In its April 23 editorial, “A college bargain for Californians,” The Times ponders what the state might do with “an extra billion dollars a year.” After considering various possibilities, the editorial acquiesces to a proposal from Sacramento that even it admits is flawed.

But before you spend this money, you have to collect it. To reap the extra billion dollars, The Times believes it “makes sense” to ignore the will of California voters and punish companies whose only apparent crime is being headquartered outside California.

The proposal, by Assembly Speaker John Perez (D-Los Angeles), is AB 1500, which he calls the California Middle Class Scholarship Act. It would impose a $1 billion tax hike on “out-of-state” businesses to provide college financial aid for families earning between $80,000 and $150,000 a year.

The plan targets a 2009 tax formula change, which only became effective last year — after California voters rejected a November 2010 ballot measure aimed at repealing it.

The speaker claims that “we’re closing that loophole that only benefits out-of-state corporations at the expense of the rest of us.” More accurately, Perez’s bill would eliminate the primary tax formula companies used for many decades before 2009, regardless of whether they were based in California.

In other words, there is no “loophole” to close. The Legislature added a second method in 2009 for companies to use to offset California’s growing unemployment rate. But rather than give this new plan a chance to work and provide a degree of tax certainty for California job creators, our legislators seem to have collective amnesia.

I was a member of the Legislature in 2009, and I remember very clearly that many Democrats joined with Republicans in support of targeted tax relief for job creators. California was facing a massive budget crisis and historically high unemployment rates. What’s now being called a tax loophole was actually a common-sense, bipartisan solution to incentivize companies to grow and add desperately needed jobs.

The reality is that many “out-of-state” companies, including manufacturers, retailers and others, have significant investments in California and employ millions of Californians. Like it or not, imposing a billion dollars in new taxes — without offsetting tax cuts — would tempt these companies to downsize their California presence, costing many jobs.

The speaker’s plan attempts to solve a problem created by unwise state budgeting. When Californians lack jobs, revenue falls. When revenue falls, college fees go up and politicians cut higher education funds. Imposing new taxes on struggling job creators would only make this cycle worse, increasing college fees further.

As if this wasn’t bad enough, remember there is no guarantee the speaker’s plan would generate the money he claims. Tax increases rarely return the amounts promised; when companies lay off workers or shut down facilities, state revenue declines.

Many college students could embark on a higher education based on the speaker’s promise only to learn an important lesson: They’ve been duped.

Don’t get me wrong — education is vital to the future of our state, and a degree significantly improves one’s chances of finding a job. But California’s problem, which stems from our high-tax and onerous regulatory climate, is that there simply aren’t enough jobs.

Rising college fees are a symptom, not the source, of California’s problems. To solve the real problem, we need to attract middle-class jobs back to California rather than drive them away. Raising taxes — even on the “out-of-state” companies — won’t help.

The bottom line is that the speaker’s proposal would create more problems than it attempts to solve. It wouldn’t create middle-class jobs in California; instead, his tax hike would educate the future workforces of Arizona, Oregon and Texas. California’s hostile business climate means college graduates must leave our state to find quality jobs, and that’s not good for anyone.

There’s a very important day this week—a day even more significant than when your taxes are due. In the State of California, Tax Freedom Day finally arrives on April 20.

Calculated annually by the Tax Foundation, Tax Freedom Day is the day on which the average Californian has finished earning enough money to pay all of his or her federal, state and local taxes this year.

So, congratulations! Just a mere 110 days into the year (not counting February 29), you can finally start working for yourself instead of the government.

But before you break out the champagne, note the following:

1. Tax Freedom Day is four days later than last year. It would have been even later had the Governor and Legislature succeeded in their efforts to raise car taxes, income taxes and sales taxes.
2. Californians must work longer for the government than residents of other states. The average American achieves tax freedom three days earlier than the average Californian. That’s one reason many workers leave our state as soon as they retire.
3. If taxes were raised high enough to pay for all government spending, California’s Tax Freedom Day wouldn’t come until May 17.

Tax Freedom Day used to arrive much earlier in the year. According to the Tax Foundation, in the year 1900 Americans paid only 5.9% of their income in taxes and Tax Freedom Day was January 22.

