Government is greediest actor in “Amazon Tax” debate

As published in the North County Times:

Editorial boards and newspaper columnists are quick to assign “greed” as the motive driving Amazon, eBay and others to oppose a new law aimed at making more out-of-state online retailers collect sales tax on behalf of the State of California. But the greediest actor in this drama isn’t Amazon —- it’s the government.

You see, online retailers didn’t pick this fight. State lawmakers did —- out of misguided lust for revenue they’ll never see.

Put aside the rhetoric and consider the facts. Under the U.S. Constitution, state lawmakers can’t compel out-of-state retailers to collect sales tax unless those retailers have a physical retail presence —- known as “nexus” —- in our state. Californians are supposed to pay use tax —- the equivalent of sales tax —- on out-of-state purchases, but few do.

It works the same way in reverse. California businesses making out-of-state sales in states where they have no brick-and-mortar retail presence don’t have to register with the tax bureaucracies in those states, collect and remit sales tax or be subject to audits. In five states where Amazon collects and remits sales tax, many California businesses don’t.

But rather than educate Californians on how sales and use tax law works, lawmakers have managed to confuse the issue. The so-called “Amazon Tax” distorts the definition of nexus in three devilish ways.

Under this new law, out-of-state companies that share income with California-based affiliate advertisers or create jobs in our state via subsidiaries are now suddenly deemed in-state companies if they continue those relationships.

And that’s just the start. The “Amazon Tax” also contains an insidious “long-arm” provision granting sweeping power to the State Board of Equalization to further expand what constitutes nexus. No one knows yet what that will look like, and the resulting uncertainty could make out-of-state companies wary of contracting with Californians for years to come.

At a time when California’s unemployment rate is already among the worst in the nation, the “Amazon Tax” sends the entirely wrong message to out-of-state job creators, entrepreneurs and investors. The unfortunate but unsurprising result is lost jobs and income for our state.

It’s not too early to declare the “Amazon Tax” a failure. Out-of-state online retailers have already overwhelmingly chosen to opt out of the new law by ending their affiliate advertising relationships with Californians. They continue to sell into California without collecting sales tax. The “playing field” for retailers has become no more level but is certainly now much more confusing.

A recent USC/LA Times poll found that a majority of young people, Blacks and Latinos, and a plurality of all Californians, oppose this new law. Why? Perhaps they understand better than our tax-hungry Legislature that driving away jobs and investment won’t solve our problems.

For the sake of our state, let’s hope sanity prevails in this debate.

State heading toward highest unemployment

As published in the Press Enterprise:

The state of Nevada has the highest unemployment rate in the nation, but California is a close second. Unfortunately, recent employment trends show California could soon swap places with Nevada, assuming the dubious distinction of having the worst unemployment rate in America. This is discouraging news for California’s more than two million unemployed workers.

Adding insult to injury, California’s liberal political leaders are like a flock of ostriches with their heads in the sand when it comes to getting California’s economy back on track. As lawmakers continue their annual tradition of sending “job killer” bills to the governor’s desk, California’s economy remains stuck in neutral even as other states pass us by.

Take Nevada, for instance. Nevada’s unemployment rate, which peaked at 14.9 percent — considerably higher than California’s 12.5 percent peak — has fallen to just 12.1 percent. That’s only four tenths of 1 percent higher than our state’s current unemployment rate.

Nevada isn’t the only high unemployment state recovering faster than California. Michigan’s peak unemployment rate of 14.9 percent has fallen more than four points to 10.3 percent.

Clearly, the economic recoveries of Nevada, Michigan and many other states are outshining our own.

This reality is underscored by the flight of California’s work force. Between 2005 and 2009 more than 870,000 Californians packed their bags and departed our state. The top destinations were Arizona, Texas and Oregon, but even Oklahoma attracted nearly 30,000 transplants.

Warning signs

But it’s not just California workers who are leaving. Our employers are as well. According to business relocation coach Joe Vranich, the number of California business relocations is five times higher this year than in 2009. He also warns that at least 14 states are actively recruiting California business owners, encouraging them to expand or relocate for cost savings of up to 40 percent.

