Wants Congress to approve caps on deferred compensation
SACRAMENTO — State Controller Malia M. Cohen released the following statement following last month’s announcement that the L.A. Dodgers signed a 10-year, $700 million contract with pitcher Shohei Ohtani. The contract is structured so that Ohtani will receive $2 million per year and defer the balance approximately 10 years, when he could potentially return to Japan and escape payment of California state income taxes on the deferred amount:
“The current tax system allows for unlimited deferrals for those fortunate enough to be in the highest tax brackets, creating a significant imbalance in the tax structure.” said Cohen. “The absence of reasonable caps on deferral for the wealthiest individuals exacerbates income inequality and hinders the fair distribution of taxes. I would urge Congress to take immediate and decisive action to rectify this imbalance.”
“Introducing limits on deductions and exemptions for high-income earners promotes social responsibility and contributes to a tax system that is just and beneficial for all. This action would not only create a more equitable tax system, but also generate additional revenue that can be directed towards addressing pressing important social issues and fostering economic stability,” Cohen stated.
About Controller Cohen
As the chief fiscal officer of California, Controller Cohen is responsible for accountability and disbursement of the state’s financial resources. The Controller has independent auditing authority over government agencies that spend state funds. She is a member of numerous financing authorities, and fiscal and financial oversight entities including the Franchise Tax Board. She also serves on the boards for the nation’s two largest public pension funds. Follow the Controller on X at @CAController and on Facebook.
By Jon Coupal, President, Howard Jarvis Taxpayers Association
The Taxpayer Protection and Government Accountability Act (TPA) is a proposed constitutional amendment which has already qualified for the November 2024 ballot. It is sponsored by taxpayer and business organizations to restore key provisions of Proposition 13 and other pro-taxpayer laws that give voters more control over when and how new tax revenue is raised.
Although TPA, unlike previous tax reform measures, doesn’t reduce or eliminate any state or local tax, it does impose both enhanced voter approval requirements for fee and tax increases as well as robust accountability and transparency provisions.
For obvious reasons, tax-and-spend interests hate TPA and have launched a multi-front assault hoping to either defeat it or keep it off the ballot entirely.
The motivation for these schemes is that politicians and their enablers are fully aware that TPA is highly likely to pass if it stays on the ballot. Californians are sick and tired of having the nation’s highest tax rates jammed down their throats, especially when these heavy tax burdens are not accompanied by higher levels of public services; in fact, the opposite is true, as evidenced by California’s high cost of living, crime, homelessness, hostile business climate, and other ills.
But now, there may be another reason why anti-taxpayer interests are waging this war on TPA. A recent report by the California Legislative Analyst’s office threw a bucket of cold water on progressives’ plans to continue to increase taxes with virtually no restraint. The LAO now estimates “2022-23 revenues to be $26 billion below Budget Act projections. Historical experience suggests this weakness is likely to carry into this fiscal year and next. Overall, our updated revenue outlook anticipates collections to come in $58 billion below Budget Act projections across 2022-23 to 2024-25.” (Note that in less than a week after this news, the LAO upped the shortfall from $58 billion to $68 billion).
If there is any saving grace to the current financial situation it is that California still has substantial budget reserves. That, plus some creative accounting, can probably blunt the negative impacts of a severe drop in revenues – at least for a while.
Nonetheless, if California’s tax revenue spigot is curtailed any significant amount, will the enemies of the Taxpayer Protection Act argue that this provides another justification for removing all restraints on raising taxes?
Economic growth in Texas and Florida is outpacing that in California, due in part to a top marginal income tax rate of zero. What is happening in other smaller states is less well known. The smart move would be to follow the lead of other states which are aggressively pursuing pro-growth strategies which in turn lead to more tax revenue.
Take Iowa for example. Defying critics who claimed that tax reductions would crush the state budget, Iowa’s Governor Kim Reynolds slashed top marginal tax rates, previously some of the highest in the nation. Not only did revenues not crash, but they shot up by huge percentage points. According to a report in Center Square, “Iowa led the ‘tax-cutting wave’ in 2022, with the most comprehensive and aggressive tax reform in the United States. This will gradually replace the nine-bracket, progressive income tax with a flat tax, bringing the top rate, which was close to 9 percent, down to a flat 3.9 percent by 2026.”
