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‘Think Long’ Offers Boost For Wealthy
NOV. 22, 2011 By KATY GRIMES Think Long, a new reform committee billed as a diverse group of politicians and billionaires, is promoting another tax reform measure for the November 2012 ballot. However, the reforms may be as controversial and unpopular as the last big attempt to raise taxes on Californians was. Think Long claims it will “update and modernize the state’s broken system of governance,” with plans to add regressive taxes during one of the worst recessions in California’s history. David Wolfe, Legislative Director with the Howard Jarvis Taxpayers Association, said that proponents of the measure oddly agree that it is a $10 billion tax increase. But Wolfe doesn’t think it will get past weary California taxpayers. “Voters have rejected the last seven attempts to raise taxes since 2006,” said Wolfe. “This plan isn’t even revenue neutral.” In past attempts to impose taxes on service, plans have at least included a significant drop in existing sales taxes in order to appear revenue neutral. The Think Long report indicates that only a miniscule sales tax cut would take place, making this one of the largest tax increases in recent years. Think Long released a report with recommendations designed to raise $10 million in revenue for California. “At a time when political leaders in both Sacramento and Washington seem hopelessly mired in gridlock, the committee has shown that difficult bi-partisan compromise can be reached if politics is set aside and the public interest is put first,” the report states. Members of Think Long include wealthy philanthropist Eli Broad, former governor Gray Davis, former Democratic Assembly Speakers Willie Brown and Robert Hertzberg, and Google chairman Eric Schmidt. California Forward Makeover? Hertzberg has a history of reform attempts, having served as Co-Chair of California Forward. That group advocated for placing a constitutional revision on the Nov. 2, 2010 statewide ballot to end the two-thirds requirement for the Legislature to raise taxes. The group also planned to end the ability of the state government from borrowing money from local governments. Created in 2006 “with $16 million from five major foundations,” California Forward was the master mind of California Common Cause, the Center for Governmental Studies, the New California Network and The Commonwealth Club of California’s Voices of Reform Project, the Evelyn and Walter Haas Jr. Fund, The William and Flora Hewlett Foundation, The James Irvine Foundation, and The David and Lucile Packard Foundation. The new group looks quite similar. Think Long Specifics Plans include the creation a new tax of more than 5 percent on currently untaxed services such as accounting, auto repairs, hair cutting, and legal services. All services except health care and education would be taxed. However, critics are skeptical of the where and how lines would be drawn on what constitutes education and health services. To offset these new service taxes, the group proposes to charge no tax for families making up to $45,000, charge 2 percent tax on income between $45,000 and $95,000, and tax 7.5 percent on income above $95,000. The group proposes doubling the current state income tax exemption for homeowners and renters. But Wolfe said that the flattening of the income tax rate will only benefit higher income earners. The wealthy will see their taxes lowered, while the middle class and working class will be paying more. Wolfe said that together with the increase in income tax, the proposed service sales tax amounts to a hefty tax increase on the middle class. The wealthy would see a significant drop in income taxes from 9.3 percent to 7.5 percent. While the tax increase is estimated to increase state revenues by nearly 11 percent beginning in 2013, Think Long states that the new revenue would help retire state debt, and eventually go to K-12 schools, higher education even to local governments. Citizens Council As Gov. Jerry Brown’s realignment is enacted and realized, Think Long proposes creating an independent, non-partisan Citizens Council for Government Accountability, to address the additional responsibilities facing local governments. The citizen council would be responsible for “both foresight and oversight, balancing the short-term horizon of the legislature and governor with a long-term perspective that extends beyond political cycles.” And Think Long proposes that the citizen council would have the authority to place initiatives directly on the ballot, order the Secretary of State to publicize the Council’s positions and comments on ballot initiatives, and have the same subpoena power currently enjoyed by the Little Hoover Commission, an independent state oversight agency. Think Long states that the citizen council is not another layer of bureaucracy. However, the council would receive “no less than $2.5 million,” each year, from the Governor’s budget, “to attract and maintain a high-quality professional staff.” And the staff would be exempt from civil service hiring regulations. Nowhere in the report are plans for cutting or streamlining government. Tough Critics Some critics question the involvement of two former California governors. Gray Davis was recalled by the voters in 2003, and Schwarzenegger (who consulted with the committee, but wasn’t a member) left office after increasing the size of state government, and failing to fulfill most of the promises he made when ran for governor to succeed Davis. Critics are suspicious as well of the billionaires involved: “In news that should shock nobody at all, their tax proposals involve shifting the burden away from the rich and corporations and onto what’s left of the middle class,” Calitics writer Robert Cruickshank said. “In short: corporate taxes go down, income taxes go down for everyone but especially for the rich, and the sales tax goes up (in fact if not in rate). The middle class – what’s left of it, at least – would shoulder the burden of taxation in California even more than they already do.” The California Taxpayers Association has a long history of opposing taxes on services. CalTax cites the experiences of four other states that ended up repealing service taxes. Florida, Michigan, Massachusetts, and Maryland imposed taxes on legal services, accounting, auditing, bookkeeping, engineering services, architectural services, and computer IT and design services, but each of the states quickly repealed the taxes after overwhelming public outrage, and businesses losses. “Taxed activity, such as the purchase of tangible goods, tends to grow slower than untaxed activity precisely because it is taxed. If services are taxed, the growth rate will slow,” CalTax reported in “Taxation of Services: A Disservice to California.” With local governments already pushing tax increases, Think Long will undoubtedly feel a similar pushback as Michigan, Florida, Massachusetts and Maryland. Wolfe said that Think Long has yet to release a detailed plan with affirmative language.