The warning signs of California’s jobs problems are everywhere, yet the California Legislature seems oblivious. Lawmakers waste their time on nonpriorities or churn out new taxes, fees, mandates and ridiculous regulations on business owners who are barely surviving.

The Sacramento Bee recently identified 10 bills to watch in the California Legislature. Nine of the 10 bills have nothing to do with jobs. Instead these bills seek to regulate unloaded guns, shark fins, cell phones, ski helmets, smoking and tanning. Given our Legislature’s propensity to regulate every facet of our lives, it’s no wonder the Mercatus Center recently ranked California as the third “least free” state in the nation.

A tenth bill on The Bee’s list, dubbed the “Amazon tax,” was recently approved by the Legislature as a budget measure and signed into law by Gov. Jerry Brown. This measure is just the sort of misguided law that may guarantee California soon becomes the nation’s leader in unemployment.

Losing income

Proponents of the so-called “Amazon tax” claim it will “create fairness” by “leveling the playing field” between California’s brick-and-mortar retailers and out-of-state online sellers. They claim it will generate $200 million in new revenues for the state. But evidence shows this measure will actually cause California to lose, not gain, millions of dollars.

Amazon.com and other out-of-state online retailers have already terminated their California-based affiliate programs and are taking other steps to ensure that they have no legal connection to California that would force them to collect sales tax here. These out-of-state retailers continue to sell into California without collecting sales tax.

Meanwhile, the true victims of the “Amazon tax” are California job creators who will suffer an unavoidable loss of income if they continue to do business in this state. As many as 25,000 California affiliates who pay an estimated $124 million in state income taxes are impacted. Small businesses that currently benefit from affiliate referrals will also suffer lost revenue.

Another surprising victim of this new law is eBay , a homegrown California success story and major private sector employer. Ironically, the “Amazon tax” will actually disadvantage eBay and drive online sellers away from eBay toward to other platforms, like Amazon. As sellers living outside California discover that continued sales on eBay trigger new, unwelcome relationships with California’s tax auditors, they will take their business elsewhere. And I can’t blame them.

Unless California’s leaders want to make California the nation’s unemployment leader, they need to radically transform their priorities. They need to stop making California offensive to business, and instead start wooing private sector jobs by extending a welcome mat to entrepreneurs and businesses of all kinds.

A Temporary Tax That Never Went Away

As published at FlashReport.org:

California taxpayers are celebrating a rare victory. Despite Democrat efforts to extend them, the sweeping “temporary” tax increases of 2009 have gone away. This is an uncommon treat, as many prior tax hikes sold as “temporary” are still with us today.

As Californians enjoy the benefits of this victory, today marks the 20th anniversary of a prior sales tax increase that is still with us. On July 15, 1991 Californians were impaled with a “temporary” sales tax increase of 1.25%. This measure was enacted by the Legislature to address the state budget shortfall during the early 1990s economic downturn.

Fast forward to June of this year. A 2009 sales tax rate increase of 1% was set to expire on July 1, 2011. Despite a vote of the people against extending this and other temporary tax increases, Governor Jerry Brown and Democrat legislators unsuccessfully sought a five year extension of these taxes.

These higher taxes amounted to billions of dollars per year out of the pockets of struggling Californians and into the hands of wasteful government. Combine the 2009 temporary sales tax increase with the 1991 temporary sales tax increase, and we’re talking about $11 billion dollars per year taken from the people. And that’s not even counting the other tax hikes.

For most of our state’s existence California prospered with either no sales tax, or much lower rates than we have today. Today five states—Alaska, Montana, Oregon, Delaware and New Hampshire—still have no sales tax at all. Of these states, two—Alaska and Montana—are among only four states which have no budget deficit.

