First debate of 2016 CA election season tackles poverty, taxes

 

election democracyIt’s not even 2016 yet, but the first debate over a probable initiative on the November 2016 ballot took place in Dana Point Monday when former Board of Equalization member Conway Collis squared off with Howard Jarvis Taxpayers Association president Jon Coupal over the Lifting Children and Families Out of Poverty Act. The debate was hosted by the California Alliance of Taxpayer Advocates.

The measure, backed by charity organizations dedicated to reducing poverty, would raise property taxes on residential and commercial property valued at $3 million and more. The money would be deposited in anti-poverty programs outside the General Fund.

Collis argued that the initiative was a way for government to help relieve 2.4 million California children living below the poverty line. He said there was a moral and financial reason to do so. Leaving one-quarter of California’s children in poverty was an immoral position for the state. Lifting 50 percent of those suffering from poverty in 20 years — the goal of the initiative proponents — would reduce the dollars required for welfare programs and prisons while adding taxpayers to the rolls.

Coupal saw the measure as a direct attack on Proposition 13’s property tax protections. He asked: “Aren’t taxes high enough?” listing the state’s high tax rates in different tax categories. Coupal said voters were willing to support the Proposition 30 tax increases when the state budget was in crisis. There is no crisis now, he asserted, with the state sitting on a surplus of anywhere from $1 billion to $10 billion.

To Collis, a tax that touched only 1 percent of the taxpayers was worth the investment in attempting to save money in welfare programs while aiding those in poverty. He said business had a legitimate concern in annual reassessments on property (as proposed in a legislative bill to split the property tax roll) but that this plan “protects and builds” on the Proposition 13 framework and would preserve property tax predictability.

But Coupal said the economy and businesses would suffer, with more businesses packing to leave the state, especially because the great portion of the properties affected by the proposed tax increase would be commercial properties.

While Collis said the initiative has fail-safes to control programming that did not work to reduce poverty, Coupal countered that 30 programs are already in place to deal with poverty and that many suffer from fraud and abuse with recipients spending taxpayer-sponsored income in Hawaiian resorts and Las Vegas casinos.

Collis said his initiative would not simply help the poor but would boost all Californians. He said that the growing number of poor would “swallow the state budget” unless corrective measures are taken.

Collis insisted that polling and focus groups prove that voters understand that the tax was only on expensive property and would affect few taxpayers. He said signature gatherers were asking voters if they owned property over $3 million and if they answered “no” then they were told the measure would interest them. Collis said voters readily signed.

However, Coupal had a message for those voters should the initiative qualify for the ballot. The initiative breaks Proposition 13 by going after residential property. Once that door is opened other tax increase activists will want to charge through and all residential property owners would be at risk. That message will not be lost on voters, Coupal said. It is a concern that would be expressed in a political campaign.

The campaign messages are already being shaped and a long political campaign season has unofficially begun.

(Disclosure: I am associated with the committee that opposes the Lifting Children and Families Out of Poverty Act.)

4 comments

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  1. Richard Rider
    Richard Rider 15 December, 2015, 09:48

    Divide and Conquer. That’s the core strategy for destroying Prop 13 safeguards. Given the “soak the rich” mentality of too many low information voters, it might work.

    Once the rich and businesses (those who choose to stay in California) are getting the big tax bills, they won’t fund any opposition to raising the REST of the property owners’ bills.

    As I said — Divide and Conquer.

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  2. RT
    RT 15 December, 2015, 09:50

    CalWORKs (California’s Cash Aid TANF Program) has proven that state wide efforts to deal with poverty are simply ineffective. This bill seems to have accepted the false CalWORKs premise that those receiving enough outside support from a government program are not in poverty. The fact is that this idea (as well as the major flaw in CalWORKs) is that it ignores the fact that the only true way out of poverty involves gaining a job that pays enough to pull the family out of poverty.
    Without a true focus on gaining employment, this program will fail just as CalWORKs has failed so many families by leaving them in poverty and subject to the whims of the state and local bureaucracies.

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    • Richard Rider
      Richard Rider 15 December, 2015, 10:22

      Indeed, poverty programs PAY people not to work. Stated differently, working more costs benefits, for little or no net gain.

      This is not just theory:

      http://riderrants.blogspot.com/2013/02/yes-100-tax-on-earned-income-for-single.html

      “Yes, a 100% tax on earned income for many single parent families”
      by Richard Rider
      REVISED September, 2015

      Here’s an eye-opening study by the Pennsylvania Department of Welfare — looking at the welfare benefits for a single parent with two kids.

      BOTTOM LINE: If one is taking advantage of the welfare/subsidy options, then between about $9,000 and $69,000 of (reported) earned income, such a family faces what amounts to an average 100% tax.

      Stated differently, such a family earning $9,000 and receiving the subsidies is as well off as the identical family earning $69,000 and paying their taxes. It’s an awesome disincentive to improve one’s lot in life. And there’s every reason to assume that similar disincentives of roughly the same magnitude can be found in ALL of our states.

      I first found the story in the WALL ST JOURNAL — an op-ed by economist Arthur Laffer (see below). That article led me to the source material — a study and PowerPoint put together by the Pennsylvania Secretary of Welfare.
      http://www.aei.org/files/2012/07/11/-alexander-presentation_10063532278.pdf

      The loss of benefits is not a uniform sliding scale, as some benefits arbitrarily stop past a certain income point. The PowerPoint is worth reviewing, even if just for a quick overview.

      Suggestions of reforms are made both in the Pennsylvania study and the WS JOURNAL article, but for now the fact remains — the government pays people to remain poor. Few will find their net income jumping between $9K to $70K in one increment, so for the years working between these two numbers, one is essentially working for free. And most such low skilled workers have little prospect of ever passing that $70K point where they start actually making money.

      This 100% tax makes a strong economic (though hardly moral) case for working on the side in the underground economy for cash while collecting all the low income benefits. It would be a huge temptation to do so. Welfare (and that’s what all these “entitlements” are) is a drug, and we are addicting people to these subsidies.

      Here’s the link to the excellent WALL ST JOURNAL article by Arthur Laffer:
      http://online.wsj.com/article/SB10001424127887324235104578243373468081096.html?

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  3. Ulysses Uhaul
    Ulysses Uhaul 15 December, 2015, 15:20

    Is it fair that a server in a food place with two kids getting free health care, dental, eye care for her family while a two income young family pays $1400.00 per month with a 5-7 thousand dollar deductible with limited choice of medical providers.

    The tension in California over inequality works many ways. Compounded by forced immigration, undocumented visitor issues, wink wink job and higher educational discrimination, who can be allowed in mortal combat, who is allowed to carry a ladder or fire hose, letting politicans or voters determine employee pay, gender this and that nightmares, who may be peeking in bedrooms or bathrooms, who wears a bulky backpack or has an odd looking midriff with wires here and there….tension…..unpredictability……insecurity….

    No wonder doomers and the fair and balanced clash!

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