Over the years, the sheer number of taxes and their overall cost has grown tremendously. In fact, it’s jarring to compare our current taxes to what Californians paid a century ago.
In the early 20th century, Californians paid no sales tax—the sales tax was first imposed in 1933 at a rate of 2.5%. Today Californians pay sales tax rates as high as 9.75%.

In 1935, the state personal income tax added to the permanent federal income tax, which commenced in 1913 with a top rate of 7%. Today, the top federal income tax rate is 35%, and California’s personal income tax rates are among the highest in the nation.

A state gas tax of two cents a gallon was added in 1923. An extra cent was tacked on by the federal government in 1932.

Today, according to the American Petroleum Association, Californians pay 69 cents in taxes and fees per gallon of gasoline—the second highest rate in the nation. For truckers and others who use diesel, it’s even worse: 79.5 cents.

Fuel taxes grow whenever fuel prices rise, which is why I’m sponsoring legislation that would cap the tax whenever gas prices exceed $4 per gallon.

On a brighter note, California’s property taxes are protected by voter-approved Proposition 13, but they are still above average compared to other states.

While none of us enjoy paying taxes, we do want good schools, smooth roads and safe neighborhoods. So we pay taxes. But no matter how much we pay, it never seems to be enough.

Someone is always telling us that unless we send even more of our hard-earned money to Sacramento, our schools, roads and neighborhoods will fail or be unsafe. They don’t explain why the nearly four months of our lives we already work for the government isn’t enough to stop these bad things from happening. They just want more of our money and more of our lives.

When is enough, enough?

Should you hear someone talk about raising taxes this week, ask them: “When do you think Tax Freedom Day should be?”

Force them to be honest. Force them to admit they want to take away more of our liberty by having us work extra days, weeks or even months for the government, instead of ourselves.

Tax Freedom Day helps us understand the truth. It illustrates what many would like to obscure: that taxes are lethal to liberty.

April 17 may be the deadline of another tax filing season, but it’s just the start of Democrats’ 2012 tax initiative season. In fact, in less than 60 days, voters must take a stand against and defeat the first round of this year’s tax hike measures: Proposition 29.

Prop. 29, like many other tax increases in recent years, seeks to target an unpopular activity, smoking, and increase taxes to combat something of universal concern, in this case cancer research.

Cut from the same cloth as previous taxpayer-funded ballot-box boondoggles like high-speed rail, the stem-cell research initiative and First 5, Prop. 29 is a $735 million annual tax increase that creates a brand new bureaucracy overseen by unelected political appointees who have unchecked authority to spend billions of taxpayer dollars.

At a time when Democrats are threatening more devastating cuts to education and public safety if voters refuse to approve Governor Brown’s tax measure in November, Prop. 29 raises nearly $1 billion in taxes a year, yet fails to do anything to solve our massive budget deficit or require that Sacramento control its wasteful spending habits.

What advocates for tax increase on specific products like tobacco fail to understand is that tax policy has consequences. At the Board of Equalization, we oversee the collection and implementation of tobacco and other taxes. Every time we increase taxes on products like this we encourage the black market. We’ve seen first-hand the loss of revenue and harm it causes to legitimate business owners.

Investigations into those evading the tobacco taxes are expensive and ultimately reduce any income to the state from those tax increases. Much like every other type of tax increase, it often has the opposite effect. Just a few years ago, tobacco-tax hike author Rob Reiner argued against increasing the tax further, estimating major losses to other pet projects.

Adding insult to injury is the fact that, unlike previous initiatives, nothing in Prop. 29 requires that funds be spent in California or even in the United States. Despite our double-digit unemployment rate and more than 2 million Californians currently out of work, the measure actually allows our tax dollars – and, with them, our jobs – to be shipped out of state. Shouldn’t we be keeping tax dollars here in California to create California jobs?

Written by former Senate President Don Perata, Prop. 29 was drafted to specifically circumvent Proposition 98 education protections. Despite the 20,000 teachers who’ve been issued pink slips in California, Prop. 29 actually cheats schools out of more than $300 million.

But it’s not just education that gets short shrift, Prop. 29 was so poorly written as to put taxpayers at risk for the same kinds of conflicts of interest, waste and mismanagement that have plagued previous agencies and commissions created at the ballot box.

