New tax would hit services

New tax would hit services

 

Robert_HertzbergTax reform is in the air. One proposal is by state Sen. Bob Hertzberg, D-Los Angeles, also a former speaker of the Assembly.

Senate Bill 8, the Upward Mobility Act, would raise $10 billion in sales and use taxes to replace the $7 billion Proposition 30 raised largely from taxes on the wealthy. Prop. 30 was passed by voters in 2012 and was heavily supported by Gov. Jerry Brown. Prop. 30 expires in 2018. SB8 would take effect in 2019.

Oddly, SB8 largely would target such Democratic Party constituencies as professionals and service-sector businesses with more than $100,000 in gross income. Health care and education services would be exempted.

The money would be spent this way: $3 billion would go to K-12 schools and community colleges, $2 billion to the university systems, $3 billion to local governments and $2 billion to a new earned-income tax credit for poor families.

The reasoning behind SB8 was spelled out by columnist George Skelton:

“California is relying less on the sales tax, which applies only to purchased goods, while leaning heavily on the richest 1 percent, whose incomes fluctuate like a roller-coaster.

“In 1950, the sales tax generated 60 percent of all state revenue, the income tax just 10 percent. Today, the sales tax brings in around 25 percent, the income tax more than 60 percent.”

Under current law, the sales tax is applied to concrete items, such as a car or computer; food is exempt. The reasoning behind not taxing services is that what is offered – such as business consulting or legal advice – is intangible. Moreover, many such services easily could be outsourced to another state to avoid taxation – such as hiring computer programmers in Texas or India.

The services tax also especially would hit small- and medium-sized businesses, such as independent real estate brokers, auto repairmen and handymen.

Tax boost

By costing $10 billion to the $7 billion of Prop. 30, SB8 would be a 43 percent tax boost. And although the California economy is performing well now, it’s impossible to say how it will be doing four years from now.

A services tax also would encourage the growth of black markets. For example, in September the Los Angeles Times reported:

“Nine people were arrested in raids targeting 75 locations, and $90 million was seized — $70 million in cash. In one condo, agents found $35 million stuffed in banker boxes. At a mansion in Bel-Air, they discovered $10 million in duffel bags. 

“Federal officials said they believe that the drug organizations have used businesses throughout Los Angeles to convert their vast earnings into pesos, turning the city into a hub for ‘trade-based money laundering.’” 

People in black markets obviously don’t pay sales, income or other taxes.

GOP minority

Although Republicans remain a minority in both houses of the California Legislature, on Nov. 4 they gained enough new seats to prevent a two-thirds Democratic supermajority.

All Republicans are expected to oppose any tax increase of any kind.

So it’s the lack of a supermajority that would prevent SB8 from being passed.

Shift to non-profit economy

Oddly, SB8 is being advanced at a time when some tax-generating assets are being taken off the tax rolls, also benefiting the rich at the expense of everybody else.

One is the current shift of private electric utilities to non-profit municipal electricity-buying cooperatives, called Community Choice Aggregation.  Such cooperatives tout savings to customers for avoiding taxes paid by such regulated electric utilities as Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric.

Currently, 16 cities in the South Bay area of Southern California are planning to opt out of Edison and set up their own cooperatives, with the wealthy cities of Redondo Beach and Manhattan Beach leading the way. That will be lost corporate taxes to the state and property taxes for local government. Effectively, the wealthy people in those areas are sloughing off their tax obligations to those in other areas.

As reported by CalWatchdog.com, electric buying cooperatives not only avoid paying corporate taxes but offload expensive green power costs onto federal taxpayers by buying heavily subsidized green power and Renewable Energy Credits.

The long-term experience of the State of Illinois with electric buying cooperatives is that they show initial benefits to customers, but don’t make economic sense in the long term.

Assembly Bill 2145 of 2014 proposed to make it more difficult for cities to form electric buying cooperatives.  However, it died in the state Senate in September.

40 comments

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  1. bob
    bob 19 December, 2014, 18:13

    No matter how many or how high taxes are they are never enough or high enough according to the DemoNcrats. And the libtards maggots that infest this blogs would have it no other way.

    Reply this comment
  2. Ulysses Uhaul
    Ulysses Uhaul 19 December, 2014, 19:25

    BoBo

    That’s not fair. The fair and balanced posters bring levity and clarity to counter act all the caveman and desert rat rants on CWD.

    Sit back and read their stuff. Miserable.

