Tuesday, August 16, 2011

Today's Reminder that California is Doomed: Antonio Villaraigosa's Tax Plan

It's a depressing fact of life that union-hack-turned-LA-mayor Antonio Villaraigosa is already contemplating the next step in his political career. Never mind that Los Angeles has largely died on his watch: when you're a lame-duck mayor with no practical skills, you need to think about moving on. As such, Villaraigosa has already worked to increase his national profile by getting himself appointed president of the U.S. Conference of Mayors, and has appeared on national news shows in that capacity. In addition, he gave an address to the Sacramento Press Club today that had all the tone and fanfare of a campaign speech.

This is what we look like every time Antonio Villaraigosa gets an idea.

Unfortunately for Villaraigosa, he views the world through the ideological lens of a union-hack-turned-politician, and as such, his ideas are invariably awful. When he appeared on Meet the Press in late June, he used the opportunity to urge Washington to wind down the wars in Iraq, Afghanistan, and Libya, and to use the savings to bail out city governments across the country. Aside from the obvious practical problem (i.e., no one in either party, except for Ron Paul, has any appetite for actually ending the wars), more top-down programs from Washington are not going to fix the problems affecting America's cities. A few weeks later, he entered the partisan fray in DC by urging an end to the debt-ceiling standoff; of course, given that Los Angeles had been downgraded by Moody's just three days earlier, few were looking in his direction for guidance on responsible public finance.

Today, however, he offered his latest bit of partisan nonsense, calling for a massive tax overhaul in California. His plan would embrace many of the concepts in Gerald Parsky's 2009 California Tax Commission report: an 11% cut in personal income tax rates, elimination of the state's corporate tax, new tax credits for business, and extending the sales tax to services. While these moves alone might have met the Parsky commission's goal of revenue neutrality, that's not a goal Villaraigosa shares. As such, he wants to eliminate the two-thirds majority requirement for tax increases, and implement the so-called "split roll" of Prop 13. By removing 13's tax protection for commercial properties, he hopes to raise $8 billion in new taxes every year, and by taxing services, he hopes to see $28 billion in new tax revenues. He supplemented this plan with a lot of huffing and puffing over the (almost non-existent in California) Tea Party, and used the phrase "grand bargain" a lot.

As others have pointed out, a split roll of Prop 13 would most likely fail to generate anywhere near that much tax revenue, as the values of commercial property have plummeted just as much as those of residential land in recent years. Moreover, given the continued weakness of California's economy, it's unlikely voters would see the wisdom of, you know, massively increasing taxes on employers in the face of 12% unemployment. And if Californians were really eager to drop the two-thirds requirement for tax hikes, they probably wouldn't have approved Prop 26 last year.

Most likely, though, none of this matters to Antonio Villaraigosa. He's far too wedded to the notion, popular among our political class here, that all good and civilized things come from government. It's not going to occur to him that the greatness of our state has come from its pioneering spirit, or from the innovations of its entrepreneurs, just as it's not going to occur to him that people thrive under conditions of personal liberty and economic freedom. To him, failing to reinforce every bit of the public-sector status quo with forcibly-extracted private money, particularly with regard to public education, constitutes "Tea Party economics at work" and a failure to "keep the California Dream alive". Never mind that this status quo is crumbling under a mountain of bad debt in nearly every corner of the Western world; for Villaraigosa, restraining spending and freeing the private economy from government signifies a surrender of the best parts of ourselves.


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