Like the stem cell research and high-speed rail initiatives, Prop. 29 contains no real accountability or oversight provisions. The nine-member commission Prop. 29 creates can spend $110 million a year on real estate and equipment. That’s in addition to the $15 million a year it can spend on administration and overhead for things like consultants, conventions and travel.

Prop. 29 does not contain critical taxpayer protections vital to any measure of this immense magnitude. In fact, the only report required on the commission’s activities is written by the commission itself, no external audits provided. That’s a lot like the fox guarding the hen house. These are not hypothetical scenarios – Prop. 29 specifically lacks the kind of accountability and audit provisions that were called for in the wake of mismanagement and conflicts-of-interest at other commissions, such as the high-speed rail authority, the First 5 Commission or the stem cell agency.

Just in the past few months we’ve seen the horrendous waste at the high-speed rail authority. Yet this proposal makes the same mistakes in terms of lack of accountability and creates an organization destined for inefficiency.

What’s worse, not only did Prop. 29 drafters choose to ignore these valuable lessons, they went a step further and locked in these fatal flaws for 15 years. Not even the governor or Legislature has the authority to amend Prop. 29, even in cases of waste, fraud or abuse.

Every one of us has had our lives affected by cancer in some way, devastating our friends and loved ones. We all support doing what we can to find new, innovative treatments and cures. To accomplish that we must be deliberative and logical in our approach, not create a huge government bureaucracy as an emotional response to painful issue. It is foolish to waste billions of dollars, derails job recovery in our state and leaves no one accountable.

It certainly won’t make the experience any less painful, but next time you fill up your gas tank, try figuring out how much you just paid in taxes. Do the math, and you’ll soon discover that rising fuel prices are a whole lot better for the government than they are for you.

California consumers pay the highest prices for fuel anywhere in the continental United States. These prices include hidden taxes that help drive up fuel prices. Each and every time fuel prices rise, our taxes go up too.

According to the American Petroleum Institute, California’s gasoline taxes and fees, averaging 67 cents per gallon, are tied with Connecticut’s as the second highest in the nation. California’s diesel taxes are the highest in the nation, averaging 75.9 cents per gallon.

Included in the price you pay for gasoline are a (1) federal excise tax of 18.4 cents per gallon, (2) state excise tax of 35.7 cents per gallon and (3) sales tax of 2.25 percent plus applicable local taxes. Notably, the sales tax is calculated on the total price of the fuel sale including excise taxes, resulting in double taxation — California consumers pay a tax on a tax.

According to Lew Uhler, founder and president of the National Tax Limitation Committee, “The double tax on gasoline — geared to price changes — creates a perverse windfall for the government big spenders precisely when rising gas prices hurt consumers most.”

Rather than taxing you on your taxes, the government should send you a thank you note.

Here’s why: Even with declining fuel consumption, California consumers are paying more tax for less gas. This happens because sales tax is calculated per dollar spent rather than per gallon of fuel. As a result, government coffers receive an unanticipated windfall when fuel prices rise.

The state Board of Equalization’s numbers show that even with lower levels of consumption, rising fuel prices have spurred fuel tax revenues to record levels. Due to rising fuel prices, the state collected $61 million more in fuel tax revenues during the second quarter of 2011 than during the same period the year prior. In the meantime, fuel consumption fell by 127 million gallons.

And that’s only the part of the story.

In 2010, the Legislature enacted a law requiring the state Board of Equalization to lower the sales tax on fuel and raise the excise tax by a corresponding amount. As a result, the excise tax for motor vehicle fuel is 35.7 cents per gallon, but the Board of Equalization must readjust it annually to ensure “revenue neutrality.” The rate is set to increase to 36 cents effective July 1. Absent legislative action, high fuel prices will drive this tax even higher in 2013.

California lawmakers may lack the political courage to address other reasons why California fuel is so expensive (e.g., special fuel blend requirements), but they can and should address the problem of rising fuel taxes. Simply put, the government shouldn’t be doing anything that drives fuel prices even higher.

To this end, I am crafting a legislative proposal to limit sales tax to the first $4 per gallon of gasoline and cap excise taxes at their current levels. Under my proposal, the state would still receive all of the fuel tax revenue the governor was counting on in his January budget, which forecast average quarterly fuel prices of no greater than $3.82 during the 2012-13 fiscal year.

