Business Isn’t Thinking of Taxpayers
An initiative being circulated for the November ballot calls for strengthening the two-thirds vote for taxes. However, California’s largest taxpayer advocacy group, the Howard Jarvis Taxpayers Assn., has no plans to support it.
The association, which itself has championed the two-thirds vote requirement for tax increases, agrees with the principle of the initiative but refuses to assist the hypocrisy of the measure’s backer: the California business community.
Corporate interests, led by the California Chamber of Commerce, are the sole sponsors of this self-described taxpayer protection proposal. If this measure becomes law, it will overturn a California Supreme Court decision that said levies passed by the Legislature to mitigate problems associated with certain business products--such as the consequences of lead in paint--are fees, not taxes.
By determining these levies to be fees, the court allowed the Legislature to pass them by majority vote. If the initiative redefines these levies as taxes, they will need a two-thirds vote to pass. Because business leaders don’t like these charges on their products, they want a two-thirds vote requirement to protect themselves against these levies.
The problem for grass-roots taxpayer groups is that these same business leaders want to lower the two-thirds vote requirement on other levies that all taxpayers must pay.
Consider the hottest tax debates today in California. Much of the business community supports Proposition 26 on the March ballot. This would lower the 120-year-old two-thirds vote requirement to a simple majority to pass local general obligation bonds, which are paid off exclusively by property taxpayers.
Similarly, the business community has been solidly behind an effort by Senate President Pro Tem John Burton to lower the local two-thirds vote requirement for transportation improvements. This latter effort is fervently supported by the business people of the Silicon Valley, although the plan has recently run into a road bump because Gov. Gray Davis doesn’t like it. Still, the business community insists that these measures to reduce the two-thirds vote are good investments for taxpayers.
These same business leaders have the nerve to call their new initiative the Two-Thirds Vote Preservation Act.
Why the seeming pro-tax stance for business? Self-interest has a lot to do with it. Business leaders feel they have to play along with the new Democratic majority in Sacramento. Yet it’s still hard to follow the business community’s reasoning on tax issues.
For example, the California Business Roundtable, made up of the top executives in the state, issued a 1998 report titled “Building a Legacy for the Next Generation,” which projected that over the 10-year period beginning in 1997, local general obligation bonds would need to supply about $9.2 billion for school construction. To reach that figure, these business leaders supported the majority vote standard for school bonds.
Guess what? In only three years, a total of nearly $12 billion in local school bonds has been approved under the two-thirds vote standard. Yet the Roundtable continues to lead the crusade for Proposition 26 to make it easier to raise more taxes.
Want more business hypocrisy on tax issues? This past December, a few multimillionaire business people, mostly from the Silicon Valley, held a news conference to announce that they would donate millions of dollars to pass Proposition 26. Meanwhile, on the same day, Silicon Valley business types were reportedly thrilled by the news that Washington would extend research and development tax credits, which, newspapers said, the executives hoped would be made permanent.
Similarly, some of the same executives who are supporting the fight to make it easier to raise taxes for schools and roads are leading the fight against Internet sales taxes that could pay for those schools and roads.
Grass-roots organizations have always believed that business taxpayers and citizens taxpayers should stick together. That is impossible to do, however, when corporate interests are lobbying for tax increases on families. If the business community continues to go south on tax issues, perhaps they should not be surprised when grass-roots tax groups call for higher corporate taxation to pay for the bigger government that business leaders seem to think is needed.
