In response to the report from Governor Schwarzenegger’s commission that proposes ground breaking California tax reforms, I point to the worldwide movement to decrease taxes to stimulate growth, not increase taxes to bolster deficit spending as seems the fashion in the U.S. where the Fed created $50B just last week.
A European style value-added (VAT) could indeed be a revenue engine, but it would all come to nothing if it’s sole purpose is to fund an ever expanding welfare state of “Too Big To Fail” entitlements. Before gimmicks like a are even considered broader tax reform must come first, starting with the elimination of capital gains and corporate taxes.
More importantly, California tax reform must start with a California Taxpayer Bill of Rights that MUST HAVE
1. a balanced budget amendment — Gosh don’t we already we have one in California? Yes! But there are at least half a dozen law suits against the Governor for trying to do just this from lawmakers, unions, and special interest groups.
2. a line-item veto
3. a spending limit such as inflation plus population growth
OK, FOUR THINGS!
4. a two-thirds vote for any tax (even those disguised as fees) that increase the budget past the limits defined in #3