As 2nd Anniversary of Federal Health Reform Law Approaches, CA Ballot Measure Seeks to Control Skyrocketing Health Insurance Rates.
Anthem Blue Cross will raise health insurance rates for nearly 600,000 Californians by as much as 20% on May 1. A ballot initiative to make health insurance more affordable by regulating premium increases is necessary to protect Californians from excessive rate hikes, said Consumer Watchdog Campaign today.
Friday is the 2nd anniversary of the federal health reform law, which will require every American to have health insurance by 2014 but does not control what private health insurance companies can charge. The ballot initiative proposed by Consumer Watchdog Campaign would require health insurance companies to publicly justify rates, under penalty of perjury, and get rate increases approved before they take effect.
"Every time insurance companies force another double-digit rate increase on consumers they make the case for our ballot initiative to rein in excessive rate hikes. If Anthem had to include a copy of our petition in the rate increase notice it mailed to more than half a million consumers, we'd already have the 505,000 signatures necessary to qualify the measure for the November ballot," said Carmen Balber with Consumer Watchdog Campaign.
The ballot measure would regulate health insurance policies that cover 5.3 million Californians. 35 states have the power to reject excessive rate increases, but California does not.
"The Affordable Care Act ends some of health insurers' worst abuses - like cancelling coverage when patients get sick, or charging women more just for being women. But the law falls short on cost control. Health reform cannot succeed if we don't put the brakes on skyrocketing insurance premiums. Strong rate regulation will lower premiums, give insurers incentives to cut spending and save health reform," said Balber.
On Monday, the U.S. Supreme Court will begin hearing oral arguments in a case that will determine whether the law's mandate that individuals purchase insurance violates the Constitution. Regardless of what the court decides, the experience with health reform in Massachusetts shows that consumers will need the protection of rate regulation to hold down insurance prices, said the group.
Consumer Watchdog released a report last year demonstrating how rate regulation has begun to curb insurance premiums in Massachusetts, where the mandate that people buy health insurance -- the model for the 2010 federal reform law -- failed to control costs. Other states that instituted or strengthened state laws requiring rate review and approval of health insurance rates, including New York, Oregon and Maine, have also seen cost-control results. States without regulation of health insurance rates have seen massive and unjustified rate increases take effect with no power to stop them.
A new report from the California HealthCare Foundation finds that 38% of Californians say the cost of their health insurance went up in 2011, and 37% delayed getting health care they needed because of costs.
"The reality is that consumers will not purchase insurance they cannot afford, and insurance prices become more out of reach for families every year," said Balber. "Experience in states from California to New York has shown that rate regulation is the only way to force insurance companies to open their books, justify spending, and block excessive profits."
The Centers for Disease Control and Prevention reported last week that 1 in 5 Americans are burdened by medical debt and half of them are unable to pay the debt at all. Health insurance premiums in California increased at a pace five times the rate of inflation in the last decade, according to the California HealthCare Foundation.
SuperPACs. They've changed the political landscape, for better or worse. Mostly worse. Now, here in California, Independent Expenditures have pretty much had the same leeway as SuperPACs do on the federal level for years. But the stakes for the presidency are worth, apparently, far more for corporate special interests and billionaires than control of our Legislature. Apparently.
But, this week the Assembly joined several other states in calling for the overturning of Citizens United:
The California Assembly yesterday approved a resolution urging Congress to overturn the 2010 U.S. Supreme Court decision in Citizens United v. Federal Election Commission. The split decision helped give rise to super PACs by allowing unlimited contributions from corporations and unions to attack or support politicians, as long as the committees don't coordinate with candidates. The California bill, AJR 22, is part of a campaign to pass such resolutions around the country.(CalWatch)
This is a noble sentiment, and I applaud the Assembly Democrats for making it. However, let's be real here. The Supreme Court, with its conservative core, isn't particularly interested in seeing a return of regulated campaign finance. Since the 1976 Buckley v. Valeo case, it has all been a big race to deregulate campaigns. SUre, there have been fits and starts of trying to come up with some way to control spending. To find some way to equalize the voice of the people, so that the rich don't hold vastly more power than those who can't afford to buy nationwide TV spots.
But that hasn't happened. Overturning Citizens United is an important step. However, as the "Move to Amend" groups are pointing out, the key underlying distortion is that for some reason the Court thinks that money is speech, and that corporations are people. It isn't, and they aren't.