Tags: Arnold Schwarzenegger, budget deficit, California, California budget, California Legislature, government, Jerry Brown, Katy Grimes, legislature, tax increases, Taxes, Think Long, unemployment, waste Comments(25) |
May 23, 2012
In past attempts to impose taxes on service, plans have at least included a significant drop in existing sales taxes in order to appear revenue neutral.
What will happen is this;
#1) The state will claim to drop the sales tax to say 5% IF we can tax SERVICES.
#2) If it is approved, they will drop the sales to to 5%.
#3) After 1-2 years the state will say we have an “emergency” and need funding for “schools/cops/firefighters/[insert any fabricated emergency here] and need to raise the sales tx just a slight 1%, 1% won’t hurt anyone is what the claim will be (we have seen this a million times by now, we know the routine).
#4) Another year goes by, repeat #3.
#5) Another year goes by, repeat #3 again.
#6) In 5 years the sales tax will be back up to 10%, except this time ALL services will also be included.
This is a gimmick to raise your taxes. The tax revenue from this state in strong economic times ALWAYS grows, there is NO NEED to tax services.
What is needed is a SPENDING CAP of no more than 5% spending increase from the previous year. That will stop the state from increasing spending @ 12% per year which is what they have done every year during this depression-I would hate to have seen the potenial increases in a stronger economy.
We need to raise the capital gains tax;
http://news.yahoo.com/top-0-1-nation-earn-half-capital-gains-172647859.html
“I commend you to the late Justice Louis Brandeis warning to the nation that;
” We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” We have to make up our minds to restore a higher, fairer capital gains tax to the wealthiest investor class– or ultimately face increased social unrest.
Until the following gets cleaned up we will never heal as a nation.
This is William K. Black again. I remind you – he was a special prosecutor during the S&L crisis back in the 1990′s. He put hundreds of crooked banksters in jail where they belonged. He is an EXPERT on the topic of financial fraud. He is NOT some yahoo shooting his mouth off.
Here is Professor Black at an Occupy event – according to the references in the video – it was at an event in LA County. He does not discriminate on calling out poltical leaders – as he calls out both Ronald Reagan and Barack Obama in his oratory. And he calls out Alan Greenspan.
Until we clean house on these proclaimed fraudsters we are going to swirl around the toilet bowl and eventually get flushed.
Listen to William K. Black! It’s 15 minutes. So grab a drink!
http://www.youtube.com/watch?v=N_AuvLTJNh0
Good video!
Let’s call on Think Long’s billionaires to release their California tax returns,
I don’t particularly like this proposal.
I absolutely abhor the idea of giving the politicians yet more things to tax (i.e. services).
But the 9.35% income tax rate that kicks in around $47,000 that we have now is absolutely intolerable.
So I would take what they are proposing over what we have now.
However, I think all of this is moot.
Next November the DemoNcrats will most likely get their 2/3rds majority and then they can pass any kind of budget and any kind of tax increase they want.
But the 9.35% income tax rate that kicks in around $47,000 that we have now is absolutely intolerable.
But it is never the full amount because of deductions…….. I dont trust these clowns to do anything, I think their entire deal is to scam the poor and middle class for heir bosses, the public employees.
“Next November the DemoNcrats will most likely get their 2/3rds majority and then they can pass any kind of budget and any kind of tax increase they want.”
Quite likely, Bob. I’m looking forward to that election almost as much as the wing-nuts seem to be.
“But it is never the full amount because of deductions.”
What deductions? If you have no dependents and rent a home what’s left to deduct?
Skipping Dog this is for you. Watch it and you will watch history in the making…
http://www.youtube.com/watch?v=c7edc0S7xh0
SkippingDog says:
November 23, 2011 at 9:40 pm
“Next November the DemoNcrats will most likely get their 2/3rds majority and then they can pass any kind of budget and any kind of tax increase they want.”
Quite likely, Bob. I’m looking forward to that election almost as much as the wing-nuts seem to be.
