Contributor

John Campbell

John Campbell (R-Irvine) is a California State Senator representing the 35th District in Orange County. He represents the cities of Newport Beach, Laguna Beach, Irvine, Costa Mesa, Huntington Beach, Seal Beach and Cypress. He can be reached through his Senate website and through the website for his California Senate campaign. [go to Campbell index]

A Budget Deadline?
Oh, they'll get around to it...
[John Campbell] 2/14/05

There is not much going on formally in Sacramento these days. By that, I mean that we are voting on very few bills and having very few committee hearings. Assembly Democrats finally announced that they will hold hearings on the Governor's reform proposals starting around the first of March. That is conveniently after the deadline by which the Governor said they needed to act or he would "go to the people."

But there is lots going on informally. Here are a few tidbits:

Tax Loopholes: While Democrats have bashed the Governor's proposed budget spending increases as "painful cuts," they have themselves not been forthcoming with an alternative. They are nervous about their image as the party of tax increases, so they instead are talking about "closing corporate tax loopholes." When asked exactly what these loopholes are, Treasurer Phil Angelides presented a letter identifying 7 "loopholes" that need to be closed. These 7 "loopholes" are fairly arcane items like making farmers pay sales tax on diesel fuel for their tractors and limiting the gross receipts of corporations that file for S Corporation status under federal law. The point, however, is that the total revenue that Mr. Angelides claimed will be generated by these tax increases is only $329 million. It will probably actually be much less because they never take into account taxpayer behavior when taxes go up. But even if we accept his numbers, that is 1/27th of the budget deficit. What about the other 26/27ths? Well, an Assembly committee this week suggested raising the rates on both individual and corporate income taxes. Tripling the car tax again is also on their list of "options."

When you hear the word "loopholes," replace it with the word "increases."


Tax Filing: It's that dreadful time of year when we all have to prepare our annual income tax returns. But the nice people at the California Franchise Tax Board (FTB) are from the government and they are here to help. (heavy sigh) They will send a notice to 50,000 randomly selected taxpayers this year offering to prepare their state tax returns for them. How nice! Do you think the FTB will make sure they take all deductions and exclude all income they can? Do you think they will try hard to ensure that the taxpayer is paying the lowest legal tax?

Of course not! The FTB is known nationwide as an organization that has a culture of trying to extract the most tax out of a taxpayer, rather than the correct tax. Having the FTB do your return is like asking the other team to shoot your free throws in a basketball game. They have a conflicting objective to yours. Don't let anyone you know do this. Taxing agencies have more authority than any other element of government. We need to limit and control that authority whenever possible. Remember that I have some background in this area as a CPA with a Masters degree in Business Taxation.


Secretary of State: The two questions before us now are whether or not the hearings will continue and who the Governor will appoint to replace the office recently vacated by Kevin Shelley. As of the date of this writing, rumors are rampant but no appointment has been announced yet. As far as the hearings on the behavior and actions of the Secretary of State's office are concerned, they should continue. It is unlikely that Mr. Shelley was the only person in the Secretary of State's office that was involved in the alleged misappropriation of funds. We must discover how deep and how broad the problem is in order to correct it.


A Final Note: During one of the hearings this week, a spokesperson for the liberal California Budget Project organization suggested that a long term solution to the budget crisis would be to require school children to be educated on the importance of state government spending and how critical it is that we do more. Shall we put subliminal messages in the text books that say "taxes and spending are good" too? I guess liberal indoctrination in college isn't working well enough so they want to start earlier. CRO

This piece first appeared in the Orange County Register

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