One would think that in a democracy, the preferences of voters would drive political analysis. If voters abandoned one of the parties in droves to the point where that party became irrelevant, it would be a sign of a healthy political system that was adaptable and flexible to changing public views. If, however, one party became massively unpopular yet still wielded power and influence, that would be the sign of a failing political system - one that did not reflect the views of a democratic people.
In California, we have witnessed the long yet inevitable death of the Republican Party. Driven by a base that hates everything about 21st century California, from its diversity to its social and economic values, California Republicans have made themselves irrelevant by their refusal to abandon that crazy base or their own unpopular ideologies.
They lost every statewide election in 2010. They have not picked up a Congressional or legislative seat from Democrats in nearly a decade. The independent redistricting process found that the previous lines had been gerrymandered for Republicans and when they produced a fair redistricting, Republicans faced the loss of numerous seats. Republican party registration has been in decline for years. And the last time Republicans controlled the Legislature, the Beatles were still making records together.
There's nothing inherently wrong with that. California Republicans do not reflect the values or desires or diversity of their state and so they are a dying party. Parties that get out of step with their electorates die - it has happened before (Federalists and Whigs aren't on the ballot) and more importantly, it is a good thing. It is a sign that democracy still works, even in a state with serious structural problems.
Yet it is wrong if you are someone like George Skelton who prefers to believe that a healthy democracy requires not a party system that reflects voter preferences, but an artificial one that represents left and right equally, even if the right has been rejected by the state's voters. In his column in today's LA Times, Skelton sees it as bad for democracy that the right is no longer part of governance in this state - even though voters have made it absolutely clear they want nothing to do with them:
A Democratic governor - basically a moderate - doesn't find it worthwhile to dicker with conservatives. Brown futilely tried for several months last year to reach a deal with Republican lawmakers in which they'd provide the necessary two-thirds legislative vote to place a tax measure on the state ballot.
Republican leaders wouldn't negotiate at all. A handful of unranked GOP senators agreed to talk. But for whatever reason - Brown wouldn't cross labor, Republicans feared anti-tax demagogues - bargaining broke down.
So Brown went the signature-collecting initiative route. To achieve his goal of placing a potentially winnable tax increase on the ballot, the governor felt compelled to deal with the far left. The right - the GOP - was irrelevant.
That's unhealthy in a democracy. And it's nobody's fault except the hard-right GOP's. The party allowed itself to become so weak in California that it has little to offer Democrats in bargaining. And what it does have, it refuses to offer.
This is absurd. The only reason Brown is going to the ballot is because of the undemocratic rule requiring a 2/3 vote of the legislature to raise taxes. Without that, Brown could have passed a tax increase in the legislature (as the Constitution intended) or he could have put something on the ballot for voters directly.
More importantly, there is nothing at all unhealthy about refusing to negotiate with a party that has been consistently rejected by California voters. If Republicans had made big gains in 2010, if they were a growing rather than a shrinking party, then maybe Skelton might have a point that they've earned a role in negotiating a ballot initiative.
Californians have made it clear they don't like Republicans and they don't like right-wing ideology or values. They have consistently rejected them. That's true of tax policy, where local tax increases routinely pass, and where most receive 50% of the vote even if passage requires the undemocratic 66.6% mark. The debate in California is about which taxes are the right ones to levy. To Republicans, the debate should be about whether any taxes at all should be levied.
But voters have rejected that too - Meg Whitman promised no new taxes and she lost to Jerry Brown by 13 points. Brown promised "no new taxes without voter approval" - indicating he was indeed open to tax increases - and is now governor.
Skelton's focus on an artificial and obsolete left-right equality means he doesn't grapple with the more interesting and relevant questions as to why Republicans and the right are dying in California. Just 20 years ago right-wing politics was quite viable in the Golden State. California was a swing state in the 1992 election, after having voted for Republican presidential candidates in each of the past five elections. In 1994 Republicans re-elected a right-wing governor, narrowly won the Assembly, and came close to taking the Senate.
It's been all downhill since then. The 1994 victory came by rallying whites against Latinos. But in the subsequent 20 years Latinos have soared in population and gotten politically organized to oppose the right and the Republicans. Many conservative whites left the state and those who remained have steadily grown more progressive.
California has changed, and its political system and its parties ought to change with it. If a party refuses to change and adapt, then that party should rightly suffer the consequences at the ballot box. That's exactly what has happened to the Republicans. And that means they have lost any claim to playing a role in the governance of this state.
Ultimately, this raises the question of whether Skelton is still a useful political commentator on California issues. He clearly has a lot of background and expertise. But he also seems to not understand modern California. Until he realizes that the death of the Republican Party is a healthy thing for democracy, he's going to keep advocating for unhealthy political practices merely out of a misguided desire to uphold political balance at the expense of political reality.