And while you’re at it, enjoy your tax increases, too.
I hope you will still be able to afford Alpo and flea powder.
Skipping Dog this is for you. Watch it and you will watch history in the making…
http://www.youtube.com/watch?v=c7edc0S7xh0
OMG, that was hilarious! TY!
What deductions? If you have no dependents and rent a home what’s left to deduct?
There are TONS of deductions besides mortgage/trust deed and dependants. If not you need to start a small side busness.
Quite likely, Bob. I’m looking forward to that election almost as much as the wing-nuts seem to be.
#1- I doubt the dems or anyone else will get a 2/3′s suyper majority, in CA or anywhere else imn America. BUT, even if they do it is unlikely they will get ALL of the dems to approve tax increases, they too have constituents they must answer to, and thery are not all public employees.
But we shall wait and see.
The Dems controlled BOTH houses of the Congress WITH Obama in the WH and they had the same problems as before that control, without the majority of both houses.
Next November the DemoNcrats will most likely get their 2/3rds majority and then they can pass any kind of budget and any kind of tax increase they want.
As I said, not likely.
“But it is never the full amount because of deductions…….. I dont trust these clowns to do anything, I think their entire deal is to scam the poor and middle class for heir bosses, the public employees”
Rex is correct here.
Use your common sense.
California State is consistently coming up short on the revenue side of the equation. There would be NO REASON for these crooked bureaucrats to propose a new tax system unless the plan was to collect more revenue. If you think that they are proposing this new system to benefit YOU – get some help immediately. You are FORCED to think CRITICALLY with these rascals. A growing percentage of the California population is living from paycheck to paycheck. Taxing services will put even greater pressure on that growing segment of our population. Look at the pigs who form this committee – Arnald, Condo Rice, Gray Davis, etc…. are multi-multi millionaires in their own right. You think they represent YOU???
Think Long’s “Citizens Council” has a skeezy Soviet Kommisariate feel to it, a bunch of unelected and unaccountable appparatchiks using their subpoena power to stage show trials in order to foist ballot deceptive initiatives off on the voters. Why didn’t they just call it the People’s Kommisariate?
Think Long’s “Citizens Council” has a skeezy Soviet Kommisariate feel to it
What kills me about these billionaire clowns-like Eli Broad and Warren Buffet, the top 1/10 of the top 1% – is how they say raise taxes on everyone, I have news for them, they can send in as much money to the treasury as they wish, because they are the ones getting the biggest benefits from this country today, not the other 99.9%. Here, read this, I especially liked the last paragraph of this article;
“I commend you to the late Justice Louis Brandeis warning to the nation that ” We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” We have to make up our minds to restore a higher, fairer capital gains tax to the wealthiest investor class– or ultimately face increased social unrest.”
http://news.yahoo.com/top-0-1-nation-earn-half-capital-gains-172647859.html
You will not find any common ordinary citizens on the “Citizens Council”. You will only find those who have BIG investments in the status quo who understand that they desperately need to suck more money from the little people to save their BIG investments. The devil is ALWAYS in the details and the details in these gimmick proposals are ALWAYS hidden. Remember when Nancy Pelosi said that congress had to pass the Obamacare health reform bill before we could find out what’s in it? That told you everything you needed to know. They can’t tell you the truth. If they did you would immediately oppose their proposals. So they must fool you with gimmicks, omissions and lies. That has become the trademark of American politics today. None will be honest with you about the spending deficits, our state or federal debtloads, the rigged investment markets, the contrived corruption on Wall Street, etc… They will NOT tell you the TRUTH. You MUST read between the lines. Even if you feel helpless in getting screwed – it is YOUR obligation as a citizen to understand HOW you are getting screwed and to communicate it to your fellow citizens. That is your civic duty!!!
The “Think Long” thinking is indeed thinking long. First they will exempt up to half the CA population from the already highly progressive state income tax. Then the NEXT election cycle it will be easier to pass “temporary” state income tax increases on the remaining payees.
Sound familiar? This is right out of the federal income tax playbook, where currently 51 percent of households pay no income tax, including 30% who get windfall profits from income tax “credits,” notably the EITC.
Thus too many favor “taxing the rich” through higher income taxes. No skin in the game.
Think Long is a long term con job.
Wonder Dog wants a highest state capital gains tax. We ALREADY have the nation’s fourth highest CG tax — 9.3%. Doubtless the dog wants us to be #1.
What such pooches can’t grasp is that, while people are reluctant to leave the U.S. (with good reason), they WILL leave a state.
Maryland learned this lesson recently when their tax on millionaires resulted the next year in one out of eight NOT FILING ANY Maryland income tax form. Those that didn’t die switched their residence to another state. Rich people can easily do that.
Indeed, consider California’s recent net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The cumulative net annual income lost from this 8 year out-migration comes to about $26 billion.