    Reply this comment
  3. Bill Gore
    Bill Gore 20 December, 2014, 14:03

    ‘fair and balanced”:zzzzzzzzzzzz

    A stealth VAT that will drive what’s left of the middle class in CA into the arms of other states, such as OREGON, where there’s NO sales/’use’ tax (Orwellian/maoist terminology)BTW. And IT’S ALL ‘FOR THE KIDS’ REMEMBER….

    Also, POP QUIZ: Does anyone know why California’s sales tax is called a ‘use tax’? Anyone, anyone? Buehler?

    Well kids,it’s because language really really matters to maoists, many of whom are lawyers, and don’t ever want to go to jail themselves, even though they gladly shatter and destroy the middle class, whom they despise. Under a sales tax, a buyer is merely forking over a percentage of the price to the state for the privilege of being able to conduct business in that state. In other words, after the transaction, the buyer actually owns the thing he/she bought. Under a ‘use tax’ it is implied that the buyer does NOT actually vest a title of ownership in the thing he/she bought. The ‘buyer’ is merely being permitted by the state to consume, or use up, the beneficial aspects of the thing he/she bought. ACTUAL ownership, in terms of ultimate ownership, vests or resides in the STATE. Crazy huh? And who said maoists are stupid?

    Reply this comment
    • S Moderation Douglas
      S Moderation Douglas 20 December, 2014, 20:43

      Buehler says sales tax is not called use tax. They are two different animals. Sales tax is charged on any purchase made in the state. Use tax is paid on any commodity bought outside the state, that you “use, give away, store, or consume the item in this state.” Use tax is the difference between CA sales tax and the sales tax you paid, if any, in the state of purchase. Except if you bought your car in a higher taxed state (Tennessee 9.45%), CA won’t refund the excess.

      I’m pretty sure the state doesn’t own the car I bought in Illinois and brought to California. They couldn’t afford the liability on all those cars brought in from out of state.

      Lawyers are people too.

      And the glass is still half full.

      Reply this comment
      • Bill Gore
        Bill Gore 21 December, 2014, 07:13

        Up here in beautiful wet clean hydropower-rich pristine coastline OREGON we also have something called the ‘kicker’, when state revenues exceed the budget the difference is ‘kicked’ back to the taxpayer. OMG can you imagine the howls of righteous outrage if such a thing were proposed in dirty overpopulated overregulated destroyed by sprawl Kali? And so the ‘use tax’ is actually a sales tax on the use of an item, just to make absolutely sure that no grubby little citizen-slave can enjoy the ‘use’ of something purchased out of state without paying full freight to the almighty state. Then all these dollars are remitted to the “Board of EQUALIZATION”-more maoist orwellian creepspeak. Who/what is being ‘equalized’?…..

        Reply this comment
        • SeeSaw
          SeeSaw 21 December, 2014, 17:41

          Why are you even interested in what we do in California? I have driven through Oregon many times and it is very pretty–otherwise, Oregon does not compare in any way to California. I am glad that you are happy in Oregon. Don’t worry so much about what the other state is doing.

          Reply this comment
  4. Skippingdog
    Skippingdog 20 December, 2014, 15:37

    As we’ve transitioned from a manufacturing economy to a service economy, a tax on services makes more sense. Our resident Ayn Rand disciples will always reject any tax, no matter the reason, but their kooky ideas are ever more irrelevant.

    Reply this comment
    • bob
      bob 20 December, 2014, 16:00

      Yeah Skippy, tax the sh*t outta ’em!

      Reply this comment
      • skippingdog
        skippingdog 20 December, 2014, 22:03

        It’s all a question of what we produce, bob. Otherwise, a standard VAT would probably work just as well. The U.S. remains the most lightly taxed of any industrialized nation, even when you include state taxes. Like it or not, the modern world is expensive and most normal people like the government services they receive or have available. Those things have to be paid for unless you want to borrow more money. That’s also why you folks don’t really want a balanced budget amendment. It would raise taxes markedly higher immediately for everyone.

        Reply this comment
        • bob
          bob 21 December, 2014, 09:54

          Sales taxes in this state in many places are dam* near 10%. And sales taxes are the most regressive taxes hitting the poor the hardest but they also hit the lower and middle class hard, too.

          But of course you want to add sales taxes to services anyway so what taxes will you cut in return? Oh, that’s right, none. The average middle class working stiff spends about a third of the year working for federal, state and local government but for people like you that is just not enough is it? You think Bill Gates or Warren Buffet have a third of everything they make taken by the government?

          Like it or not, the modern world is expensive…

          Parasitical trough feeders like you are very expensive. We can’t afford your ilk. You will kill your host.