It's hard to say which has been more harmful to the body politic in this country: the extremist tilt of conservative Republicans, or the crowd of aloof both-sides-do-it anti-partisans who give them cover. Normally the latter are confined to the traditional media, who follow closely in the footsteps of their patron bipartisan saint David Broder. Conservative extremists in elected office and partisan think tanks move on apace with their agendas; Democrats and even some progressives bend over backwards to give them most of what they ask for, in spite of the awful nature of the policies being espoused; conservative extremists smell weakness and demand even more; negotiations break down; and the traditional press tut-tuts over the horrible "partisanship" of it all. The stories written by these press flacks heave exasperated sighs at both parties for the futility of the debates, while covering the actual details of the policy arguments, the popularity of the proposals involved, and the depth of the actual concessions from each side with all the rigor of a children's pop-up storybook. Jackie Calmes' now legendarily terrible piece in the New York Times about the deficit reduction debate last year has become something of an archetype for this sort of vapid reporting.
Unfortunately, the passage of the top-two primary in California has created a new hybrid breed of anti-partisan politician. This relatively new species seeks higher office by attempting to marginalize both parties with the sort of detail-free bipartisan platitudes which the establish press has made its hallmark.
Case in point: Linda Parks, candidate for California's new 26th Congressional District. Parks is currently the 2nd District County Supervisor encompassing much of Thousand Oaks and the surrounding areas. In 1996 she switched her registration from Democrat to Republican in order to win elected office in the mostly Republican district. She has a decent environmental track record, and is a moderate Republican swing vote on the Board of Supervisors. The local Republicans have attempted several fierce primary challenges against her, all of which failed due to Democratic crossover support (the district's registration makes it very difficult for an actual Democrat to win there.) However, there was little chance for her to advance higher than the Board of Supervisors due to a lack of support for her in either Party.
But now Ms. Parks has seized on the top-two primary system to run for Congress, courting the Decline-to-State vote while marginalizing both parties and maintaining a conveniently substance-free platform. Because Jerry Brown signed a law recently dictating that the ballot must reflect the Party in which one is registered, Linda Parks re-registered with no party preference a few weeks ago. The June ballot for this majority Democratic district will now have four Democrats (at least two of them conservative), a conservative Republican state senator named Tony Strickland, and the "non-partisan" former Republican Linda Parks. If the Democrats split their vote, it's entirely possible if not probable that the November run-off in this Democratic district will lack a Democrat entirely, and be a face-off between Parks and Strickland. Fortunately, fantastic progressive Assemblymember Julia Brownley is running for the district, but it's no guarantee she'll make it past June without a lot of help.
Combined measure raises hope for a progressive victory
by Brian Leubitz
Governor Brown for a long time has known, and publicly stated, that he wanted to eliminate the other competing revenue measures. When he wasn't able to do it by sheer publicity, apparently he found it necessary to strike a deal:
After weeks of battling in public and negotiating behind the scenes, Gov. Jerry Brown and the California Federation of Teachers have reached a tentative compromise on a November tax initiative, sources close to the deal said.
As currently structured, the deal would result in a smaller sales tax hike and larger tax increase on the wealthy than the Democratic governor wanted. CFT had been circulating an initiative with no sales tax hike and a two-step increase on earners starting at $1 million.(SacBee)
Now, Molly Munger still has her revenue measure that would raise taxes on pretty much everybody. And considering she just dropped another $300K into the account, it doesn't seem like she has any interest in backing away now. It certainly doesn't seem like she's posturing, but considering where her measure is polling, it is a long shot at best.
CFT and the Courage Campaign worked quite hard on this more progressive Millionaire's tax, and they both deserve a lot of credit for pushing the Governor on this.
When Vallejo was looking at bankruptcy, it still seemed a little taboo. There was a stigma attached. However, since then, municipalities, especially when right-wingers are involved, figured out that municipal bankruptcy is a great way to break the back of the public employees. And, so hooray, they are becoming more acceptable. Stockton is already considering it, and now add Fresno to that mix:
Fresno Mayor Ashley Swearengin on Monday warned that the city is in "severe financial stress" that demands immediate action and presented a 10-year plan calling for more concessions from city workers.
But the presidents of the city's two public-safety unions said they sense Swearengin is being overly dramatic for political reasons, and urged the public to get all the facts before choosing sides.
Fresno's budget season has come early this year, and it's already turning into a war.
