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Tuesday, January 31, 2012

Governor "Moonbeam" is at it again!

To increase taxes or not to increase taxes? The question was posed to Californians in a recent poll by the Public Policy Institute of California.

"Strong majorities of Californians favor Gov. Jerry Brown's proposed tax initiative and oppose the automatic cuts that public schools will face if voters fail to approve the measure in November," according to the PPIC summary. The Brown tax increase was favored by 72 percent of Californians and 68 percent of likely voters because people are worried about budget cuts, especially to education.

In this Jan. 18, 2012, file photo, Gov. Jerry Brown leaves the Assembly after he delivered his State of the State address before a joint session of the Legislature at the Capitol in Sacramento. While most other governors are proposing tax cuts and letting temporary tax increase expire, Brown is trying make the case for boosting taxes on the wealthy and the state sales tax.
ASSOCIATED PRESS FILE PHOTOADVERTISEMENT But not so fast. For one thing, polls this far away from an election are highly volatile. As was pointed out by Joel Fox of the Small Business Action Committee, just look at the polls in the Republican primaries. One day Mitt Romney's poll numbers make him look invincible. The next day he's losing in South Carolina to Newt Gingrich. And who knows what will happen in Florida on Jan. 31.

A major factor is that people are not focusing on the November election. It's still more than nine months away. No one has seen the ads, pro and con, for the Brown initiative. Other tax-increase initiatives also may be on the ballot.

Gov. Brown's "temporary," five-year tax increase includes two components: an increase of 1 or 2 percentage points in the state income tax for those making $250,000 or more per year. And a half-cent sales tax increase.

But when the poll broke down the two taxes, Californians became schizophrenic. The income-tax boost on the "rich" was favored by 68 percent of likely voters. But 64 percent opposed raising sales taxes, which everybody pays. That brings to mind the old saying, "Don't tax you, don't tax me, tax that man behind the tree."

We also don't know what condition the economy will be in later this year. The major economic surveys, such as those by Chapman University, anticipate continued moderate growth. But nobody knows what lies ahead. A sudden shock, like the September 2008 financial meltdown, could strike the country. War in the Persian Gulf could send oil prices into the stratosphere. And the European debt crisis could crash. People in a renewed recession would be less likely to increase their own tax burdens.

Then there's the finding that 55 percent of likely voters, in the PPIC summary, "believe state government could cut spending and still provide the same level of services." So people still are skeptical that government has done enough to save on current spending.

"Raising taxes at this point is just so beyond the pale," Lew Uhler told us; he's the president of the Roseville-based National Tax-Limitation Committee. "I just don't see people buying into the class-warfare stuff. They're not only trying to increase taxes on high-income families, but also the sales tax."

He pointed out that the governor remains an enthusiast for the California High-Speed Rail Authority and its spending plan of at least $99 billion on a project widely considered a boondoggle. "He's re-establishing his Gov. Moonbeam name by this craziness," Mr. Uhler said.

The last time Californians passed a tax-increase initiative was in 2004 with Proposition 63. It increased state income taxes on millionaires by 1 percentage point to fund mental-health programs. Yet it passed with just 54 percent of the vote even though opponents spent just $13,000 compared with proponents' approximately $4.7 million. And that was during the height of the real estate boom, when it seemed the good times never would end.

Times are different now. The economy still is hobbled. Any tax increases will face solid opposition. Bring it on.

Lew Uhler

President, National Tax-Limitation Committee

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