November 01, 2012
By JEROME E. HORTON
CHAIRMAN CALIFORNIA BOARD OF EQUALIZATION
While, Proposition 30 and 38 raise taxes for education, $6 billion and $10 billion respectively, proposition 30 is less taxing on the poor and middle class. However, both measures appear to be going down to defeat.
Another sad reality is if they are approved by the voters, California’s high income taxpayers may decide to use the various loopholes in the tax code to reduce or defer their income, and continue to pay the minimum amount of taxes. If they do, the propositions will generate quite a bit less than projected.
Governor Brown has made it clear that California’s budget woes will continue to grow and major budget cuts, affecting schools and other social programs, will be necessary if Proposition 30 fails.
Our economy is on the upswing. Approximately 180,208 new California businesses registered with the Board of Equalization between January 1 and October 8. Property has been assessed at higher values over the last two years, and sales tax revenue is on the rise.
In addition, we still have a few options. The governor could choose to focus on government efficiency measures to cut waste, eliminate fraud, and empower the Board of Equalization, Franchise Tax Board and Employment Development Department to capture the estimated $8 billion in unpaid taxes from businesses operating illegally in California. Collecting these unpaid taxes will increase funding for education, without raising taxes.
During the presidential debates, the candidates referenced the fact that foreign countries are stealing our intellectual property and our technology. Unlicensed retailers are shamelessly counterfeiting everything from Bayer aspirin and Viagra to cigarettes, Rolex watches, and handbags for retail sale in California. Those illegal merchants are forcing California businesses 'out of business,' limiting the creation of quality jobs for Californians, and stealing tax revenue that should be deposited in our state's general fund.
This is commonly referred to as the underground economy; illegal businesses selling counterfeit or stolen products.
Unfortunately, California taxing agencies are not working collaboratively, or effectively sharing information to combat the underground economy. Accordingly, billions in tax dollars are lost each year and the under-employment or human trafficking element continues to flourish in California.
Last year, in partnership with Senator Curren Price, I introduced legislation to establish a Centralized Intelligence Partnership to allow all of the taxing agencies to share information and consolidate their enforcement efforts. Unfortunately, it stalled in the Assembly Appropriations Committee on a technicality.
If the propositions fail, there will possibly be an opportunity for legislators to rethink this initiative that levels the playing field for California businesses, identifies criminals, and forces them to play by the same rules and pay their fair share of taxes.