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E-mail Print Does California Lead or Follow?
Capital Ideas
By: K. Lloyd Billingsley
8.18.1998

Capital IdeasCapital Ideas

Sacramento, CA. -- Political, social, and cultural trends start in California and flow east. Is that often repeated dynamic true, or have things changed, rendering the conventional wisdom obsolete?

There is some evidence for west-to-east theory, including the obvious influence of Hollywood and Proposition 13, which effectively decriminalized home ownership and touched off a national property-tax revolt. By passing Proposition 209, California became the first state to get the government out of the racial preference business. This year, the state’s voters dumped 25 years of failed bilingual policies for the radical concept that the best way for children to learn English is to be taught in English. While other states are looking to follow those leads, California is playing catch-up on the key issue of taxation.

Those who doubt that California is a tax-addicted state might recall that this is the only state that dared attempt to impose a tax on cartoons, the 1996 "laugh tax." Washington, Arizona, and New York cut their car tax, following the lead not of California but Virginia, whose action prompted dozens of other states to consider cuts in the regressive fees. California settled on a meager 25-percent reduction.

New York and Florida, meanwhile, granted a one-week vacation from the sales tax. During that week, residents may buy all the clothes they want, tax free, and beginning in December, 1999, New York will make the measure permanent.

Connecticut, Ohio, and Minnesota are providing residents with direct tax rebates. Kansas has lowered property taxes and is eliminating the sales tax on everything from Girl Scout cookies to remodeling. According to the National Conference of State Legislatures, states cut taxes by $3.8 billion this year, winding up with a total of $30 billion in surplus money -- doubtless largely because of the tax cuts. Two-thirds of the states enjoyed budget surpluses and only Wyoming raised taxes, a five-cent increase in its gasoline tax.

In California, the sales tax on everything from a pencil to a yacht is above seven percent and more than eight percent in five counties, including San Francisco. No California politician has recently advanced the idea of reducing this tax, which punishes the poor and middle class, particularly when they purchase necessities of life such as automobiles. No state assemblyman or senator has proposed giving even a temporary vacation on the sales tax.

Prominent Democrats have referred to the state’s $4.4 billion surplus as a "score" and suggested that it would be "blowing it" to give any of it back. Reducing taxes, in this view, amounts to government spending. If that is true, it follows that when residents spend their own money, it amounts to paying taxes, a concept state lawmakers have yet to consider.

During the twenty years since Proposition 13, California has fallen behind in the quest to reduce burdens on citizens. The flow is now east to west, with other states, including some traditional free spenders such as New York, taking the lead. They appear to believe that citizens are more qualified than politicians to spend their own money and that tax reductions may well contribute to a budget surplus. If California is to be a leader and not a follower, its elected representatives will have to put these simple ideas into action.

-- By K. Lloyd Billingsley

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