How would you change California's taxes? View The Bee's forum.
I don't believe our tax structure is broken. The volatility issue is more a budget issue than a tax issue. We've had capital gains, stock options, and dividend income in the personal income tax for a long time. The trouble we've gotten into is where we've had spikes in those sources and spent the spike on ongoing programs.
To me, the immediate problem is getting some way to restrain spending on a reasonable basis. I thought the rainy day fund in Proposition 1A on the May 19 ballot was a reasonable restraint. It would have permitted the state to spend more each year but it would have taken the revenue spikes and moved them out of the general fund.
I still think we should go back to that. If you deal with your budget issue, then you can look at the question of whether the tax structure is not providing significant revenue to meet the needs of the state.
The business net receipts tax is a tax that has never been implemented anywhere in the world. It has been likened to a value-added tax they have in Europe, but when you go to Europe and buy something, you look at your invoice and the VAT is on the invoice. It's like a transaction tax. This would not be like that at all. It wouldn't be transparent.
This tax would exempt businesses with revenues of $500,000 or less. But if you own a restaurant and your revenues are $900,000 annually, but you've been losing money the last couple of years, you would still owe the tax. We would be shifting from a system that is essentially based on the ability to pay to a system where you just owe the tax regardless.
We have more immediate things we need to deal with before we get into radically changing the tax structure.
Hauck is president of the California Business Roundtable, and a member of the Commission on the 21st Century Economy.
