for several years and come back to find the rate is 8.25 to 8.75 (never quite sure which is which, and where). I wonder if the jump from 7 to 8 was supposed to be 'temporary' too? They say nothing is more permanent than a temporary guest worker, but I have a feeling that 'temporary' tax increases may prove that saying wrong.

Chillipepper

"why Brown's proposal won't feel like a tax hike to most Californians -- they're already paying those rates"

Of course we are and we are hurting. For many of us are FORCED to pay those rates. We have learn and we shall not extend any of these rates.

What does this taxes done during the last two years? NADA!

They are just use to pay the Unions pocket!

Nothing has been done to the $500 billion pension shortfall and this is going to fall upon us like a 500 ton ball of steel.

Robben F

Where are the calls of "Draconian" by the lefists? Where are the screams and howls by the legislature? Oh yeah, they have proven through their actions that resistance to Arnold's aursterity measure only existed becasue he was a republican. Of course, the leftist nutjobs that inhabit the editorial board for the tiems will not produce an article detailing this.

One other thing: I love how the author(s) stated that, since the democrat party forced the tax cuts enacted during Bush's presidency to be temporary, allowing them to go up would somehow, in some parallel universe, would not have been a tax hike. Is going from 5 to 10 going up? Of course it is. So, taxes were about to be raised.

The author(s) then goes on to tell us lies about ATR's perspective on Jerry Brown's tax hikes in one sentence (they don't exist, according to you fools), only to contradict himself in the very next paragraph, where the following is said "What the governor has proposed to put on the ballot would, if passed, result in people paying higher sales, vehicle and income taxes than they would if the law were left unchanged. And the most perceptive taxpayers among us may notice that the state started withholding 0.25% less from their paychecks as of Jan. 1, when the income tax increases expired. "

So, in other words, you admit Borwn is hiking taxes and fees. So, you excoriate ATF, lie about the situation, then give specifics that completely contradict your premise.

Is the author(s) 12 year of age? Is there not an editor working for the times who could simply bring this complte lack of intelligence to someone's attention before going to print? What utter and complete fools.

Bob Johnson

Yet not a single worthless state worker slob laid off. No surprise here.

susan

I listened to John and Ken today, 40 Republicans have taken a pledge to vote NO on taxes. One holdout hasn't made up his mind. Brown will try to circumvent the law, but it is doubtful he can. Judges will block his moves. Brown better come up with another plan.

Barbara

People who believe we can have a civil society without paying taxes are unrealistic. The question is, how much and how is it spent? There are prisons to fund, shall we close them? Shall we have no police or fire departments? What about courts? How about getting rid of public schools and letting many people end up uneducated and illiterate (more than the ususal).

Would you like to have only dirt roads perhaps? Shall we scrap the DMV? I find that idea tempting but we need to have licensed drivers and automobile registration, etc. Perhaps we could close all the State Universities and the University of California (although if you do your homework you will discover that on about 16% of the UC budget comes from state funding). The list goes on.
Those of you who think all taxes are somehow illegitimate, please say what services you are willing to get rid of.

Barbara

overtime is not used in computing pensions for state workers. Also, people CAN retire at 50 or 55 in some areas but few actually do it because ... GASP ... they generally can't afford to do so.

Dick Wright

About the only thing correct in this piece is the title.

Federal income tax rates under Bush were cut from 15, 28, 31, 36, and 39.6 percent to 10, 15, 25, 28, 33, and 35 percent. If Congress did not act, the lower rates would have reverted to those in effect when Bush became President --- or the rates would have increased. How does keeping the rates as were a tax cut since the rates would increase? That is a tax increase and semantics have nothing to do with it.

As for those "fees" due to expire in CA, if no action is taken they also go up. That is an increase in "fees" no matter how you decide to tell people. These rates revert to a lower fee and not a higher fee (or increase).

I suspect you would argue that Federal income tax rates if reverting to those of Eisenhower's Presidency (highest marginal tax rate was 91%) would not be an increase. You sound like a liberal, who tells anyone who would listen, that we pay less taxes now than when Reagan was President or more than European nations. Who cares? Issue remain spending not taxes - in CA or in the nation. Just, whatever you do, do not expect more money from the US taxpayers for the mess you caused.

Dave

@Common Sense: The state tax on Gasoline is a percentage of the gas price. When the evil gas companies jack up the cost of gas, the state gets more money. It has nothing to do with Right Wing anything. throwing more money at a problem won't fix the problem...Brown is correct, we need to makes sure less money is going out of the bucket than is coming in to get us out of this mess. Simple logic. Please think before you type something foolish.


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