Cal-Tax Commentary

Taxpayers are Big Winners as Four Tax-Grab Initiatives are Rejected

By Larry McCarthy

Larry McCarthy is president of the California Taxpayers' Association.

Taxpayers were big winners in the 2007 General Election in California as four tax-grab ballot initiatives were defeated and Governor Arnold Schwarzenegger, who has vowed not to raise taxes, was re-elected.

Voters not only gave the governor a vote of confidence in a campaign in which taxes were a major issue, but they sent a strong message by repudiating well-financed ballot initiatives promoted by hucksters who wanted to raise taxes by manipulating the initiative process for their own business or political interests.

Besides the governor’s landslide re-election victory, voters approved $42.6 billion in bonds to rebuild California, including the package of transportation, school construction, flood protection and housing bonds backed by the governor and the legislative leaders of both major political parties.

Taxpayers should be most pleased by the defeat of the tax initiatives: Proposition 86, the over-reaching 300 percent increase in the cigarette tax to line the pockets of the hospital industry; Proposition 87, the $4 billion oil tax to benefit venture capitalists while increasing dependence on foreign oil and making gasoline at the pump more expensive; Proposition 88, the property tax for education proposal that was such a bad idea that proponents walked away from it, and Proposition 89, the power grab by the nurses’ union under the guise of “clean money for politics.” It would have taxed business to pay for public financing of political campaigns, including a slush fund for politicians, while virtually eliminating the business community’s ability to participate in ballot proposition campaigns. Of course, the nurses’ union and trial lawyer allies would be under no such constraints as they push their agendas against an effectively silenced business community.

If any of these measures had passed, it would have opened the floodgates for other proposals targeting unpopular groups of businesses or industries, consumers, or successful Californians for higher taxes to fund pet programs of the initiative sponsors who sometimes benefit financially or decide who does.

This is the worst kind of ballot-box budgeting, which usually comes without the type of accountability and oversight that the legislative budget process is designed to provide.

Taxpayers are on a roll. They have seen five tax-grab initiatives rejected at the polls this year, starting in June with Proposition 82, the controversial universal preschool initiative with higher taxes on those with higher incomes. This Rob Reiner-sponsored measure, made even more controversial by a recently released state audit showing misspent tobacco tax dollars from a previous initiative, may still have been in the minds of some 50 newspaper editorial boards around the state that came out against some or all of these tax initiatives.

Many editorials concluded that the causes of some initiatives are laudable, yet agreed with Cal-Tax, particularly on the ballot-box budgeting issue. Those that are good ideas should be funded through the state budget process, so they can be supported by all taxpayers, not just those who happen to be part of an unpopular group, such as smokers.

Meanwhile, initiatives are already being prepared by sponsors for the next round of statewide elections in 2008. Will there be another popular cause linked to higher taxes?

We hope the harsh reaction from the California electorate to all five such measures in 2006 will discourage such irresponsible behavior in the future.


Cal-Tax Digest. November 2006

©2006 California Taxpayers' Association