At a morning City Hall news conference where she was joined by City Manager Mark Scott, Swearengin warned that "there is no Plan B" to the cost reductions, and Scott warned that even bankruptcy could not be ruled out if expenses don't come down.
"It is not in our employees' best interest for their employer to be so financially unstable," Swearengin said. "I hope they will see that."(Fresno Bee)
The city is facing a $15mil shortfall in the next fiscal year, doubling a few times over in the next 5 years. For a city like Fresno, this is a really big deal, and changes they way they provide services. At the same time, this isn't as existential as Mayor Swearingen is making it seem. This is a negotiation, and cities have discovered that they have a nuclear weapon in their pocket that they didn't know about. And, oh, look, at that...it's a nuke, it sure would be bad if that went off in here, wouldn't it?
Mayor Swearingen isn't necessarily a right-winger. She's hardly a progressive, but not one to really be pushing the ball forward too much on the big conservative issues. But, perhaps that tells us more about the role of muni bankruptcy now that is being used in this situation. Fresno seems unlikely to ever get there, but anything to beat down the unions, I suppose.
Fortunately after the Vallejo bankruptcy, the Legislature passed, and the Governor signed, AB 506 that requires a mediation process before they can actually declare. It's something of a credit counseling service, that brings the City and the creditors together to work things out before the situation becomes a toxic waste site for future credit for the relevant city. It still isn't as restrictive as some other states are with their municipalities, but it was a step forward from the old situation of playing with the nukes out in the open. Whether this will actually prevent bankruptcies is still to be determined.
Closure of mail processing centers means mail could take days longer in some locations
by Brian Leubitz
In case you haven't watched the dramatic saga that is the US Postal Service, well you should check in on that. There is the sensational story of the members of Congress that are super excited that their union employees will be laid off, and are fighting the pension overpayment issue. But, for electoral purposes, this message from SoS Debra Bowen is important:
Unfortunately, a U.S. Postal Service (USPS) plan to shut down 223 big mail processing hubs across the country and 14 here in California - including the one located in Redding - threatens to disenfranchise millions of Californians who vote by mail. ... By law, late ballots can't be counted; postmarks aren't enough.
The USPS asserts the closures won't affect your ballot, but its future best hopes do not coincide with the current reality voters and elections officials have already witnessed in California. When mail facilities closed last year in Monterey, Ventura, and Yuba counties, officials conducting small local elections there reported mail that used to take one to three days to deliver was instead taking five to seven days. (Redding.com)
Many voters use the last weekend to vote their ballots. If the closures go ahead, there is a strong chance that these voters will be disenfranchised. No matter which side of the political spectrum on which you reside, this is seriously troubling. The post office, Congress, and the State need to find a way to ensure that voters aren't losing their votes because the post office is having some money issues.
Yesterday I mentioned some positive economic signs, and today we get some negative numbers:
California revenues missed the mark in February by 3.2 percent, or $146.3 million, state Controller John Chiang said Monday.
Chiang, who manages the state's cash, said the shortfall was likely due to a spike in tax refunds going out earlier than expected in February. Income tax receipts were 5.7 percent, or $99.9 million, below the Department of Finance's projection.
Gov. Jerry Brown and state lawmakers are anxiously awaiting tax receipts from March and April, two significant revenue months as taxpayers file their returns. The Democratic governor has proposed a budget to close a $9.2 billion deficit, but the nonpartisan Legislative Analyst's Office has suggested that Brown's estimates are overly optimistic and that the deficit is likely higher than that figure.(SacBee)
As mentioned, the big tax figures are going to be the March and April figures, so no need to panic just yet. However, with everybody on pins and needles for the smallest bit of data, this made a ripple in Sacramento. Don't expect anybody to let the panic button escape their direct line of vision anytime soon.
The Board of Equalization has access to a veritable smorgasboard of data that any geek would salivate over. Unfortunately you normally have to do a bunch of digging to find the stuff that might be of interest outside your traditional nerd circles. However, the following two sentences might interest a few folks:
The Board of Equalization on Friday estimated that taxable sales in California rose 7 percent in the fourth quarter of 2011 from the same period of 2010.
The estimate was based on early calculations of cash receipts. It provides fresh evidence that the state's economy is strengthening.(SacBee)
Also of note, the 2010 Q4 sales tax data was up from 2009 about 7%. While these numbers are good, 2007-2009 were so bad that we can't paint over them in a few good quarters. That being said, the economy is on the right track. There will be no next big bubble to put us back in the boom times, but we're coming back. And perhaps slow and steady isn't really so bad.
