October 2009
News ‘n’ Views
Page 8
Message from the Office of Assemblyman Tony Mendoza
RESTRUCTURING CALIFORNIA’S TAX SYSTEM The legislature is back in special session dealing with a number of pressing issues. As a State, we still have to deal with our deficit, federally mandated prison reform, water issues and an attempt by the Governor to revamp the state’s tax structure on the backs of the middle class. The Commission on the 21st Century Economy, a 14 member committee established by Executive Order, was charged with evaluating California’s tax system and proposing reforms. The idea was to craft a fair system that is more stable and reflective of today’s economy. The recommendations have been anything but equitable. The Commission, chaired by Gerald Parsky, a longtime Republican political figure who served as chairman of President George W. Bush's campaigns in California in 2000 and 2004, has produced a report proudly endorsed by Schwarzenegger, even though only 9 of the 14 members of the commission will give their support. Allan Zaremberg of the California Chamber called it fatally flawed and Art Pulaski of the California Labor Federation said the report was a profound disappointment. Under the Parsky proposal, income tax rates would be changed from six different rates to just two - a 2.75% levy on income up to $56,000 for a married couple, and 6.5% for taxable income exceeding that threshold. This works out, in effect, as a giveaway to the rich, while taxes paid by the poorest 62 percent of Californian’s are reduced by $4 per year. Furthermore, the Parsky Commission, to offset the reduction in collectable income tax, calls for the introduction of a “Net Receipts” program where current retail sales and corporate taxes would be eliminated and replaced by a broader business tax that would place a levy on every type of business such as service sector firms like lawyers and business consultants. The fear, while we are just coming out of a recession, is that the new tax would also encourage relocation of California jobs to foreign firms that would be beyond the reach of California's tax collectors. One member of the Commission, economist Richard Pomp, even wrote a 21-page report blasting the Commission’s recommendations, saying of the report: “… the emperor has no clothes.” Even so, Governor Schwarzenegger said if given the chance he would sign it immediately. We should not give him that chance. While we all agree our current tax structure is flawed and subjects the state to a roller coaster of boom and bust cycles, our job as Democrats in the State Legislature is to protect the middle class when seeking to overhaul something as important as California’s tax system. The Governor called a special session to force a rapid approval of his flawed tax reforms, but the promise of government is to protect, empower and enable success to all that it serves, not to sacrifice the many for the advantage of the few.
TONY MENDOZA
Assemblymember, 56th District Submitted by Jay Day, Member of Tony Mendoza’s staff