CalTax Gets Rolled by the Governor

The California Taxpayers Association (CalTax) after weeks of heavy pressure from Governor Arnold Schwarzenegger agreed to support his "compromise" budget plan which includes a $10 billion tax increase. Apparently CalTax thinks Californians don’t pay enough taxes.

CalTax has a venerable history as a business oriented taxpayer group. But in the really tough political battles they have rarely been there for working Californians. The greatest taxpayer victory in the history of the Golden State was of course Proposition 13. This landmark tax-cutting measure allowed millions of Californians to stay in their homes by reducing property tax rates and by providing certainty about future tax liability. The tax certainty aspect of 13 has proven a boon to corporate California . And yet CalTax the mouthpiece for corporate California was strongly opposed to Proposition 13 in 1978.

Later CalTax developed a track record of opposing the two-thirds vote requirement especially as required for local sales taxes. The two-thirds vote requirement has proven to be a valuable check against runaway taxation and a responsible means to assure broader community consensus on tax increases.

So why is CalTax so enamored with sales tax increases? As a broad based tax hitting the working class and consumers the hardest the sales and use tax is apparently viewed as "less" damaging to businesses. We wish more members of the CalTax Board of Directors were watching former U.S. Senator Fred Thompson during the Republican Convention when he characterized the Obama’s proposed tax increases on the business community as "taking water from their side of the bucket." Thompson as well as most fiscal conservatives understand that taking water out of any part of the bucket hurts us all.

For grassroots taxpayer groups like Howard Jarvis Taxpayers Association and the hundreds of local organizations throughout the state what is so frustrating about the California business community is that they squeal like a stuck pig if elected leaders propose tax increases on them or threaten to remove tax credits meant to foster economic growth. We understand that. But why cave in when your customers employees and stockholders (many of whom are persons of modest means with 401(k)s) are similarly threatened? Didn’t Benjamin Franklin say something about hanging together?

With this move CalTax has damaged its reputation perhaps irreparably. How will it now ask for help for the business community from the very same Republican legislators they have now undercut?

Moreover it will now be more difficult for the business community to come to grassroots organizations both statewide and local seeking help in fighting the coming onslaught of new taxes Sinclair Paint type fees and other levies the left want to impose on businesses. It is not apparent that CalTax has fully thought this through.

There may those on our side both in the Capitol and out that will want to retaliate against the business community by letting the Democrats have their way on "the rich" corporations and business property owners. Some may even call for a split roll property tax.

But that would be unwise. Just because some in the business community have surrendered to higher taxes there is still an urgent need for strong taxpayer advocacy which is willing to speak the truth to political power. It is unfortunate that CalTax isn’t there with us.

Jon Coupal is President of the Howard Jarvis Taxpayers Association — California’s largest taxpayer organization — which is dedicated to the protection of Proposition 13 and promoting taxpayers’ rights.