California opened its doors to the sales tax in 1933 with the Riley-Stuart Act, as did several other states. It was sold as an “emergency measure” during the Great Depression, at a rate of just 2%. As late as 1977 the sales tax rate in California was still only 4.75%. Despite our recent tax reduction, our 7.25% statewide rate remains the highest in the nation, not including over 130 different local governments imposing their own sales tax—raising the tax rate to nearly 10% in some areas.

The answer to California’s problems isn’t higher taxes. Californians already bear the sixth highest tax burden in the nation. Rather we must reduce taxes and limit regulations to create an environment where job creators can expand and thrive.

As today’s somber tax anniversary passes with little notice, let it be a reminder that the government’s appetite for your money is insatiable, and “temporary” taxes rarely go away.

New Law Creates a “Qualified” Mess

As published in the Inland Valley Daily Bulletin, Los Angeles Daily News, Salinas Californian, San Bernardino Sun and Fox & Hounds Daily:

Two years ago, the California Legislature enacted an onerous law requiring business owners dubbed “qualified purchasers” to register with the State Board of Equalization for the purpose of reporting “use tax.” Like many bad laws, this one was cooked up in an attempt to help balance the state’s budget. As you might suspect, it hasn’t worked.

I was serving as a senator at the time and voted against this legislation. Now, as an elected member of the State Board of Equalization, I’m seeing firsthand the mess this law has created.

The “Qualified Purchaser Program” was supposed to bring in $200 million in new revenue during its first two years; so far, it has yielded only a fraction of that total, barely covering related expenses, including new staff and other program costs.

The program has registered 500,000 California small business owners, including Avon sellers, dentists and real estate agents. Most of these registrations have been involuntary, meaning that if BOE staff thinks you meet the definition of a “qualified purchaser,” then you’re automatically registered, whether you like it or not. Under the program’s terms, any “service enterprise” that grossed more than $100,000 in a single calendar year and had no prior relationship with BOE must now annually report its “use tax” on a new form.

By and large, Californians, including many of these business owners, are unfamiliar with “use tax.” The use tax is similar to the sales tax, but it is the obligation of the purchaser to remit the tax directly to the BOE, instead of paying it at the point of sale. The use tax applies when you purchase items from a retailer who is not located in California and is not registered to remit tax to California. Purchases subject to use tax include those made on the Internet from sellers outside the state.

What’s particularly frustrating about the Qualified Purchaser Program is that it isn’t even necessary. There already were two different ways for Californians to report use tax: (1) BOE form 79b and (2) a dedicated line on state income tax forms. Now, an arbitrary but rather large group of small business owners must report use tax in a completely unique way. This serves only to make California a more confusing place for our state’s most important job creators: small business owners and entrepreneurs.

Of the 500,000 business owners registered as qualified purchasers, more than 60 percent were so confused by the new program that they didn’t return the paperwork that the BOE sent them. So in May of this year, without my prior knowledge or approval, BOE staff mailed “final” delinquency notices to 305,000 business owners, threatening an “estimated” tax bill for failure to respond.

Not surprisingly, BOE was flooded with thousands of phone calls from angry, confused and frustrated taxpayers, many of whom were forced to endure wait times of several hours or more to talk to a BOE representative. In the past year and a half, BOE has received more than 175,000 calls from qualified purchasers seeking assistance.

Of those qualified purchasers who actually submitted a return, an overwhelming 87 percent reported that they owe zero use tax. Of the few who did owe, the average amount was so small that they likely paid more to their accountant to comply with this program than they paid in tax. And that doesn’t count the taxpayer’s time and frustration.

Impacted business owners have been providing my office with helpful feedback, and I welcome more. I am inviting qualified purchasers to take a survey on my website at http://www.boe.ca.gov/Runner. I plan to share the feedback with my fellow board members and other interested parties.

In the meantime, I will be working with my colleagues on the board to ensure reasonable implementation of this law. But, to be clear, I also will be calling for a complete repeal of the program.

