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Thanksgiving for California Taxpayers – An Uncertain Future

In this season of Thanksgiving, taxpayers in California have reason to pause when asked for what they are thankful. Considering the costly plans of the newly elected Legislature and governor, taxpayers may be most grateful for the fact that the state hasn’t yet built a wall encircling the state to keep them from leaving.

After 2017, when lawmakers enacted new taxes including a $5.2 billion annual tax hike on gasoline, diesel and vehicle registration, as well as a new tax on recorded documents, 2018 saw every effort by the Legislature to increase taxes defeated by advocates for taxpayers.

We are grateful that the first-ever tax on drinking water was defeated.

We are grateful that the tax on fireworks was defeated, and that the effort to revive the “snack tax” was not successful.

We are grateful that the proposal to put a sales tax on services was shelved.

We are grateful that nearly a million voters signed petitions to repeal the gas and car tax. Of course, the bad news is that the gas tax repeal was given a new title by Attorney General Xavier Becerra that removed the words “gas tax repeal” from the ballot, deceiving voters.

Further disappointments for taxpayers in November’s election results include progressives winning supermajorities in both the Assembly and the state Senate. California’s one-party government can now pass tax increases without the need of even a single vote from the opposition party. This surely increases the probability that taxpayers will be steamrolled by all the tax increases that were defeated in 2018 being resurrected in 2019.

An even bigger threat may appear in the form of proposed constitutional amendments emanating from the Legislature.

Supermajorities in both houses allow the party in power to place these on the ballot, again without the need of a single Republican vote. Once on the ballot, the measures need only a simple majority to pass.

While Proposition 13 remains very popular, taxpayers advocates could be stretched to the limit if confronted with multiple anti-taxpayer constitutional amendment proposals. In the last decade, these have been stopped before clearing both houses of the Legislature. But now, the following proposals are likely to make an unwelcome encore in the Capitol: Lowering the vote threshold at the local level for passing bonds and parcel taxes from two-thirds, as required by Prop. 13, to 55 percent or even less; imposing higher property taxes on businesses; bringing back the estate and gift tax; restricting the ability of homeowners to transfer their Proposition 13 base-year value to a new residence; and weakening Proposition 218, the Right to Vote on Taxes Act, which limits the extent to which local governments can impose various fees, charges and assessments on property.

Given the list of costly promises made during the election campaign, on top of the massive unfunded pension liability that already burdened the state, higher taxes are a near certainty in the next two years. Californians currently pay some of the highest state and local taxes in the nation, but it isn’t nearly enough to keep up with the spending of the politicians who have been elected to run the government.

Still, California taxpayers can be grateful this Thanksgiving that they still have the power of the initiative and the recall. If they can keep it.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.

Unionized Government's Open Season On Taxpayers

Even if one lives in a cave, it’s hard to avoid the publicity surrounding the high profile presidential debates that are a reminder that this is an election year. And California taxpayers know, from hard experience, it also means that it is open season on taxpayers as local politicians rush to put tax increases on the ballot.

Emboldened by success in little-publicized 2015 off-year elections in which 29 out of 40 local tax increase measures passed, scores of communities and special districts are seeing this year as an ideal opportunity to raise your taxes.

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Presidential election years tend to bring out more voters, including many who do not pay close attention to what’s on the ballot until the last minute. These “low information voters” are a prime target of tax raisers because they are more easily convinced by simplistic arguments. These duplicitous arguments often tout the benefits of a measure to a community, without ever mentioning that it is a new tax. Or they minimalize the actual cost by expressing it in pennies per day, “It will only cost about 50 cents a day!”

Of course those promoting new or higher taxes do not want taxpayers to notice that they are often being attacked on several fronts simultaneously, as cities, counties and special districts reach for their wallets.

One of the most popular taxes from the standpoint of public officials is the parcel tax, usually a uniform property tax on all “parcels” of property within a community or district. The politicians like these taxes because, unlike bonds which must be used for brick and mortar projects, the revenue from parcel taxes can be used for any purpose including raises in pay and pensions for public employees.

These taxes are insidious because they exceed Proposition 13 limits and there is no relationship between what is being charged and the property owner’s ability to pay. A young couple in a starter home, an elderly couple in a bungalow and a multimillionaire in a mansion, all pay the same amount. Additionally, parcel taxes bear no direct connection to any service actually provided to the property owner.

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Already there is a parcel tax slated for nine Bay Area counties, while cities and school districts throughout the state are preparing their own new taxes for the ballot.

So, if you are a property owner, especially one on a limited budget, it is important to familiarize yourself with what is on your local ballot. There is a good chance that you will find a parcel property tax. Fortunately, because of Proposition 13, these require a two-thirds vote, so if a tax is not justified, there is a realistic opportunity for voters to reject it.

To paraphrase a series of commercials promoting a satellite television service currently urging viewers “don’t be a settler” – “don’t be a low information voter.” When your sample ballot arrives in a few short months, study it carefully. Keep in mind that the official title and summary for tax measures are often manipulated by the political class to encourage a Yes vote. If you have any doubts about the information provided, do further research.

About the Author: Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.