Net departures slowed in 2008 only because people couldn’t sell their homes. In 2010 we lost “only” 72,000 net people to domestic migration. Again, note that this is NET loss.
http://www.mdp.state.md.us/msdc/Pop_estimate/Estimate_08/table5.pdf and
http://tinyurl.com/2010-CA-lost-72000 and http://interactive.taxfoundation.org/migration/
These are not welfare kings and queens departing. They are the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods) – and retirees seeking to make their pensions provide more bang for the buck.
Some of these departing seniors are retired state and local government employees fleeing the state that provides them with their opulent pensions – in order to avoid the high taxes that these same employees pushed so hard through their unions. And once they move out of California, our state can no longer tax their California-paid pensions.
Look at the makeup of this group. Picked by a Democrat and a RINO, the committee is almost totally made up of Big(ger) Government advocates. The only exception MIGHT be George Schultz.
The goal is clear — to collect higher taxes. Much shuffling of who pays what goes on to obscure this goal, but that’s the driving force underlying this measure.
Don’t buy it.
What such pooches can’t grasp is that, while people are reluctant to leave the U.S. (with good reason), they WILL leave a state.
The Capital gains tax is only 15% RR-you know that. I say it should either be raised to what the poor pay, or lower the tax on the poor. Can’t have it both ways Richard-one way or the other.
Billionaires like Buffet and Broad should NOT be paying a lower tax rate than the working poor who pay more than that 15%.
BTW, if you earn more than $750 in a year you’re subect to the income tax in CA, and that is a fact.
Indeed, consider California’s recent net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The cumulative net annual income lost from this 8 year out-migration comes to about $26 billion.
Net departures slowed in 2008 only because people couldn’t sell their homes. In 2010 we lost “only” 72,000 net people to domestic migration. Again, note that this is NET loss.
They did not leave because of the cap[ital gains tax, if that is your position.
They left because the economy sucks. That is in large part to overspending by gov, espeically on employee compensation.
We need to cap government spending at 5% of the previous years budget, that would solve almost all of the problems in this state. We need to cut overall compensation for basically ALL government employees.
We also need to make sure that capital gains taxes are above that of a minimum wage employee RICHARD!
RR, we are both in agreement on most of the major issues, but you’re wrong on capital gains taxes.
Sorry, dog, you’re wrong on several fronts.
1. We are here discussing STATE capital gains taxes. Our CA rate quickly hits 9.3% — fourth highest in the nation, and over 60% of the federal 15% rate. People can move to other states and pay much lower state capital gains tax — down to and including zero. This is particularly tempting for people who are selling a lifelong asset for a big capital gain — say, a business, apartment or old stock holding.
2. Most of the people who left California this last decade left BEFORE the state economy tanked — when our state unemployment was 5-6%. 1.4 million NET left from 2000 through 2008 — only about 0.1 million left in 2009-2010.
3. The capital gains tax is MUCH more than the stated rate, as there is no adjustment for inflation. If prices double due to inflation, there should be no tax on that “appreciation,” but there is. It’s a perverse incentive for government to inflate the currency.
Dog, you are demonstrating remarkable ignorance — with exceptional certitude. That is okay, except for your accompanying arrogance. For instance:
“. . . if you earn more than $750 in a year you’re subect to the income tax in CA, and that is a fact.”
Well, SUBJECT to the income tax, perhaps. Actually have to PAY state income tax — naahhhh.
For instance, according to the state’s online tax calculator, a single person making $5,000 owes $63 tax, a 1.26% payment. But wait! First we have to take out the standard deduction ($3,670). Then we have a $99 tax credit for being a breathing humanoid. Net tax? ZERO.
Make $10,000? Tax owed? ZERO.
Make $15K? Tax owed? $84. That’s a 0.56% effective tax rate.
If they are married and no kids, on $20,000 they pay ZERO.
If they make $30K, the tax owed is $170, a 0.57% rate.
https://webapp.ftb.ca.gov/taxcalc/calculator.aspx?Submit=2010+Tax+Calculator&Lang=english&redirectURL=OTC
Note that these are 2010 rates and deductions — not this year’s schedule.
And for each dependent kid, the parents get a state tax credit $311 (2011 rate).
Hence a couple with two dependent kids who make $40K pay about $372 state income tax, an effective 0.93% rate.
And all this assumes they can’t itemize deductions or receive other tax credits beyond the standard credit.
BTW, under Think Long, they plan to exempt the first $45K of joint income, producing a huge number of former taxpayers who no longer care about the CA income tax — favoring instead your “soak the rich (a.k.a. Anyone making more)” policy. Your kinda thinking, dog!
Why is this organization not a proponent of something that 95 percent of economists agree on: broadening the tax base, while lowering overall rates is the most effective way to eliminate market distortions?