The Qualified Purchaser Program is wasting taxpayers’ time and money with no benefit to the state. Like other Californians, these taxpayers should be able to pay use tax on their income tax forms or on Form 79b, which BOE has made available for years. The law makes no sense, and is yet another example of pointless government interference in the lives of Californians and our economy.

Raising Oil Companies’ Taxes Will Kill Jobs

As published in the Press Enterprise:

Ask anyone what he thinks about gas prices and you’ll likely get an earful. The average price of gasoline in California has risen to more than $4 per gallon — and, motorists are feeling the pain.

It’s easy to blame big oil companies for this problem, and many do. However, doing so does nothing to explain why Californians see roughly 10 percent higher costs on average at the pump than the rest of the nation.

Nor does it explain why we refuse to tap the oil in the ground beneath our feet, which would create both new jobs and revenues.

Not coincidentally, California’s oil production has dropped by almost 45 percent in the last 25 years, and our refining capacity has not kept pace with demand.

Limited production and refining capacity drives up the price we all see at the pump, especially given California’s unique fuel-blend requirements.

Furthermore, California’s fuel taxes are the highest in the nation. Californians pay a shocking 66.1 cents per gallon in federal and state taxes and fees each and every time they fill up their tanks.

Truckers pay even more — 76 cents per gallon of diesel. These higher costs hit small businesses and working families squarely in the pocketbook.

Wanting to punish oil companies, some are proposing a new type of tax on oil production called a “severance tax.” This proposal would take the going rate for a barrel of oil and apply a 12.5 percent tax to that value at the point it is produced.

But instead of punishing the oil industry, we’ll end up punishing ourselves. The result will be more lost jobs and less revenues.

In January 2009, the Law and Economics Consulting Group released a study on the effects of a proposed 9.9 percent severance tax.

The study found that 10,000 jobs would be lost almost immediately if the tax were passed. Additionally, many of the roughly 100,000 jobs closely related to the oil production industry would be placed in jeopardy.

Now, remember California’s oil production has plummeted by 45 percent in the last 25 years, which is bad enough. With a severance tax of 9.9 percent, much less the 12.5 percent that is currently being proposed, production would further decrease by upward of 80,000 barrels a day.

Driving this much production out of California would undermine California’s economic recovery.

It would hurt property-tax revenues, as well as sales and use taxes, effectively hamstringing whatever benefits severance-tax revenues might have provided.

Any short-term boost in state revenue would be immediately undercut by permanent job losses and a further weakening of industry.

Given that California’s unemployment rate now ranks higher than Michigan’s, it’s foolhardy to place any of our remaining jobs in jeopardy.

Alberto Torrico, a former assemblyman and one of the severance tax’s major proponents, argued that without the severance tax, California is “giving away the energy for free.” This is, of course, silly when the state already imposes a plethora of taxes and fees on both the industry and consumers.

For the seventh straight year in a row, a survey of CEOs ranked California as the worst state for business. Torrico’s tax proposal would ensure our state retains this dismal distinction for years to come.

don’t kill jobs

Driving more jobs out of California is not an option. It is bad policy for a state to devastate an economy already reeling under high unemployment rates with an onerous new job-killing tax.

Instead, we should orient our tax and regulatory systems to be jobs friendly. Doing so is the only way to speed California’s recovery and help hard-working families.

George Runner, R-Antelope Valley, is a member of the California Board of Equalization.

Less Government, Please

As published in the FlashReport:

Treasurer Bill Lockyer caused waves last month when he suggested that given Republican lawmakers’ opposition to higher taxes, their districts should bear the brunt of spending cuts. He said, “The people who want less government ought to be at the front of that line to get less government.”

Senate Democrat Leader Darrell Steinberg expressed openness to the idea, saying, “You don’t want to pay for government, well then, you get less of it.” He added that any district-targeted cuts should not hurt “kids or the vulnerable” but instead be limited to “convenience services that affect adults.”

Outrage to the proposal—appropriately so—came fast and furious.

Senate Vice-Chair Bob Huff said the proposal was “just nuts.”