Other states have provided California with a roadmap for economic growth and healthy budgets by cutting taxes and pursuing other pro-freedom policies. However, the political realities in this one-party state – governed by hardcore progressives – render the odds of politicians even looking at the roadmap extremely slight.
That being said, if the Governor and the Legislature won’t do what’s necessary to prevent a budget disaster, the least they can do is get out of the way of those who have offered the Taxpayer Protection Act to the voters so that ordinary citizens can do what politicians won’t: impose fiscal discipline on a fiscally reckless state.
This column originally appeared in the Orange County Register. Republished with permission.
Source: MTC. Credit: Edmond Dantès photo via Pexels
Expected to boost Bay Area housing bond prospects; Cal Chamber opposes; requires majority of voters to approve
By Allen D. Payton
MTC/ABAG-backed Assembly Constitutional Amendment 1, which would lower the vote threshold for local special taxes and bonds to fund affordable housing, transportation, resilience and other public infrastructure projects from two-thirds to 55%, will go to voters in November 2024.
The state Legislature last month approved sending the amendment, authored by Assemblymember Cecilia Aguiar-Curry, to voters with the backing of the entire Bay Area legislative delegation. MTC and ABAG sent letters of support to Sacramento and MTC/ABAG legislative staff actively lobbied the bill to help get it over the finish line.
Similar bills have been proposed over the past two decades but until now none were approved by the house of origin, a hurdle that itself requires a two-thirds vote. Other supporters included Nonprofit Housing Association of Northern California, Enterprise Community Partners, the California Professional Firefighters, and individual cities and counties.
“While Bay Area voters have a long history of generously supporting taxes to fund transportation and housing improvements, measures in some parts of the region have repeatedly fallen short of the two-thirds margin,” MTC-ABAG Executive Director Andrew Fremier noted. “ACA 1 would reinstate the ability of voting majorities to address vital community needs.”
The election of ACA 1 co-author Robert Rivas to the Assembly speakership helped build momentum for the proposed amendment, as did the nonprofit housing community’s raising of $10 million to gather signatures for a citizen’s initiative if the legislature didn’t approve the amendment.
California Chamber of Commerce Opposes
The constitutional amendment is opposed by the California Chamber of Commerce. In a report by policy advocate Preston Young before it passed, he claims ACA1 would increase costs for key sectors, will erode taxpayer safeguards and would harm California workers.
Preston wrote, “This would provide increased tax authority for many local government agencies in California—not just cities and counties, but thousands of potentially overlapping special districts.
In a letter sent to legislators recently, the CalChamber pointed out that while it’s important to improve infrastructure and increase housing availability, higher property, sales and parcel taxes on working Californians run counter to the goal of making the state more affordable for all.
Businesses engaged in manufacturing, research and development, teleproduction and post-production, and agriculture face a significant sales and use tax burden in California.
The sales and use tax is supposed to be a tax on the final point of sale of a product, yet many businesses—including businesses conducting research and development, manufacturing, filming activities, and agriculture—are taxed for equipment purchases.
Taxation of business inputs for these industries leads to a pyramiding effect throughout the production process, leading to higher costs for purchases made by consumers, the CalChamber explained in its letter. To counter this pyramiding effect and incentivize business growth in the state, California offers a partial state-level sales tax exemption for purchases made by these industries. However, purchases made by these businesses are still subject to local transactions and use taxes.
Equipment purchases represent a significant portion of capital investment for existing businesses and start-ups. Tax increases promoted by ACA 1 would defeat the purpose of the state-level exemption provided by the state and make it more cost-prohibitive to conduct these business activities in California, the CalChamber warned.
ACA 1 would allow local jurisdictions to approve Bradley-Burns sales tax increases with a 55% vote of the electorate, eliminating the uniformity and certainty provided by the Bradley-Burns sales tax.
