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04
Fri, Dec

Hold onto Your Wallets

LA WATCHDOG--“You don’t raise taxes during a recession…. The last thing you want to do is raise taxes in the middle of the recession because that would just suck up and take more demand out of the economy and put businesses in a further hole.” Barack Obama, 2011 

It appears the Proposition 15, the Split Roll that would have increased the property taxes of the owners of commercial and industrial properties by $12 billion a year, has been rejected by the voters.  

But this rejection will not stop our Elected Elite and the leaders of the public sector unions from trying to pick our pockets despite the fact that California is already one of the highest, if the highest, taxed state in the country.  

Over the last few years, the Metropolitan Transportation Authority has been considering a “congestion tax” that would raise between $5 billion and $10 billion a year over the next ten years.  This is in addition to the $3 billion a year that we contribute through the 2% sales tax.  This new revenue would be used to fund Mayor Garcetti’s $26 billion “28 for’28” initiative in time for the Olympics as well as free fares for all transit riders, billions in cost overruns, and Metro’s inefficient bureaucracy and bloated payroll. 

Our friends in Sacramento have also considered a new millionaire’s tax which would impose a surcharge of 1% of all income over $1 million, increasing to 3% on income over $2 million, and 3.5% for all earnings in excess of $5 million.  That would increase the marginal tax rate from 13.3%, already the highest in the nation, to 16.8%.  According to its sponsors, this levy would raise almost $7 billion a year. 

Sacramento’s politicians have also proposed the nation’s first “Wealth Tax” which impose a 0.4% levy on Californians’ net worth in excess of $30 million.  The expected haul: $7.5 billion.  

While these two levies would raise an estimated $14 billion, an amount that has the leaders of the teachers union salivating, the negative impact on our economy and the State’s reputation would be considerable.  More than likely, it would drive a number of wealthy individuals, their entrepreneurial spirit and investment capital, and their businesses which employ slews of Californians out of state to more friendly tax and regulatory environments.  

There are also rumblings that the City of LosAngeles will be placing a measure on the ballot that would authorize up to $2 billion in bonds to finance affordable and homeless housing.  This would result in a substantial increase in our property taxes.  

And more than likely, the Los Angeles Unified School District will also place a measure on the ballot in next few years to raise money to finance its unsustainable labor contract negotiated by Mayor Garcetti and its underfunded pension plan and other retirement liabilities. 

And who knows what the County will do, especially given the sorry state of its pension plan? 

One common theme is that while our Elected Elite want us to approve tax increases, and massive ones at that, they are not willing to engage in any real reforms: open and transparent labor negotiations, the restructuring of the underfunded pension plans, benchmarking the efficiency of their operations, or independent oversight of their budgets and finances.  

But this is not a one way street.  And until our elected officials are willing to engage in real reform, we need to continue to vote no on any future tax increases, especially during a recession. Just ask Barack Obama. 

 (Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council.  He is a Neighborhood Council Budget Advocate.  He can be reached at:  lajack@gmail.com.)

-cw