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Raising Taxes is Not Reform

It seems like every time we turn around, there is another attempt in the Capitol to raise taxes.  Such proposals punish hard-working Californians, kill jobs and slow economic growth. Nevertheless, Democrat lawmakers are at it again. This time it’s a $10 billion increase disguised as “tax reform.”

Tax reform is needed in California.  Under the current structure, personal income taxes account for 66 percent of the state’s annual tax revenue. This means that when the economy is booming, there is a lot of money coming into the state’s coffers.  However, in bad years when Californians are making less money, revenue drops sharply.

This volatile structure perpetuates the boom-bust budget cycles that hurt Californians. The tough budget years of the recent past required the Legislature to slash funding for education, infrastructure, and other priorities because tax revenue dropped by billions of dollars from one year to the next.  It also led to a $6 billion tax increase in the form of Proposition 30.

Something must be done to stabilize tax revenues and protect Californians from the cycle of tough cuts followed by tax increases.  But the “reform” that Senator Bob Hertzberg, (D-Van Nuys) proposes in Senate Bill 8 is little more than a $10 billion tax increase.

Senator Hertzberg’s proposal would simply extend the sales tax to services without cutting taxes anywhere else. Thus, in addition to the taxes we already pay, his proposal would tax us another $10 billion when we do things like sign our kids up for soccer, take the car in for an oil change, call a plumber, or get a haircut.

Saddling hard-working Californians with more taxes is the wrong move, especially when so many are still struggling to find good, stable employment.  We should be finding ways for Californians to keep more of their hard-earned money, not seeking to have government take more.

Make no mistake – the State needs a more stable and predictable source of revenue, but creating stability does not require more tax dollars.  We should consider changing how and where government collects taxes, and we should do so with a commitment to keeping the amount of revenue collected at the same level and, ultimately, reducing it.

Last year, Democrats and Republicans worked together to help stabilize the budgeting process by creating a Rainy Day Fund that the voters overwhelmingly approved. This fund sets aside a portion of the tax revenue generated every year that can only be spent during weak economic times.  This was a good first step toward stabilizing tax revenues.  The next step is to enact tax reform that will protect Californians from years of deep budget cuts and higher taxes without taking more money out of their pockets.

So let’s keep the issue of tax reform on the table for the upcoming session, but let’s work to develop a solution that will help grow our economy, stabilize revenue volatility, and not burden Californians with more taxes.

 

Assembly Republican Leader Kristin Olsen, R-Modesto, is recognized as a solution-focused reformer. She represents the 12th Assembly District in the California Legislature, which includes portions of Stanislaus and San Joaquin counties. Follow her on Twitter: @KristinOlsenCA