          That’s also why you folks don’t really want a balanced budget amendment.

          How the hel* do you know what I want? I would take a balanced budget in a minute. I would end all foreign aid, all corporate welfare, Obammiecare, slash military spending and close all foreign military bases and cut a host of other “programs” and the budget would be in surplus and then I would give the working people tax cuts.

          Reply this comment
          • SkippingDog
            SkippingDog 21 December, 2014, 12:41

            Ah, one of our “taxes are theft” minions. Good thing the world will never be what you want.

          • S Moderation Douglas
            S Moderation Douglas 21 December, 2014, 13:25

            Actually, in California, unless you are in the highest quintile (over $90,000 a year), your combined state and local taxes are lower than the national average.

            That’s why they call us progressive. California is an expensive place to be rich.

            For the rest of us, the glass is more than half full.

          • bob
            bob 21 December, 2014, 13:48

            Ah, that old canard, eh Doglas?

            This state has an income tax rate of over 9% that kicks in at around 48k, the highest in the country at such an income level. It has sales taxes in many places that are near 10%, it has the highest gas tax in the country slated to go even higher thanks to AB 32, it has one of the highest disability insurance payroll taxes in the country. I could go on. It also has among the highest costs of living of any state and all of this is results in the highest poverty rate of any state. You can sugar coat it any way you want but this is a high tax, high cost of living state. This is your progressive paradise where those unemployed or who work in the private sector get raped by trough feeders such as yourself.

          • bob
            bob 21 December, 2014, 13:52

            Ah, one of our “taxes are theft” minions. Good thing the world will never be what you want.

            Federal, state and local debt is in the tens of trillions of dollars. Unfunded liabilities are in the hundreds of trillions. Your big government paradise is unsustainable. You’re right, the world will never be what I want. Instead this system will collapse thanks to those who worship the state, such as yourself.

          • SkippingDog
            SkippingDog 21 December, 2014, 16:09

            A service tax would actually be far more progressive than a standard sales tax. Poor or even middle class people don’t use expensive services such as lawyers, accountants, architects, financial planners, etc., nearly as much as those with more personal wealth do. That means less tax for the poor who don’t use many services and more tax for the rich who do.

          • bob
            bob 21 December, 2014, 16:24

            A service tax would actually be far more progressive than a standard sales tax.

            But being the good state worshipper that you are, you are not proposing cutting the standard sales tax. And the poor patronize auto mechanics, get haircuts and use a host of other services that would be hit with this tax so this would raise their tax burden.

          • SkippingDog
            SkippingDog 21 December, 2014, 20:31

            I’m not proposing either. I’m merely noting that our change from a manufacturing economy to a service economy should be reflected in our tax policy.

          • S Moderation Douglas
            S Moderation Douglas 22 December, 2014, 12:44

            Please define “canard.”

            “income tax rate of over 9% that kicks in at around 48k”…. That would be $48,000 “taxable” income. Big difference.
            “It has sales taxes in many places that are near 10%,”…. BUT, California percapita sales tax burden is lower than about eight other states because unlike some of those states, California does not tax groceries…yet. Or services…yet.

            I know of only two sources that separate state and local tax by income group.

            “Tax Rates and Tax Burdens in the District of Columbia – A Nationwide Comparison

            Calculates that a hypothetical family of three in Los Angeles pays zero state income tax on incomes up to $75,000.
            Higher rates, yes. On “taxable” income. But California exemptions and exclusions keep the tax burden lower, for lower income citizens. MUCH lower, in many cases.
            ……………………….
            THE INSTITUTE ON TAXATION & ECONOMIC POLICY…”Who Pays? A Distributional Analysis of the Tax Systems in All 50 States”

            Shows California’s top five percent of earners having the highest tax burden of all states, with the possible exception of New York.
            ……………………….
            http://taxfoundation.org/ “Which States Have the Most Progressive Income Taxes?” says resoundingly……California.
            ……………………….
            http://soquelbythecreek.blogspot.com/search?q=state+income+tax Will happily tell you that in California,

            “The bottom 50% of taxpayers contribute less than 2% of the entire income tax bill.”
            and,
            “the top 3% pay roughly half of California income taxes.”
            ……………………….

            Progressive.

            And the glass is more than half full, because.. lower to middle income Californians don’t pay as much tax as they have been led to believe. And more than half full for higher income taxpayers because.. they have higher income.

          • bob
            bob 22 December, 2014, 19:20

            Last time we were on this merry go round you sited a web site that couldn’t even get the Colliefornia sales tax rate right, Doglass.

