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Pillage People turn to Pillory Penalty
Please veto this bad idea…

[by K. Lloyd Billingsley] 2/10/06

California Assembly Bill 1418, by Inglewood Democrat Jerome Horton, would require California's two tax agencies to make public the names of those who owe the state more than $100,000, in a quest to retrieve $340 million. The bill, a kind of fiscal Megan's Law, passed the Assembly on a party-line vote. As they appraise the measure, state senators and the governor might consider a few realities, including problems at the Franchise Tax Board (FTB).

K. Lloyd Billingsley
[Courtesty of Pacific Research Institute]

K. Lloyd Billingsley is Editorial Director for the Pacific Research Institute and has been widely published on topics including on popular culture, defense policy, education reform, and many other current policy issues. [go to Billingsley index]

It is common for Californians who have promptly paid their state taxes to receive a delinquency notice. In these cases, the FTB has the taxpayer's check, but takes so long to cash it that the lapse triggers a notice, mailed at taxpayers' expense. (See PRI website for "State Greed has Consequences," Capital Ideas, August 4, 2004.) Such lethargy and inefficiency should cause legislators to think twice about expanding the portfolio of the FTB and California's other tax agency, where state employees have ample time to concoct schemes aimed at wringing yet more money out of already overburdened taxpayers.

During the mid-1990s officials at the state Board of Equalization, which has never equalized anything, got the idea to treat editorial cartoons as though they were works of art purchased in a gallery, and therefore subject to sales tax. The measure, dubbed the "laugh tax," made California an object of national ridicule.

Legislators should consider whether the delinquency problem stems from taxes that are too high. California has the most punitive income tax for single people, the eighth most punitive for married filers, and is the third most punitive in the nation when calculated as the difference between the top and bottom rate. Californians pay nearly $1000 in state income taxes for every man, woman, and child in the state, a figure more than 30 percent higher than the national average. (See PRI's Taxing Times: How California's Steep Income Tax Stifles Economic Growth) of AB 1418 might argue that 11 other states already publicize tax delinquents. On the other hand, seven states – Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming – have no income tax. That is surely a better example to follow, but if California wants to go the publicity route, there is plenty to reveal.

The California Highway Patrol, for example, could reveal the number of chiefs who get lucrative pensions based on bogus disabilities then take strenuous jobs such as scuba instructors. The California Department of Education could publicize who was responsible for giving more than $20 million in public adult-education funds to corrupt political organizations. The CDE could also publicize the names and number of incompetent teachers fired in a given year, though a ballpark figure would be zero. CalTrans could reveal the names of those responsible for huge cost overruns on Bay Area bridges.

The University of California could publicize, without an official inquiry, the $871 million – more than twice the $340 million in taxes owed – they spent on handouts and perks to administrators while increasing student fees. The latest revelation here is UC Davis chancellor Larry Vanderhoef paying politically connected vice chancellor Celeste Rose a salary of $205,000 a year, for two years, for a job with no duties, followed by a $50,000 payment, if she dropped a discrimination suit. That works out to $460,000 in public funds, a lot more than the $100,000 minimum for AB 1418.

These revelations came by way of a free and inquisitive press, not self-disclosure by state officials. They prefer to keep such matters secret, often hiding them as personnel matters. That strengthens the case for limiting the government's publicity function to embarrassing facts about itself, not private citizens with an outstanding tax bill. It should not escape notice that California also carries a heavy debt load and is not exactly a model of rectitude on budgetary matters.

Would AB 1418 work on its own terms? Would the prospect of publicity make anybody on the delinquent list pay up? That remains far from certain. If AB 1418 passes the Senate, Governor Schwarzenegger should veto it and press for measures that lower taxes, eliminate waste, trim spending and expose corruption in state agencies. CRO

copyright 2006 Pacific Research Institute




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