This would represent a monumental change to sales and use tax policy in the state, the CalChamber said. Unlike the transactions and use tax—which is capped at 2% per county and requires statutory authority to exceed the cap—the local 1.25% sales tax (referred to as the Bradley-Burns sales tax) is uniformly applied across the state and voters are not authorized to approve increases to the rate.
“California already has the highest state-imposed sales tax in the country, and the combined sales tax rates in some jurisdictions are among the highest in the United States,” the CalChamber said. “Allowing localities to modify their Bradley-Burns sales tax rates, without a cap on rate increases, paves the way for excessive combined sales tax rates in parts of the state—increasing costs for residents and businesses.”
More than four decades ago, prompted by years of rising taxes, Californians resoundingly approved Proposition 13 to provide a check on local governments’ taxing authority, and to ensure a greater representative voice for those who would be taxed. Proposition 13 also limits taxes on property to 1% of the property’s assessed value.
Reducing the vote threshold would diminish the people’s voice on tax increases and would erode property tax safeguards. The CalChamber pointed out that a May 2022 Public Policy Institute of California poll found that 64% of registered voters believe Proposition 13 has benefitted taxpayers, and this support reaches across nearly every major demographic.
After comparing the costs of operating in California versus other states, many employers left the state in recent years. A Hoover Institution report found that from 2018 to 2022, at least 352 companies relocated their headquarters out of California—with many businesses citing the state’s tax burden as the deciding factor in their relocation.
The relocation of these companies and their employees to lower-cost states has a major impact on state and local tax revenue, causes unemployment for workers who cannot move to the new location, and is a sign that California must find ways to be more competitive, the CalChamber stressed.
“Tax increases such as those promoted in ACA 1 would be a step in the wrong direction and would encourage more companies to move workers and investments to other states,” the CalChamber said.
Indeed, Californians are sensitive to this problem. A 2020 Berkeley Institute of Governmental Studies poll found that 78% of voters “agreed that taxes in California were already so high that they were driving many people and businesses out of the state.”
Majority Vote Needed to Pass
According to a report by the California Globe, Article XVIII, Section 4 of the California Constitution, “requires a proposed amendment or revision to be submitted to the electors and, if approved by a majority of votes, takes effect on the fifth day after the Secretary of State files the statement of the vote for the election at which the measure is voted on, but the measure may provide that it becomes operative after its effective date.”
The Contra Costa County Board of Supervisors is seeking individuals interested in serving on the Measure X Community Fiscal Oversight Committee. Measure X is the countywide half-cent sales tax that passed by voters in Nov. 2020 “to keep Contra Costa’s regional hospital open and staffed; fund community health centers; provide timely fire and emergency response; support crucial safety-net services; invest in early childhood services; protect vulnerable populations; and for other essential county services, shall the Contra Costa County measure levying a ½ cent sales tax, exempting food sales, providing an estimated $81,000,000 annually for 20 years that the State cannot take, requiring fiscal accountability, with funds benefiting County residents.”
The committee was established by the Board of Supervisors on May 16, 2023 to advise the Board of Supervisors on financial audits of Measure X tax funds. There are currently five vacancies on the committee.
The Committee has the following duties:
1. Review, on an annual fiscal year basis, the expenditure of tax revenue generated by Measure X, to ensure it conforms to (i) the stated intent of the ballot measure, and (ii) the Board’s direction for specific allocations.
2. Oversee an annual audit of expenditures of tax revenue generated by Measure X.
3. Prepare an annual report of expenditures of tax revenue generated by Measure X.
Requirements:
Civic-minded
Interested in volunteering for public service
Experience with auditing principles and financial management best practices
If you have the skills and experience required, we want to hear from you!
Urges voters, taxpayers to call the Capitol to protect Prop 13, see committee members phone numbers below
ACA 1 would make it easier to raise local special taxes by removing the Prop. 13 taxpayer protection of the two-thirds vote of the electorate required to pass
ACA 13 was just introduced last week as a devious attempt to stop the Taxpayer Protection and Government Accountability Act from passing when it’s on the ballot in Nov. 2024.
