It just gets better. This is a commentary sent in my e-mail at the paper. For context, Jon Coupal is the premier taxpayer advocacy attorney in California. His organization was founded by Howard Jarvis, the tax reformer who wrote a law passed by California voters in 1978 that rolled back property taxes to 1974 levels and then limited increases in assessed valuations to 2 percent per year. Since then the group has fought against loopholes to Proposition 13 and has been a taxpayers’ watchdog.
CALIFORNIA COMMENTARY from the Howard Jarvis Taxpayers Association
Week of December 24, 2007
Governor’s Plan Is Still a Tax Increase
By Jon Coupal
Taxpayers are feeling like Chevy Chase when years ago he would read
the news on Saturday Night Live. Each week Chase would tell viewers
that Generalissimo Francisco Franco, the then recently deceased
Spanish Dictator, was still dead.
When we first reviewed Governor Arnold Schwarzenegger’s universal
healthcare proposal last January, we at the Howard Jarvis Taxpayers
Association declared it was a tax increase. Now, almost twelve
months later, we can report that the healthcare plan, after some
tweaking by the State Assembly, is still a tax increase, and a
dangerous one at that.
The one concession being made to taxpayers is that now, instead of
calling the costs to implement the program “fees,” Speaker Fabian
Nunez and the governor, the joint backers of the current healthcare
incarnation, are acknowledging that tax increases are involved.
During his successful reelection campaign, Schwarzenegger repeatedly
promised he would not raise taxes. On several occasions, he
expressly stated that, "I campaigned that I will not raise taxes and
I say this again: I will not raise taxes." The sad fact is that any
trust that taxpayers had in our governor is now wholly evaporated.
Whatever one thinks of socialized medicine, the collapse of
California’s financial house should have put the whole issue on the
back burner. But Schwarzenegger has persisted, calling a special
session of the Legislature in an effort to muscle through his
healthcare plan. Ironically he is now calling for another special
session to deal with the state’s looming $14 billion deficit that
will require ether massive tax increases – according to Nunez – or
massive spending cuts – according to the governor – to bring the
budget into balance.
The current budget crisis is the result of reckless overspending.
State spending is up 44 percent since Schwarzenegger took office.
And now he is promoting additional taxes to cover the cost of his
ambitious health care plan. This makes no sense at all. And much of
the plan would inflict significant harm on California taxpayers.
As currently written, the proposal passed by the State Assembly
would:
- Require that every Californian must have health insurance coverage
by July 2010. This “individual mandate” could be waived if the
family made less then 250% (under $51,000 for a family of four) of
the federal poverty level annually.
- Would establish “guarantee issue” coverage, which would mean that
insurers must cover those with pre-existing conditions.
- Defines a California resident as an "individual who is physically
present in the state for at least 6 months."
- Hospitals will pay a four percent fee on patient revenues, which
of course will be passed onto consumers in the form of higher bills.
- Place a 2-6.5% sliding scale payroll tax on business demanding on
payroll amount. This could lead to massive job loss, especially if
employers find themselves on the bubble between one scale level and
another.
- A large portion of the funding would depend on a tobacco tax
increase of $2 per pack.
It should be noted that when a similar plan was tried in Kentucky,
45 health insurance carriers left the state. Not surprising when a
person could go without insurance until they took ill but insurance
companies would still be compelled to provide coverage. Of course
the ultimate costs would be born through higher premiums for all.
In the early 1990s Governor Wilson worried that our state had become
a welfare magnet. After state and federal welfare reforms, the lure
of the Golden State for those interested in being subsidized by
taxpayers declined. But that trend is now reversing yet again.
Although middle and high income taxpayers are leaving the state
according to a just-released study by the Department of Finance, it
is being offset by births and more than 200,000 immigrants from
other countries. (The political left loves to complain about the
shrinking middle class and the widening gap between the rich and
poor. But all they need to do is look in the mirror to see the cause
of the problem.)
Add “free” healthcare to the mix and California’s status as the
nation’s number one welfare magnet will be restored. Feeing ill in
Idaho? Why California is the place to go. Planning to enter the
United State illegally? Let’s see which state is making the best
offer.
California residents are already among the most highly taxed in the
country. This is one of the reason that so many are leaving for
greener pastures. Additional taxes will just accelerate the exodus
of people with jobs and money who, on their way out, will be passing
the inflow of those who need or want public services.
The only good news about the Schwarzenegger-Nunez plan is that it
faces huge hurdles before it becomes a scary reality.
First, Senate President pro Tem Don Pereta, who, although a fan of
expanding government mandated health care coverage, is questioning
the wisdom of taking on these new costs during a fiscal crisis and
he has the power to block Senate passage.
Second, having confessed that they are raising taxes, the governor
and speaker, thanks to Proposition 13, must place the tax increases
on the ballot for approval. After reviewing the facts, voters are
not likely to retain the same enthusiasm suggested by a recent Field
Poll.
The final obstacle is federal law. In 1974, Congress enacted the
Employee Retirement Income Security Act (ERISA), which gives the
federal government exclusive authority to regulate employee benefit
plans, including self-insured plans. The only way that California
could implement this healthcare proposal would be to be granted a
waver by Congress, and it is unlikely that those in Washington, D.C.
really hate us that much.
*
Jon Coupal is President of the Howard Jarvis Taxpayers Association
– California’s largest taxpayer organization – which is dedicated
to the protection of Proposition 13 and promoting taxpayers’ rights.
2007-52
Permission to reproduce this commentary in any format – print or
electronic – is hereby granted.
IF YOU WOULD PREFER TO RECEIVE THESE WEEKLY COMMENTARIES BY FAX,
please send an e-mail to [email protected] and give us your your fax
number (or fax it to 951-278-3860). Please be sure to include the name
of your publication.
IF YOU WOULD LIKE TO BE REMOVED FROM THIS E-MAIL DISTRIBUTION LIST,
please send an e-mail message to [email protected] and be sure to
include the e-mail address at which you received this message along
with the name of your publication.
For more information, contact: Kris Vosburgh, Executive Director
Howard Jarvis Taxpayers Association 621 S. Westmoreland Ave., Suite
202 Los Angeles, CA 90005 213-384-9656
