California’s tax policy: A ‘Big Gulp’ for the greedy
Business and Economics Op-Ed
By: Sally C. Pipes
4.12.2002
San Francisco Examiner, April 12, 2002
Californians today bear some of the highest taxes in U.S. history. But look out, our politicians are out for more.Through a number of misguided schemes, California politicians are sticking the greedy hand of government deep into the pockets of taxpayers who already bear the heaviest tax burden in American history. A median two-income family earning $68,605 per year pays $26,758 in total taxes, or 39 percent of the family’s annual income. A typical family now pays more each year in taxes than they spend on food, clothing, housing, and transportation combined. Taxes influence every major family decision from jobs and housing to health insurance. Assessing these tax implications is a way of life in the United States, and it has created a multibillion-dollar tax consulting industry. When the federal income tax was established in 1913, its provisions were described in 408 pages. Today, the Standard Federal Tax Reporter the basic publication defining the federal income tax lawætakes up 98,408 pages in 25 volumes. There are now 650 IRS forms and instructions, and it takes an average taxpayer more than 27 hours to prepare the Form 1040 tax return and common schedules. Complying with the 2001 federal income tax code alone costs taxpayers $140 billion, more than the combined revenue of Sears, Walt Disney, Microsoft, Rite Aid, McDonalds, 3 Com, and Radio Shack. This figure doesn’t even include actual tax payments, which continue to grow. In addition to their federal taxes, Californians must work 35 days each year just to earn enough to pay their state and local taxes, totaling $3,527 per resident in 2001. California’s state and local tax burden is 46 percent more than the least taxing state of Alaska. Californians hand more than 10 percent of their income to state and local officials, but some lawmakers think this is not enough. Their schemes place political manipulation and social engineering above fiscal responsibility. State Senator Deborah Ortiz (D-Sacramento) wants to deploy taxes in the war on obesity. Her California Soda Tax Act would impose a surtax on distributors of soda and other sweetened drinks of about two cents per can. Ortiz said that children are drinking too much soda and not enough milk and “in this culture of the Big Gulp, it’s really quite alarming.” She, therefore, wants the state to take a bigger gulp. She also wants to raise the state excise tax on a pack of cigarettes by 65 cents to $1.52. Another lawmaker has suggested a “junk food tax” to help finance health programs, including dental care, for children. Senator Don Perata (D-Oakland) wants to slap a five-cent tax on every round of ammunition sold in the state. Perata, a long-time advocate of gun control, plans to ask the legislature to put his bullet-tax proposal on the November ballot. He wants to use the revenues to fund trauma centers. Instead of pushing for more taxes and more social engineering, legislators should listen to the 74 percent of the American public who favor a tax cut and the 73 percent who want to scrap the current complicated system. A better alternative for both state and federal governments would be a flat rate, personal consumed-income tax. Such a tax would be simple, neutral, fair, and healthy for the economy. An obstacle to such a system is the big-government mentality that attributes greed to those who want lower taxes and compassion to those who seek higher taxes. But wanting to keep more of what one has earned is not greed. Greed is the desire to grab more of other people’s money without supplying anything of value in return. That is what state legislators are up to. Despite the political spin, the purpose of these taxes is to enable politicians to recover from their own mismanagement, evident in the recent electricity crisis, that has saddled California with a deficit of $17.5 billion. Our legislators need to learn that the purpose of taxation is to finance constitutionally mandated services, not to fix mismanagement or fight obesity.
Examiner columnist Sally Pipes is the President and CEO of the Pacific Research Institute, a California-based think tank. She can be reached via email at spipes@pacificresearch.org.
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