            And regarding Colliefornia’s not taxing food or medicine there’s nothing special about that. The vast majority of states don’t do that.

            So the solution to not gettng taxed up the arse is have a batch of bambinos? Wondeful. If you have no kids and make even just 50k you get gored in this state and 50k is not much to live on in Colliefornia.

          • bob
            bob 22 December, 2014, 19:21

            And Colliefornia does have sales tax on prepared food and non-prescription medicines.

          • S Moderation Douglas
            S Moderation Douglas 22 December, 2014, 22:10

            I don’t recall going around anywhere. I often hear (not in this case specifically) that California has the highest taxes in the nation. I usually point out that this is a misconception not supported by facts. I don’t know what type of martyr complex compels some people to resist reality.

            (“One of the highest”? perhaps, but in many categories we are not even in the top twenty percent.
            AND many of those states who pay LOWER taxes are, figuratively speaking, of course, “sucking shamelessly at the Federal government teat.”)

            I did cite a source that got the sales tax “wrong”. I sent them a scathing letter; I’m sure they’ll be more diligent in the future. I cited them again today. They are one of the two major foundations who compile this type of data, so the other option is to rely on my own anecdotal experience.

            Or the other foundation. Tax foundation.org

            California rankings:

            Tax freedom day…………..April 20………….ranked 11th……….not first
            State and Local Tax Burden Per Capita…..$4,934…….ranked 6th…….not first
            State Business Tax Climate Index ……48th…….not even close to first (sarcasm)
            State Tax Collections Per Capita,……$3,111……ranked 11th
            State Revenue Per Capita,……….$5,634………ranked 23rd

            Federal Aid as a Percentage State General Revenue,…..32.4%…….ranked 37th
            (Interesting how so many of the “low tax” states have a MUCH higher percentage of federal aid.)

            State Individual Income Tax Collections Per Capita,….$1,346…..ranked 6th
            State and Local Individual Income Tax Collections Per Capita,….$1,229……ranked 7th
            State Corporate Income Tax Collections Per Capita,…….$256……ranked 5th

            State sales tax rate……..7.5%……NUMBER ONE…..FINALLY *

            State plus local combined rate, average……..8.38%……….ranked 9th…….that’s 9th, not first
            State General Sales Tax Collections Per Capita…………$896…….ranked 19th
            State Gasoline Tax Rates as of January 1, 2013 (Cents Per Gallon)…48.7………ranked number 2
            State Cigarette Excise Tax Rates………….$.87/pack………ranked 32nd
            State Cigarette Excise Tax Rates………….$3.30/gal………..ranked 38th
            State and Local Excise Collections Per Capita…….$325………ranked 45th
            State Debt Per Capita………20th
            State Beer Excise Tax Rates……..29th
            State and Local Cell Phone Tax Rates……..21st
            Mean Property Taxes on Owner-Occupied Housing as percent of value ……..33rd
            State and Local Property Tax Collections Per Capita……..19th
            State Debt Per Capita….20th
            etc., etc., etc.

            AND…. best of all, you don’t need to have a batch of bambinos up your arse. Only one, because:

            Average People Per Household by state: California…..2.96
            ………………………….
            And, again, these are average or per capita taxes. I believe it was Soquel by the Creek who told me the “average” Californian has one testicle and one ovary.

            In the real world, in California, it’s the high earners who pay the most taxes. Most of us are not only NOT the highest taxed in the nation, we are lower than average.

            And the glass is still half full.

            *This might be where ITEP “couldn’t even get the sales tax rate right.”
            Tax foundation note: “(b) Three states collect a separate, uniform “local” add-on sales
            tax: California (1%), Utah (1.25%), Virginia (1%). We include these
            in their state sales tax.”

        • Deserttrek
          Deserttrek 22 December, 2014, 15:41

          taxes are theft ….. anything taken from a person under threat of force is theft … wake up

          Reply this comment
          • bob
            bob 22 December, 2014, 19:22

            Come now, comrade. To each according to his needs, from each according to his abilities!

  5. bob
    bob 20 December, 2014, 16:02

    Don’t you just love the look on the face of that DemoNcrat? And with his arms crossed. The arrogant prick will take every penny he can from you.

    Reply this comment
  6. bob
    bob 20 December, 2014, 16:04

    “…Upward Mobility Act…”

    Sales taxes are the most regressive of taxes. Only an arrogant, prick DemoNcrat could call a regressive tax an Upward Mobility Act! And the idiot Colliefornia (as Ahnode calls it) sheeple believe these DemoNcrats have their interests at heart.

