Bill Whalen

Will Newsom’s “inspirational framework” include more taxes and regulations?

Tax reform is ‘profoundly difficult’ in California, Gavin Newsom says

Lt. Gov. Gavin Newsom told The Sacramento Bee editorial board in February that he's in favor of extending a temporary tax increase.
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Lt. Gov. Gavin Newsom told The Sacramento Bee editorial board in February that he's in favor of extending a temporary tax increase.

In the neighborhood of America’s blue states, California is more than keeping up with the Joneses.

Three years ago, voters in America’s nation-state legalized recreational marijuana. In New York, a legislative push to do the same as part of a bigger state budget deal just went up in smoke (it might pass this summer when it’s a standalone vote).

In Illinois, the talk is doubling the state’s gasoline tax, from 19 cents to 38 cents per gallon, to pay for infrastructure needs. California’s already been there and done that two years ago – raising the per-gallon tax from 18 cents to 30 cents, then rejecting a ballot measure to undo that tax hike.

When it comes to California and taxation, forget about the Joneses. The more salient question: Will Democratic lawmakers ever stop jonesing for new fees and levies?

I refer you to this recent piece by CALmatters’ Judy Lin, who listed these proposals in the new legislative cycle: a soda tax to fight obesity, a tire change tax for stormwater cleanup, a firearms excise tax, an oil and gas severance tax, plus a fee on dialysis centers and increase in lead-acid battery fees.

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And, perhaps most intriguing of all: charging California water users an extra fee to help decontaminate water in low-income and rural communities.

Gov. Newsom supports that concept. He also likes a monthly phone fee to upgrade the 911 emergency system and, possibly, a payroll tax increase to underwrite expanded paid family leave.

Despite the appetite for higher taxes, California’s governor insists he’s a marketplace kind of guy. During a stop at Stanford University last week, he offered this confessional: “I believe in putting private capital to work. I believe in the entrepreneurial spirit that defines the best of this nation.”

Newsom added: “I think in an inspirational framework.”

Translation: he wants to champion an “inclusive capitalism” that raises all boats.

Despite the lofty talk, Newsom has to prove he’s not another tax-and-spend progressive. He’s not Jerry Brown, a lifelong public servant. But he’s also not Arnold Schwarzenegger, a lifelong capitalist who stumbled into public service.

In a better world, what Newsom would be is Steve Westly, a former state controller and now a managing director of a Silicon Valley venture firm. Westly’s been on record in these pages advocating a revamp of California’s tax system (Newsom is likeminded).

Westly also recently tweeted: “A variety of new taxes were recently proposed which is concerning. California has to learn from past mistakes and not assume higher taxes can always solve problems.”

The odds of Newsom saying that? The proof in the pudding will be the choices Newsom makes come bill signing time. Namely: those bills deemed “job killers” by the California Chamber of Commerce.

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Bill Whalen

During Jerry Brown’s eight years, the Chamber gave 226 bills that moniker. That’s an average of not quite 30 bills a year, a pittance in a paper-happy Legislature (this year, a record 2,628 bills are in play).

Of those 226 bills the Chamber considered a threat to California’s economy, only 26 made it to Brown’s desk. The governor signed 15 and vetoed 11 – a testament to Brown’s skills at conveying his intentions and divisions within the majority’s ranks (less urban, ag-minded Democrats don’t always see eye to eye with their coastal colleagues).

The most “job killers” Brown received in a year: 38, in 2016.

The most “job killers” Brown signed: 4, in 2013 and 2017.

The most “job killers” Brown vetoed: 4, in his final year in office.

Let’s see how many “job killers” the Chamber finds in this year’s mountain of legislation, how many survive the legislative gauntlet and how many Newsom blesses.

By then, we’ll have a better idea of whether capitalism is still a capital idea with this governor.

Bill Whalen is a Hoover Institution research fellow and former speechwriter for Gov. Pete Wilson. Whalen can be reached at whalenoped@gmail.com.

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