Jon Coupal of the Howard Jarvis Taxpayers Foundation compared the idea to the strong arm tactics of an organized crime protection racket. He also suggested it might violate the equal protection guarantees found in both our state and federal constitutions.

Even the Los Angeles Times called the plan “ham-fisted and wrong.”

Mr. Lockyer’s point merits further consideration and a more thorough response.

Republicans do want less government. We believe our state’s fiscal problems are the result of too much spending, not too few taxes.

We believe that government spending doesn’t produce happiness. Instead we know that government spending can foster dependency, stifle entrepreneurship and fund wasteful bureaucracies. We also know that government programs tend to grow larger and larger yet often outlive the purpose for which they were created. Some even create more problems than they solve.

We Republicans question how it is that some states manage to do more with less and are also able to grow jobs. We ask why so many businesses are choosing to locate or expand outside California, and why our state’s unemployment rate is higher than nearly every other state. We’re also pretty confident we know the answers to these questions.

The evidence backs us up. According to the Tax Foundation, Californians bear the sixth highest overall tax burden in the nation. California’s income taxes, sales taxes and fuel taxes rank at or near the top. If not for Proposition 13, which protects homeowners by limiting property taxes, our overall tax burden would be far worse.

Despite the fact that California taxes and spends more than most other states, our schools and roads don’t reflect it. And a diminished private sector is forced to pay more to support state worker wages and benefits that exceed those of many private sector workers.

Contrary to conventional wisdom, increased government spending can actually hurt a state’s economy. A little-noticed 2010 Harvard Business School study found that increased federal spending in states with politically powerful leaders causes “significant retrenchment” by corporations, dampening investment and employment activity.

It’s not too much of a stretch to say that state spending could have the same impact.

Yes, less government can be a good thing.

The real problem with Lockyer’s proposal is that it doesn’t go far enough. If Republican lawmakers are asked to accept less tax dollars for their districts, they should get to determine where and how those dollars are spent.

They should be empowered to enact policy reforms they have long championed to help California’s struggling private sector create jobs, including less red tape, lower taxes, reduced energy costs and real tort reform.

They should be allowed to enact commonsense education reforms putting kids first by freeing teachers and locally-elected schools boards from Sacramento’s micromanagement and granting parents more control over their children’s education.

Public-private partnerships could boost these efforts and move California’s transportation system into the 21st century. They could also expand our state’s dismal water storage capacity and help with other infrastructure needs.

These reforms would revitalize areas of our state currently plagued by joblessness. Rather than flee California, businesses could relocate to more friendly terrain available only in Republican districts. Employers in other states might, for a change, see California—albeit only some parts—as an attractive place to do business.

If accompanied by real reforms, Lockyer’s spending cuts could be the best thing that ever happened to Republican districts. Economic growth and job creation would lead to lower unemployment; increased government revenues could be invested in local priorities or returned to taxpayers.

Mr. Lockyer, if less government truly means less government, then count me in.

Republicans Show True Courage

As published in the Sacramento Bee:

Conventional wisdom in California’s perennial budget crisis is that lawmakers who support tax increases are courageous, while those who refuse to go along are, well, cowards.

The John F. Kennedy Library Foundation reinforced this misguided notion last year by handing out “Profiles in Courage” awards to four legislative leaders who inflicted billions in higher taxes on average Californians struggling to survive a steep economic downturn.

Courage, it seems to some, is the willingness to pick another’s pocket when one’s own bank account balance is running low.

Despite his public persona of frugality, Gov. Jerry Brown shares this view.

In his State of the State address earlier this year, Brown argued that California would once again be a leader in “job creation, renewable energy and education” if lawmakers could find “courage to tackle our budget deficit head-on.”

For the political layman, tackling our budget deficit “head-on” is the governor’s code phrase for billions in more taxes, which Brown fervently supports.

Case in point, last month the governor used a crime victims rally to send an even more pointed message. He told the victims: “I’m hoping that your courage will become contagious and inspire the reluctant few Republicans who we need to join up and get our budget done.”

