Tue, Aug

Now Is the Time for Remaking Tax System

CALIFORNIA - You couldn't come up with a better time than right now if you wanted to remake the California tax system.

It won't be easy, but many of the stars are aligned. And no one has more incentive to make such a change happen now than Gov. Jerry Brown.

Brown has a number of needs that could be met by a big push for comprehensive tax reform. First, he needs more revenues for the budget if he wants to avoid making more cuts to important public services.

Second, he needs to find a way to talk about jobs and the economy, and taxes are an obvious way there. Third, he needs to breathe some life into his stale governorship by taking on game-changing reform; if he doesn't go on offense, and show himself to be a force for fixing a broken system, the California public is likely to turn on him.

Perhaps most important, Brown, if he wants to control the agenda next year, needs to head off a massive war over taxes on next year's ballot. The governor should worry both about his allies - unions that want to push for all kinds of new taxes that are likely to add to California's reputation as hostile to business - and about those on the right who may take counter-steps to limit revenues or make the budget deficit even worse.

Brown has said he wants to avoid a war of all against all. And he should, since he'd lose control of the agenda in a big initiative fight. One way to pre-empt such a battle would be to draw people into finding a comprehensive solution on a subject such as taxes.

Taxation is a difficult and divisive subject, but the governor may find it easier than he thinks. Cooler heads on left and right know that a multi-initiative war is likely to lead to defeat for all sides - which means only the political consultants who run the campaigns will have a good 2012.

Voices on the left - including Lt. Gov Gavin Newsom and Los Angeles Mayor Antonio Villaraigosa - have been signaling an interest in broader tax reform, in the interest of not only fairness but also economic competitiveness.

And Brown already has forged ties to the business community, through the budget process. So he has good will that should allow him to bring labor and business to the table together to talk about tax reform.

And yes, the anti-tax right will oppose any changes, though Brown, as a longtime advocate of flatter taxation, would at least get a hearing. But that opposition shouldn't stop him. Brown's governorship right now is going nowhere. So he has little to lose by tackling a big issue, such as taxes.

(Joe Mathews is Journalist and Irvine senior fellow at the New America Foundation, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It. This column was posted first at foxandhoundsdaily.com)    -cw

Tags: taxes, tax system, Governor Brown, Jerry Brown, Gavin Newsom, Antonio Villaraigosa, tax reform, business, labor

Vol 9 Issue 61
Pub: Aug 2, 2011