By Jon Coupal
Prior to the successful passage of Proposition 13 in 1978, Howard Jarvis tried several times to bring property tax relief to beleaguered California homeowners. While coming close, it wasn’t until 1978 when voters overwhelmingly passed Proposition 13 over the opposition of virtually every political institution and newspaper in California.
As they say, timing is everything. What changed the political dynamic so abruptly in 1978 was the fact that thousands of California homeowners were being taxed out of their homes. That also explains why, to this day, Proposition 13 retains its popularity even as the state has become more “progressive.”
Last week there were two competing press events over Assembly Constitutional Amendment 1 (ACA 1), a proposal that would erase part of Proposition 13. As the head of the Howard Jarvis Taxpayers Association, I was joined at a news conference on the Capitol’s west steps on Wednesday by several legislators who have unequivocally expressed their continued support for Proposition 13 and opposition to ACA 1. Also present were several representatives of other taxpayer groups as well as business organizations suffering under California’s excessive tax burdens.
ACA 1 is a direct attack on Proposition 13 because it would cut the vote threshold needed to pass local special taxes, dropping it from the current two-thirds vote required by Proposition 13 to only 55%. That change would make it easier for local governments to raise taxes.
Since Proposition 13 was enacted in 1978, voters have continued to support the important two-thirds vote protection. That support was reaffirmed with the passage of pro-taxpayer initiatives in 1986, 1996 and 2010.
Many people may not know that the two-thirds vote requirement did not originate in 1978. It has been in the California Constitution since 1879! For more than a century, local property owners have been protected against excessive bond debt by the requirement that local bonds – repaid only by property owners – need a two-thirds vote of the local electorate.
ACA 1 repeals the two-thirds vote protection for tax increases to support “infrastructure,” a term so expansive that local governments would be able to raise taxes for almost any purpose with a vote of just 55% of the electorate. This is a hatchet that chops away at the taxpayer protections in Proposition 13.
ACA 1 proponents are aware of Prop. 13’s enduring popularity, so not once in their over one-hour press event did they mention Proposition 13 by name. Instead, they talked about “protecting democracy,” “local control,” and taking on “right-wing interests.” (Are Californians “right wing” for wanting to keep their home instead of being taxed out of it?) Nor did the supporters of ACA 1 provide any specific example of exactly what lowering the two-thirds vote would purchase, other than to claim that it was essential to address California’s dual crises of housing and homelessness.
Opponents of ACA 1 have noted that making it easier to raise taxes makes no sense in one of the highest taxed states in America. No other state comes close to California’s 13.3% top marginal income tax rate, and we also have the highest state sales tax in America as well as the highest gas tax, not to mention gas prices. And even with Prop. 13, we rank 14th out of 50 states in per capita property tax collections. Californians pay enough.
This is a critical time. As of this writing, ACA 1 has cleared one legislative committee and may be heard by the full Assembly as early as this week. However, its main proponent, Assemblymember Cecilia Aguiar-Curry, admitted at her press conference that she didn’t quite have the votes yet. For that reason, the time is now for all defenders of Proposition 13 and advocates for limited taxation to contact their Assembly representatives and let them know that a vote for ACA 1 is a vote against Proposition 13.
This issue is so important to the Howard Jarvis Taxpayers Association that we will withhold our endorsement from any current legislator who fails to vote no on ACA 1.