Thanks to an initiative approved by voters last fall, the governor and a simple majority of his legislative allies are free to pass a budget based on anticipated revenues – about $85 billion – with no Republican votes at all. The only reason the governor wants Republican votes is because he needs a two-thirds vote to raise taxes.

By way of perspective, the state of California’s budget was less than $85 billion as recently as 2004. If the state bureaucracy survived on that amount before, it can do it again.

According to Merriam-Webster, courage is “the mental or moral strength to venture, persevere and withstand danger, fear or difficulty.” Cowardice is the opposite.

It may be the governor himself who lacks courage to close a budget deal.

In March, five Republican senators reported that they had “reached an impasse” in negotiations with the governor because their “substantive reform proposals to create jobs, require responsible state spending, eliminate abusive pension practices and implement meaningful governmental reforms” had been “either rejected or so watered down as to have no real effect.”

The senators concluded that the governor was “unable to compel other stakeholders to accept real reform.”

Later that same month, it was the governor, not the Republicans, who pulled the plug on budget negotiations. Rather unconvincingly, the governor claimed a deal was impossible because Republicans were asking for too many reforms.

New California Republican Party chairman Tom Del Beccaro recently took Brown to task in an op-ed titled “If Only Jerry Brown Had Andrew Cuomo’s Courage.” Del Beccaro argues that true courage is being shown by New York’s governor, a Democrat, who rather than raise taxes is trimming government bureaucracy and waste to close his state’s budget deficit.

When asked why he won’t support increasing taxes, Cuomo explains: “I believe it’s counterproductive for the state. I believe more people will leave the state and you’ll have less revenue.”

According to the Tax Foundation, New Yorkers have an even higher tax burden than Californians – but both states have the dismal distinction of making the top 10 list of states with high taxes.

Does Brown really believe he will lower California’s unemployment rate – which remains among the worst in the nation – by raising taxes to New York levels or higher? Does he really think job creators want to come to a state with high taxes, high costs and regulatory uncertainty?

True courage is exhibited by men and women who are willing to stand for their convictions against incredible opposition.

But having courage means little if you’re wrong.

I recently heard an elected official from the Bay Area proclaim that she believes taxes should be higher. She certainly displays courage by honestly communicating her belief. But she’s wrong. And anyone else who thinks higher taxes will help California’s private sector economy create jobs and be more competitive is also wrong.

The true unsung heroes in California’s budget crisis are those lawmakers who have the courage to oppose higher taxes despite tremendous pressure to compromise.

Though the John F. Kennedy Library Foundation may refuse to acknowledge them, overtaxed Californians are grateful for their courage.

Unintended Consequences

As published in the Mountain Democrat and Fox & Hounds Daily

They’re at it again.

Lawmakers in California, in a desperate attempt to generate revenues are again seeking to force out-of-state retailers to collect taxes for online purchases made by California shoppers. If they are successful in passing this legislation, not only will they fail to raise even one more nickel in tax revenue, they will cost the state thousands of jobs.

It’s a bit complicated, but allow me to explain: California has a cutting edge industry of internet entrepreneurs called “affiliates.” You’ve seen “affiliates” while surfing the web: blogs and websites that provide “click through” ads to online retailers. If you click through and make a purchase, the affiliate gets a small percentage in payment from the retailer.

According to the Performance Marketing Association, there are nearly 25,000 California-based affiliate businesses that provide information to California consumers and improve the ease and thrift of their shopping experience online or with remote retailers and their catalogs.

One example of a successful California affiliate is Ebates, a company based in San Francisco. Without affiliate relationships, Internet entrepreneurs like Ebates will face a painful choice: cut jobs to keep costs in line with reduced revenue or move out of California to more welcoming states. Either way, California will lose jobs and taxes.