    Reply this comment
  7. bob
    bob 20 December, 2014, 16:06

    This Demoncrat ought to get it on the next ballot if he can’t get the legislature to pass it. Trough feeders and libtards could easily get the sheeple to pass it with a name like Upward Mobility! That outta be called Upward Morbidity.

    Reply this comment
  8. bob
    bob 20 December, 2014, 16:09

    ” And although the California economy is performing well now…”

    What? What’s left of the middle class in this state is being destroyed.

    Reply this comment
  9. Ulysses Uhaul
    Ulysses Uhaul 20 December, 2014, 18:37

    Bobo

    Simple solution. Get off your buns and do your own services…run businesses under 100k.

    Is it practical chasing every small business in California when most are under the table cash grey market types?

    Chasing gardners and pool cleaners is laughable.

    Best thing to do is a transfer tax on car purchases…wholesale and retail along with a local tax on payroll and energy consumption. Also, a tax on food in grocery stores…

    Reply this comment
  10. NTHEOC
    NTHEOC 20 December, 2014, 20:57

    The best tax would be a mileage tax! When you register your vehicle they could check your mileage and then you just pay the tax included in your yearly registration. The less miles you drive the less you pay, the more miles the more you pay. This would get people to live closer to their places of employment, less traffic, less pollution, and more use of public transportation. You see, we still have many more tax options!!!!!

    Reply this comment
  11. Bill - San Jose
    Bill - San Jose 21 December, 2014, 12:50

    Communism. It’s whats for dinner.

    Reply this comment
  12. Ebolan
    Ebolan 21 December, 2014, 15:43

    Poor Bob (or Bobo as his “friends” here call him), arguing with the “libtards” as he calls them.

    Might as well be tilting at windmills.

    Bob, can’t you find anything more productive to do with your time?

    Arguing with these people will never change anything even if you are right.

    You know the saying, “Arguing on the Internet is like running in the Special Olympics. Even if you win you’re still retarded.”

    Reply this comment
    • bob
      bob 22 December, 2014, 19:23

      Why don’t you do something more constructive with your time, like get to a doctor!

      Reply this comment
  13. Ulysses Uhaul
    Ulysses Uhaul 21 December, 2014, 17:13

    Leave Bobo alone. He is vulnerable and afraid….he seeks acceptance here at CWD. Poor lad. He came to the wrong place……

    Reply this comment
    • Ebolan
      Ebolan 21 December, 2014, 18:23

      Yes, I too sense Bobo is vulnerable and afraid. Even more reason for him to “just move along now” as he says.

      Besides, unless he’s retired (which based on his posts I doubt he can afford to be retired) there is no way he can put in as much time arguing as the retired “trough feeders” he wails against.

      Reply this comment
    • Ebolan
      Ebolan 21 December, 2014, 20:34

      Maybe Bobo and Desmond can start a CWD support group.

      Reply this comment
  14. desmond
    desmond 21 December, 2014, 19:00

    Can t wait till deleon and the other commies have to deal with robots. They will figure out a way to tax them too, but they should be careful, robots have no emotions, ethics(starting to sound like politicians), and can be programmed to do all sorts of things most state employees don t do, like work a full shift. In fact, they can work around the clock. How cool is that? Take the average fireman, dumber than a pet rock, with a propensity for disability claims. Robotic hosebot works around the clock. Take out the beds, TV, Xbox. Gym. No wages to tax for pensions. How f;?(7=+ sweet is that!!

    Reply this comment
  15. NTHEOC
    NTHEOC 21 December, 2014, 20:01

    Lmao! I think Desmond has watched terminator,I robot, and transformers one to many times!!! Well we already suspected he lives in fantasyland, now he just confirmed it. I hear them calling you Desmond, “Bitter man party of one” .

    Reply this comment
  16. Ulysses Uhaul
    Ulysses Uhaul 21 December, 2014, 22:11

    Desi is conflicted. Goreee is just messed with. Bobo crys out for truth.

    Where is Teddy, the sage and modern day Nostrodamus of CWD.

    Help!

    Reply this comment
  17. Deserttrek
    Deserttrek 22 December, 2014, 15:40

    more more more … that is a disease .. the schools have TOO much money now … time to cut .. reform calpers and pensions… eliminate all aid to illegal aliens and that is just a start

    Reply this comment
  18. Ulysses Uhaul
    Ulysses Uhaul 22 December, 2014, 19:39

    Trekkie…….back to the prepper bunker…Your solutions are stale. Read the Ragwus Hunter Donkey for contemporary dumb ideas!

    Reply this comment

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