Even so, capping fuel taxes could help keep hundreds of millions of dollars in the pockets of California consumers, bolstering consumer confidence and California’s economy. Given rising fuel prices, it should be a no-brainer to take this small step to help California consumers.

To this end, I am sponsoring several measures in the 2012 legislative session. These measures aim to help taxpayers, including small businesses and other job creators, succeed in California. I’m pleased to report that my colleagues on the Board of Equalization have joined me in co-sponsoring a number of these measures, making them official BOE legislative proposals.

• Appeals Extension: AB 2453 (Block) will extend the time a taxpayer has to file an appeal after a notice of determination is issued. (BOE-sponsored)

• Lien Withdrawal: AB 2175 (Harkey and Ma) authorizes the BOE to withdraw a lien after a taxpayer, feepayer, or surcharge payer pays the delinquent liability for which the lien was filed under the applicable tax, fee and surcharge programs the BOE administers. (BOE-sponsored)

• Qualified Purchasers Program: AB 2059 (Achadjian) would revise the existing “qualified purchaser program” to increase the threshold of the filing requirement from $100,000 to $500,000. Would also create a look-up table for qualified purchasers to comply with their use tax requirement.

• Use Tax Due Date: AB 2270 (Harkey) will move due date for filing and paying use tax to April 15^th in order to align it with the option of filing use tax on the designated line of the personal income tax form. (BOE-sponsored)

A special word of thanks to the many of you who submitted legislative proposals via my website. Your input was very helpful. Please continue submitting your ideas for future legislation using this form.

According to the analysis, a higher sales tax rate will take money out of the pockets of working Californians, destroying more than 23,000 jobs and $267 million in business investment.

These projected job losses are equivalent to every worker in a medium-sized California city like Glendora or West Sacramento losing their jobs.

When considering tax increases, policymakers often rely on static analyses that ignore behavioral changes by consumers and business owners. A dynamic analysis estimates the likely behavioral changes that could result from a higher tax rate.

The BOE analysis projects that nearly all of the proposed sales tax increase would be passed along to consumers. The state would receive $222 million less in revenues than projected by a static analysis, an 8% loss in potential revenue.

Since July of last year, lower tax rates have enabled Californians to keep more of their hard-earned dollars, and our economy is growing stronger. We shouldn’t rewind our progress by reinstating even a portion of the higher tax burden Californians endured during the Great Recession.

Read the BOE dynamic analysis online.

There’s an old adage that if something sounds too good to be true, it probably is. When it comes to politics, it nearly always is.

Say for instance a politician told you he could lower the cost of sending your kids to college by 2/3rds. You’d probably respond, “Great. What’s the catch?”

Your caution would be warranted. If a recent proposal by Speaker John Pérez becomes law, you might get some help with those soaring college fees, but don’t count on your kids finding jobs once they get that diploma.

The Speaker’s proposal, which he’s dubbed the “The California Middle Class Scholarship,” would impose a $1 billion dollar tax hike on “out-of-state” businesses to provide financial aid for college students. The  plan targets a 2009 tax formula change that only became effective last year—after California voters rejected a November 2010 ballot measure that aimed to repeal it.

In his own words, the Speaker claims: “We’re closing that loophole that only benefits out-of-state corporations at the expense of the rest of us in the state. And we’re taking that benefit and directing it to middle-class families who are struggling to put their kids through college.”

Sounds good, right?

But there’s always a “catch.” This time there’s at least three:

First, many “out-of-state” companies, including manufacturers, retailers and others, have significant investments in California and employ millions of Californians. Like it or not, imposing a billion dollars in new taxes—without offsetting tax cuts—will tempt these companies to downsize their California presence, costing countless jobs. Given that California already has the second highest unemployment rate in the nation, that’s not the brightest idea.

Second, college costs aren’t fixed. When Californians lack jobs, revenues fall. When revenues fall, politicians raise college fees. Imposing new taxes on struggling job creators will only make this cycle worse, increasing college fees further. Plus, if the state’s revenue picture gets worse, the Speaker’s program could be cut too.

Third, taxpayers are footing the bill, but California’s hostile business climate increasingly means college graduates must leave California in order to find jobs. The Speaker’s “middle class scholarship” won’t create middle-class jobs in California; instead, the tax hike will educate the future workforce of Arizona, Oregon and Texas, to name a few.