Committee Hearings this Week, Taxpayers Urged to Call the Capitol
Your immediate help is needed to fight against two proposed constitutional amendments moving fast through the state Assembly. Both of these measures are attacks on PROPOSITION 13. We’re asking all HJTA members and supporters to please call the members of two committees that will be hearing these bills on Wednesday. Please call as soon as possible! Here’s all the information:
NO on ACA 1 – Hearing date: Wednesday, 8/23, Assembly Appropriations Committee
ACA 1 is a direct attack on Proposition 13 that would remove the taxpayer protection of the two-thirds vote of the electorate required to pass local special taxes. If this measure is enacted, local taxes and bonds for “infrastructure” (nearly everything) and public housing projects would pass with just 55% of the vote instead of 66.67%. This makes it easier to raise taxes, and your taxes could go up after every election. Please call the members of the Assembly Appropriations Committee and urge a NO vote on ACA 1:
Chris Holden (Chair) – (916) 319-2041 Megan Dahle (Vice Chair) – (916) 319-2001 Isaac Bryan – (916) 319-2055 Lisa Calderon – (916) 319-2056 Wendy Carrillo – (916) 319-2052 Diane Dixon – (916) 319-2072 (Please thank Assemblywoman Dixon for opposing ACA 1) Mike Fong – (916) 319-2049 Gregg Hart – (916) 319-2037 Josh Lowenthal – (916) 319-2069 Devon Mathis – (916) 319-2033 (Please thank Assemblyman Mathis for opposing ACA 1) Diane Papan – (916) 319-2021 Gail Pellerin – (916) 319-2028 Kate A. Sanchez – (916) 319-2071 Esmeralda Soria – (916) 319-2027 Akilah Weber, M.D. – (916) 319-2079 Lori Wilson – (916) 319-2011 – Represents portions of Eastern Contra Costa County
NO on ACA13 – Hearing date: Wednesday, 8/23, Assembly Elections Committee
ACA 13 was just introduced last week as a devious attempt to stop the Taxpayer Protection and Government Accountability Act from passing when it’s on the ballot in November 2024. The Taxpayer Protection and Government Accountability Act is our initiative constitutional amendment that will restore the Proposition 13 protections that have been eroded by the courts.
Some of the measure’s key provisions include:
Require all new taxes passed by the Legislature to be approved by voters
Restore two-thirds voter approval for all new local special tax increases
Clearly define what is a tax or fee
Require truthful descriptions of new tax proposals
Hold politicians accountable by requiring them to clearly identify how revenue will be spent before any tax or fee is enacted
But ACA 13 would create special rules that make it harder to pass citizen initiatives like this one. If ACA 13 is enacted, the Taxpayer Protection and Government Accountability Act would require a two-thirds vote to pass, instead of the simple majority vote that has been required for all other constitutional amendments since 1849!
Please call the members of the Assembly Elections Committee and urge a NO vote on ACA 13:
Gail Pellerin (Chair) – (916) 319-2028 Tom Lackey (Vice Chair) – (916) 319-2034 Steve Bennett – (916) 319-2038 Bill Essayli – (916) 319-2063 Alex Lee – (916) 319-2024 Evan Low – (916) 319-2026 Blanca Rubio – (916) 319-2048
Please also call your own state representatives and urge them to vote NO on ACA 1 and NO on ACA 13. You can look up their names and contact information at findyourrep.legislature.ca.gov.
Thank you for your help in this critical fight to protect Proposition 13. We greatly appreciate you! Jon Coupal is president of the Howard Jarvis Taxpayers Association.
Payment plan for low-income customers, penalty waivers for all bridges, Express Lanes
The Metropolitan Transportation Commission (MTC)’s Bay Area Toll Authority (BATA) today launched a public information campaign to raise travelers’ awareness of two new programs available through the Bay Area FasTrak® customer service center to help people with overdue tolls, penalties and fees get out of debt.
Bay Area FasTrak® now offers a payment plan program for individuals with outstanding toll debt whose household income is no more than 200 percent of the federal poverty level (about $60,000 for a family of four). The Bay Area Toll Payment Plan is open to all who have received toll violations on Bay Area bridges or express lanes. For those who qualify, violation penalties will be waived and any remaining balance of at least $100 can be paid off over time in the payment plan.
This program is intended to provide a way for people with overdue tolls, fees and penalties to get out of debt, and it is not limited to Bay Area residents.
Eligible participants may apply at the program website at bayareatollpaymentplan.org or by mailing or faxing a paper application. Both the website and the paper application are available in English, Spanish, Chinese and Vietnamese.
Photo: MTC.