Affiliates like Ebates can conduct business from any state in the country, but they are choosing to make California home. Likewise, online retailers choose to market their products through affiliates like Ebates because they help make the shopping experience for their customers easier.
If the Legislature passes a so-called “nexus” law, which will require out-of-state retailers to collect and remit California’s sales tax, those online retailers will terminate their relationship with California’s affiliates. They have done it in other states and have said they will do it here.

Paul Misener, Amazon’s Vice President for Global Public Policy, recently sent me a letter citing four pending measures aimed at requiring out-of-state online retailers to collect sales tax. He warns: “If any of these new tax collection schemes were adopted, Amazon would be compelled to end its advertising relationships with well over 10,000 California-based participants in the Amazon ‘Associates Program.’”

Misener notes that similar statewide terminations have already occurred in North Carolina, Rhode Island and Colorado after those states enacted similar laws.

A Board of Equalization analysis cautions that the proposed legislation’s projected revenues would fall by 50% as a result of Amazon’s action and be “further diminished” if other online retailers also terminated their affiliate programs. The analysis also warns of an “adverse impact on state employment,” resulting in lower corporate and personal income tax revenues for the state.

Thus, the unintended consequence of this tax policy will be to wipe out one of California’s few healthy business industries. That’s not what California needs when we have a statewide unemployment rate of more than 12%.

Collectively, affiliate businesses in California last year paid a total of $124 million in state income taxes, plus business, employment and property taxes. If a nexus law is enacted, California can say goodbye to a good portion of those revenues.

With the exodus of affiliates comes a government-sponsored brain drain as those whose mastery of online marketing and entrepreneurial drive have made it easier for California shoppers to find what they’re looking for move their companies elsewhere to find a new home.
How did this whole thing get started? And, why is California even considering a new law that would further damage the economy?

Most people know that they pay a sales tax on typical transactions, but few Californians probably know they have to pay an equivalent tax – the use tax – on their out-of-state purchases. Yet for 75 years, it has been the law. As a member of the Board of Equalization, the publicly-elected tax board charged with collecting this tax, I believe the best course of action is to make it easier for Californians to be aware of their obligations and pay them.

Lawmakers’ efforts aside, neither the Board of Equalization nor the Legislature has the authority to force out-of-state retailers to collect sales tax. In 1992 the Supreme Court ruled that the Constitution prohibits states from asserting taxing authority outside their borders unless the retailer maintains a physical presence in the taxing state.

Let’s not miss the forest for the trees. California’s most pressing problem isn’t tax collection, it’s jobs. When Californians have jobs in a growing and vibrant economy, the state will have ample revenue to fulfill its responsibilities. But when Californians don’t have jobs, we’ll always have budget problems. Rather than chase entrepreneurs like Ebates away, lawmakers need to prioritize jobs.

The unintended consequences of a nexus law would be disastrous for thousands of California families. Killing private sector jobs only worsens our state’s budget crisis. Lawmakers should reject such ill-conceived measures and instead start helping Californians get back to work.

Steel and Runner Speak Out

As published in the Flash Report

STANDING WITH LEGISLATORS WHO OPPOSE PUTTING ANOTHER TAX INCREASE BEFORE VOTERS
By Hon. Michelle Steel & Hon. George Runner, Members of the California Board of Equalization

In a rare appearance before legislators last week, Governor Jerry Brown did his best to tempt Republican legislators into breaking their promise not to raise taxes. He even joked that he would set up “a process to dispense people from their pledges.”

What puzzles us is why Jerry Brown would think that Republican lawmakers want to break their pledges. It might seem strange in the world of politics, but the reason we sign pledges is because they represent causes we truly believe in.

And it’s difficult to think of anything that unites Republicans more than our firm belief that higher taxes are not the solution to California’s problems.

The reason the Governor is having such a hard time getting Republicans to support his budget is because he is asking us to not merely break a pledge but also to violate our core beliefs.

Those beliefs inform our actions—not the reverse. Accordingly, we’re pleased to stand with Republican legislators who are members of the newly-formed Taxpayers Caucus, as well as those who have signed pledges not to raise taxes.

We support giving taxpayers a voice in the government because it is their hard-earned money which funds that government.

