The governor and legislative leaders achieved their goal of dismantling the nation’s only elected tax board. They claimed it was necessary to improve service for taxpayers while streamlining state government.
However, it’s easy to call for reforms without carefully considering the consequences – and the ones for the Board of Equalization may surprise even its loudest cheerleaders.
Now that the dust is settling, it’s becoming clear that taxpayers and the public are the losers in this deal. The reforms went far beyond the identified problems and created two new costly bureaucracies – the Department of Tax and Fee Administration and the Office of Tax Appeals. Without vetting the changes with full policy hearings, lawmakers stripped taxpayers of their right to have their appeals heard before an elected board.
The board will continue to hear tax appeals until December, but in much more limited capacity. In the past, board members helped remove unnecessary levels of bureaucracy, giving staff and taxpayers simple paths toward settling disputes and saving taxpayers valuable resources and years of frustration. Within the last year alone, my office helped resolve 4,138 constituent problems, an average of 16 each workday.
The new law restricts taxpayers from accessing this vital help when they need it the most. Recently, a legislator called my office seeking help for a mutual constituent with a sales tax problem. Ironically, the legislator supported the law that now prevents my office from helping resolve the issue.
When cases finally make their way to the full board, taxpayers will only be given 10 minutes to present their case. Mind you, some of these appeals have been years in the making, and well-armed bureaucrats are paid handsomely to represent state government.
Beginning Jan. 1, any case not heard by the board will be heard by unelected administrative law judges, who most likely will not use their discretion to help taxpayers against a revenue-hungry state government.
This is a setback for taxpayer rights. It’s also a dark day for transparency. Many decisions will now be made in secret by unelected bureaucrats who only feign to care about public input.
Other questions remain about the reforms, including whether or not the new state tax agencies will continue necessary taxpayer outreach and education events. These include free nonprofit and small-business seminars that help Californians understand and comply with our state’s draconian tax laws.
The board now lacks the resources to continue this vital outreach on its own, even though my office routinely receives positive feedback from constituents. Holding these events has been a part of an effort to increase voluntary tax law compliance.
Will the state receive less revenue because people don’t understand what taxes they owe the state? We probably would have a better idea if lawmakers didn’t rush this legislation through.
Now, it seems already overburdened taxpayers will have to find out the hard way what the answers will be.
George Runner is a member of the state Board of Equalization. He can be contacted at George@boe.ca.gov.