To ensure those who are income eligible are aware of and have assistance applying for Bay Area Toll Payment Plan, BATA is conducting extensive outreach to social services and housing agencies, as well as to dozens of community-based organizations and other human services programs.
The one-time penalty waivers will be available to customers through September 2024. To obtain a waiver or to find out if you have overdue toll violations, customers must call the Bay Area FasTrak® Customer Service center at 877-BAY-TOLL (877-229-8655) and pay all outstanding tolls and any DMV fees owed. Eligible customers who choose to enter into a payment plan must make their first payment to receive the penalty waiver.
MTC is the regional transportation planning, financing and coordinating agency for the nine-county San Francisco Bay Area. BATA manages the Bay Area’s FasTrak electronic toll payment system and administers all toll revenue from the Bay Area’s seven state-owned toll bridges.
Don’t pay a fee to have your property taxes reduced
(Martinez, CA) – Many property owners throughout Contra Costa County are receiving an official looking document in the mail regarding a fee-based service to have their property’s taxable value reduced. Although these mailers have the appearance of an official government document, the correspondence is not from the Contra Costa County Assessor or any other Contra Costa County Office.
The California Attorney General’s Office has posted warnings to California property owners on their website about the practices of these companies. For more information, please visit the Attorney General’s Consumer Alert at https://oag.ca.gov/consumers/general/prop_tax_scam.
Current scam mailers are requiring both a $40 county filing fee with the Clerk of the Assessment Appeals Board for a formal appeal, and a contingent fee of 30% of any tax savings as a result of filing the application.
It is important for property owners to know that the Contra Costa County Assessor’s Office does not charge a fee to complete an informal value review for our taxpayers.
Property owners who believe the current market value of their property is less than the assessed value, can file a FREE “Request for Value Review (Prop 8)” form with the Contra Costa County Assessor’s Office. Please visit our webpage at http://www.cccounty.us/assessor and select “Review Your Value” to find a downloadable application.
Local tax base increases by almost $15 billion, to over $267 billion
Oakley, Antioch, Lafayette had greatest increases, San Pablo, San Ramon, Hercules had lowest
By Allen D. Payton
Just in time for Independence Day, when Americans celebrate our victory over the British in the battle against King George III and his onerous taxes, the “2023-2024 Assessor’s Close of Roll Affidavit” was signed by Assessor Gus S. Kramer and subscribed and sworn to the County Clerk-Recorder’s Office, on June 30. The 2023-2024 Assessment Roll has been delivered to the County Auditor, as required by law.
The increase to the local tax base for 2023-2024 is over $14.96 billion. This represents a 5.94% increase in assessed value and brings the total net local assessment roll to more than $266.67 billion. The 2023-2024 assessment roll is the highest to date in Contra Costa County’s history.
Cities with the largest increases in assessed value include Antioch, Oakley and Lafayette with increases ranging up to 8.49%. San Pablo, San Ramon and Hercules saw the lowest assessed value increases ranging from 4.30% down to 3.86%. The assessment roll now consists of 379,442 parcels, an increase of 1,202 over the previous year.
“I would like to acknowledge and commend the employees of the Assessor’s Office for their continued dedication and hard work which resulted in the completion and delivery of the 2023-2024 assessment roll,” Kramer wrote in his letter.
The report shows the total Secured Value of property in the county, which includes all the real estate, is now over $267.6 billion. The Unsecured Value is the business equipment which includes computers, desks, chairs and machinery, Kramer explained. That total is now almost $7.8 billion.
“Local Exemptions (which total almost $8.7 billion) are what churches and non-profits enjoy, as well as all the homeowners’ exemptions. That’s a $7,000 deduction you have to apply for which saves you about $70 a year on your property taxes,” he shared. “That’s something I’m livid with the legislature for not increasing. In Idaho the homeowners’ exemption is 50%. Prior to Prop 13 in California, it was 25% but the legislature has never adjusted it. It should have been indexed or something.”
Asked about the difference between the charts in the report of $1 billion in the total Secured Value Kramer said. “It’s less than one-third of one percent, but we know what it is and we’re working it out. We had to get the report in by the July 1 due date.”