But, I think I might know a few folks at OFA and the Governor's office who are wishing for those numbers to creep up a little faster. These improvements don't break us out of the woods for the budget, but perhaps voters might be a smidge more likely to vote YES on revenue in November if the economy has shown positive growth for a few quarters.
Here are the updated districts in my "Outlook" series. I replaced the 2008-President numbers with a "Cook PVI" based only on 2008. With this number, calculating the "Partisan Factor" (PF) became a bit easier, simply averaging the CPVI, 2010 Governor and Senate races, and the difference between the DEM and GOP registration numbers. The PF's changed slightly, but the overall numbers for U.S. House, State Senate, and State Assembly remain the same.
For the 2010 races, the numbers represent the difference between the parties given their share of the 2-party vote. For example, in CA-03, Fiorina won 51-49 and Brown won 53.8-46.2.
Poll shows Californians still think we are in a recession
by Brian Leubitz
Technically, we are no longer in a recession. All of the economic data shows as much. However, that doesn't mean all that much for Californians suffering under weight of the worst economic situation since the Depression. Yes, people are hiring, but not fast enough. Despite the economic data, most likely voters (84%) believe that the state is in a recession. Nearly half (48%) say the recession is serious. And that is going to play havoc with the Governor's revenue measure.
While a strong majority of likely voters (78%) describe the state budget situation as a big problem, slightly more than half (52%) say they would vote yes on Governor Jerry Brown's tax initiative when they are read the ballot title and a summary (40% no, 8% undecided). Most Democratic likely voters (71%) would vote yes, most Republicans (65%) would vote no, and independents are more closely divided (49% yes, 41% no). Because this is the first time PPIC has been able to ask about the governor's proposal using the ballot title and a summary, direct comparison to previous surveys is not possible. However, past surveys found majority support for his plan to temporarily raise taxes (68% January 2012, 60% December 2011).(PPIC)
The Millionaire's Tax supporters are scheduled to release their own poll showing stronger support this week. Just what those numbers say could mean that the ballot looks very different in November than what we expected six months ago.
Speaking of the ballot, the two June propositions are showing strong early support. The term limits measure, which changes the term limits for future legislators to 12 years for both houses, is starting at 68% support, while the cancer cigarette tax is at 67%. However, wait for the No campaigns to come online before you really start analyzing too deeply.
On an unrelated note, the poll also showed increased support for marriage equality:
A number of social issues are being debated this election year. Californians' views have undergone a marked shift on one issue: same-sex marriage. Today, 56 percent of likely voters favor allowing gay and lesbian couples to legally marry-up from 47 percent in October 2008, just before voters passed Proposition 8, which banned same-sex marriage. Among registered voters, majorities of Democrats (72%) and independents (56%) today favor legalizing same-sex marriage. Most Republicans (61%) are opposed. Support has grown in most political and demographic groups since October 2008. It is up 16 points among Democrats (56% to 72%), 11 points among Republicans (23% to 34%), and is similar among independents (53% to 56%). Support is up 10 points among Latinos (36% to 46%) and 7 points among whites (50% to 57%). Across age groups, support grew 10 points among those age 18-34 (53% to 63%), 13 points among those 55 and older (34% to 47%), and is similar among those age 35-54 (45% to 48%). Among evangelical Christians, support increased 15 points (21% to 36%).
Last week, the U.S. House of Representatives approved H.R. 1837, a federal water management bill targeting California. The bill would override state law to favor certain powerful water users - specifically agriculture.
The bill still needs to pass the Senate before going to President Obama, and both of California's Senators have vowed to fight its passage. If it were to pass, it would disregard decades of collaboration between various stakeholders in California.
At risk are:
- efforts to restore the Bay Delta to help prevent a total collapse of the fish and other wildlife populations that rely on it;
- water conservation measures; and
- environmental protections for all Delta and Central Valley rivers.
The vote was highly partisan, with Republicans (ironically) pushing through this bill ignoring state rights in a vote of 246-175. Other states including Colorado, Wyoming, and Oregon stood in opposition to H.R. 1837, recognizing that it would set a precedent allowing Federal law to usurp state control over water.
One of the most outspoken opponents of H.R. 1837 is California Congressman John Garamendi. As President Clinton's former Deputy Interior Secretary and as a member of the House Natural Resources Committee, Garamendi is intimately familiar with California water policy. According to the Congressman:
"This legislation turns upside down 150 years of California water law and court decisions, creating an unprecedented theft of 800,000 acre feet of the Delta water by South-of-the-Delta water contractors. All of the Sacramento-San Joaquin Delta and its watersheds are contained in the state of California. The federal government has shown deference, respecting California water rights and the constitution. This legislation usurps California's power to determine its own water and economic destiny."