We support a truly balanced budget because the government, like the average citizen, has a duty to live within its means. It is the responsibility of government to spend taxpayer dollars judiciously and efficiently, not to pile billions of dollars in debt on the backs of taxpayers and their families.

We oppose tax increases because it is wrong to take more money from those who earned it than is necessary to pay for the key functions of government.

According to the Tax Foundation, Californians worked until April 14 last year to pay their taxes. We pay nearly $5,000 per person in state and local taxes – the sixth highest tax burden in the nation.

High taxes are a key reason why California’s unemployment rate and business climate are among the worst in the nation. Voters seem to understand this better than the Governor, which is why they have rejected nearly every tax increase proposal on the ballot in recent years.

While lobbying for his budget before the Legislature Brown told one Republican to “step up and do something you don’t want to do.” The budget isn’t about what we want or don’t want, it’s about what is right and what is wrong.

The time has long passed for playing games with the budget while increasing spending on the backs of California’s taxpayers. Today we take a stand for fiscal sanity, for jobs, and for allowing California’s citizens the freedom to make a living.
_________________________________________________________________

Vice Chair Michelle Steel and Board Member George Runner serve as elected members of the California State Board of Equalization and are the state’s highest ranking Republican elected officials.

Don’t Kill California’s Recovery

As published in the Fresno Bee and Fox & Hounds Daily

With jobless numbers still at record highs, it wouldn’t be right to declare California’s economic downturn over anytime soon. Even so, glimmers of hope are beginning to emerge that the Golden State is inching its way toward economic recovery.

Let’s hope the politicians don’t mess it up.

In his recent State of the State address, Governor Jerry Brown said “we will not create the jobs we need unless we get our financial house in order.”

Unfortunately the Governor’s proposals to put California’s financial house in order are starting to look more like a wrecking ball than a rescue plan. His budget proposes billions of dollars in taxes on the private sector—the very folks he wants to create more jobs.

It may seem like a distant memory, but merely two years ago, a different Governor and Legislature tried taxing their way out of a similar budget mess. Since then California has lost more than half a million jobs and our state’s unemployment rate has grown by 20%.

We clearly don’t need an empirical study to tell us that tax hikes don’t create jobs.

Even so, Governor Brown is proposing to extend these very same tax increases for five more years. If approved, Californians will pay $45 billion more in income taxes, sales taxes and vehicle taxes.

On top of this, the Governor is proposing to eliminate a number of tax incentives that currently encourage businesses to create and retain jobs in our state. Under his proposals, private sector employers, including many small businesses, would pay more than $2 billion in retroactive taxes this year and increased taxes for years to come.

The Governor calls his budget solution a “balanced approach” since it includes both tax increases and cuts. But in reality, his approach is anything but balanced.

A balanced approach would recognize that the private sector has been devastated by the economic downturn—more so in California than other states. In the past three years, more than one million private sector workers have lost their jobs.

During that same time period, guess how much state employment shrunk?

It didn’t. According to the latest Employment Development Department numbers, state employment actually grew by 1,200 jobs. We now have 489,000 state workers—nearly half a million—whose wages and benefits are paid by a private sector that is a million workers smaller.

And now the Governor is asking the private sector to step up and pay even more to protect those state workers’ paychecks.

Does that seem balanced to you?

To be clear, I’m not saying I want state workers to lose their jobs. I wouldn’t wish that on anyone. My point is simply that private sector workers provide the tax dollars that allow state government to pay its bills, including the paychecks of state workers.

California currently has the second highest unemployment rate in the nation. Our elected leaders could have responded aggressively months—even years—ago to protect California jobs and improve our state’s dismal business climate, but they didn’t. It’s only fair that government shares the pain.

California’s real problem is jobs, not revenues. When jobs are plentiful, government always has plenty of revenues. When jobs are scarce, as they are now, government revenues dry up.

Solve the jobs problem, and you’ll solve California’s budget problem—not to mention a few other problems as well.