Don’t get me wrong. Education is vital to the future of our state and a college education significantly improves one’s prospects of finding a job. California’s problem, which stems from our high tax and onerous regulatory climate, is that there simply aren’t enough jobs.

This scarcity means that college students with significant debt end up with jobs that only require a high school diploma. They displace the kids who only have high school diplomas. So now those kids must also go to college to have a chance of getting a job that only requires a high school diploma.

For California to succeed, our politicians need an education too. Even a basic understanding of economics would help them understand that rising college fees are a symptom, not the source of California’s problems. To solve the real problem, we need to attract middle-class jobs back to California, rather than drive them away. A billion dollar tax increase is not the solution.

And who knows? With good jobs, Californians might even be able to afford to send their kids to college without Speaker Pérez’s help.

….

The celebration coincides with the state’s second Ronald Reagan Day that was enacted under a 2010 law written by former state Sen. George Runner.

SB 944 establishes Feb. 6 as a special day of significance in honor of Reagan, akin to other days celebrating naturalist John Muir, California teachers and the California poppy.

The bill did not create a state holiday and does not cost the taxpayers money.

“In these challenging economic times, we can learn much from our former governor and president,” said Runner, now a member of the Board of Equalization. “Ronald Reagan believed in the American people and he was confident that our nation’s brightest days are ahead of us.”

Runner invited all Californians to visit www.facebook.com/ReaganDay to share a favorite memory, quote, photo or video of Reagan.

Twitter users are invited to tweet their memories using the hash tag #ReaganDay.

….

In Jerry Brown’s California, you have two choices: Embrace the governor’s agenda, or become the object of ridicule.

In his State of the State address, Brown contrasted “declinists” who see California as a “failed state” with him and others who see “unspent potential and incredible opportunity.” The implication being that those who support his proposals are bold visionaries, while the rest of us simply lack courage and foresight.

The governor’s agenda includes tax hikes, a costly rail plan and burdensome energy policies aimed at spurring so-called “green jobs.” At its essence, it is a call for more public subsidies to fund more government programs.

What’s missing is a sense of reality. Our choice is not between utopia and dystopia, between courage and cowardice. Rather we must choose between wisdom and foolishness and between caution and haste. We must live in the real world, soberly evaluating each proposed policy on its merits.

Ponder the following questions:

• Why have California voters consistently rejected tax increases? Do they lack faith in our state?
• Why has support for high-speed rail plummeted in recent years? Have Californians become cowardly?
• Why did California’s unemployment rate rise higher than other states? Shouldn’t California’s rate be lower given our huge share of venture capital and successful startups, not to mention our inviting climate?

It isn’t that Californians lack faith in themselves, our state or the future. It’s that we’ve lost faith in politicians and government programs. We’ve been promised the moon time and again but end up with little to show for our significant tax investments.There are two competing visions of how to best spur job creation and California’s recovery. The first, espoused by Brown, would increase tax rates that are already among the highest in the nation, making our overall revenue picture even more volatile. In just four years, the governor’s plan would increase state spending by 30 percent, and California would take on billions in new debt to fund a dubious high-speed rail plan.

The second vision, shared by the majority of California taxpayers, would insist that government live within its means, doing more with less. State leaders would spur job creation by eliminating needless laws and regulations that make California uncompetitive with other states. Our tax policies would be smart and competitive.

Rather than creating jobs that survive only with ongoing subsidies, taxpayers would keep more of their hard-earned dollars. After all, it wasn’t the government that created the success stories of Apple, Intel, Hewlett-Packard, Oracle, Qualcomm, Twitter, Facebook and others cited by Brown.

An obvious place to start would be to reform our tax laws to help stop the exodus of manufacturing jobs. Did you know that California is one of only three states in the nation that fully taxes both the input and output of the manufacturing process? According to the Milken Institute, a five-cent reduction in this tax would yield net tax revenue within three years and bring 500,000 jobs to our state within ten.

It should be a top priority.

Let’s put some faith in the people of California. Let’s help the job creators who are forced to comply with what even Brown admits is a “plethora of complex laws and regulations.”

California’s best years are yet to come. But the credit will go to the hard working citizens of this state, not higher taxes and more government programs.