Large protest at Capitol draws attention, results unclear
by Brian Leubitz
If you have been paying attention, you have noticed the appalling cuts that the state's university systems have taken. In fact, a recent study showed that for most middle class students, Harvard is now more affordable than the CSU system. No matter what your goals are for the CSU system, this is a very bad thing. It is not functioning as a way to improve the lives of middle and lower class Californians, and it is not providing the resources for economic development that it should.
And so we get yesterday's protests from students of both university systems and their supporters:
Another day of protests played out at the state Capitol on Monday with thousands of demonstrators denouncing soaring higher education costs and a select group spending most of the day inside the rotunda to achieve one goal: getting arrested.
**** *** ****
The main group of arrestees, who will be charged with trespassing, apparently felt they had made their point, although it was unclear at times exactly what that was.
The ballooning cost of attending public colleges and universities in California was the primary focus, but at times the leaderless Occupy movement supporters discussed issuing demands on a range of issues, from the repeal of Proposition 13 to being allowed to use Capitol restrooms during their sit-in.(SacBee)
Occupy is very good at actions and getting attention. But in this case, and in others, the message got overpowered by the theatrics. And maybe that's fine, as there are more than enough wonks in Sacramento. Maybe the theatrics will be just the thing to open a few eyes.
But those eyes are just as recalcitrant as ever. The Republicans just look out on this, behind their anti-tax pledge suits, and glaze over. Will this be the action that breaks through? Or will there be more actions until it does? This protest was something of an organizing nightmare. But whether the state can continue to ignore the protests, when the function of our higher education systems continues to dwindle, is the larger question.
But as Dan Walters points out, higher education has taken a drubbing:
The thousands of college students who marched on the Capitol on Monday to protest rising fees and decreasing state support had a point: Higher education has taken a disproportionately heavy drubbing in recent years as politicians attempted - and largely failed - to balance the state budget.
The Legislature's budget analyst has calculated that under Gov. Jerry Brown's 2012-13 budget, state general fund spending on the University of California, the state university system and community colleges will have dropped 21 percent in five years, while fee and tuition revenue will have increased by 64 percent.(Sacbee)
There are a number of reasons for this, but you can mostly chalk it up to the fact that cutting higher education is the easiest. It involves the fewest lawsuits, and so the students get screwed over and over again. It is just one more piece of the dysfunctional governance by committee that gives the legislature strange cues.
We need more revenue, and we have two initiatives that would do that. However, the Millionaire's tax would actually get some of that to higher education for a change. Gee, isn't that a novel idea.
Ventura County, California was long represented by useless back-bencher Elton Gallegly (R-CA-24). Now he's retired, the lines have been redrawn to a slight Democratic advantage, and Democrats should have one of their best chances of picking up a House seat...unless vanity candidates, ostensibly Democrats, give the seat to the Republicans. The Democratic Congressional Campaign Committee lists the newly renumbered CA-26 as a "red to blue" race.
Below the fold, a case study in California's new "top two" primary rules, and in ego.
There has been much discussion on whether to tax services in the same way we tax goods. It could bring in several billion dollars of revenue in new sales taxes. However, before we even get there, the question of what is a "good" and what is a "service" acts as a threshold question.
And Dan Walters found one particular good/service question to address:
Ordinary computer users continue to pay taxes on off-the-shelf software but custom programs designed for big corporate and government customers, some costing millions of dollars, are exempt.
Why? The sponsoring legislator, John Vasconcellos, a Democrat who often railed about cuts in state spending, offered a lame rationale about software being mostly services, but the real reason was that the industry had political clout and used it.(SacBee)
And as Walters points out, this question alone could mean nearly two hundred million of revenue annually for the state. On one level, it is hard to blame Sen. Vasconcellos for the loophole, in a hate the game, don't hate the player sort of way. But, the state has been suffering from these little injuries as we seek to balance the budget, and they add up.
Walters calls for tax reform generally, and that isn't necessarily a bad idea. But, for many years that has just been a code word for reducing progressivism and putting more of the burden on the middle class. If we can clean up the tax code, great, but we have to be careful about how we go about it. We must ensure the protection of a consistent revenue stream while also avoiding a shifting of the bill away from those who can most afford it to those who can't.
