Inflation Is a Tax On Us All

January 7, 2022 By Jon Coupal 1 Comment

Pinned on my office wall is a Zimbabwe $10,000,000,000,000 note. (That’s 10 trillion for those of you tired of counting zeroes). The currency is real, although Zimbabwe’s default currency is now the U.S. dollar. The central bank of Zimbabwe issued these $10T notes during the last days of hyperinflation in 2009, and they barely paid for a loaf of bread.

Ironically, you can now purchase one of these bills for about $27 U.S. dollars because they serve as collectors’ items or, more importantly, as a physical representation of the evils of inflation. Every economics professor in America should own one to show to their students on the first day of Econ 101.

Milton Friedman explained that inflation is always “a monetary phenomenon in the sense that it is and can be produced only by more rapid increase in the quantity of money than in output.”

Inflation hits everyone, but especially the middle class and those on fixed incomes. Inflation is a threat to the middle class because price increases reduce purchasing power so that the things that the middle class could previously afford are now out of reach. This pushes the lower rungs of the middle class out of the picture.

The disproportionate impact of inflation on the middle class relative to the wealthy may seem counterintuitive because the inflation rate — projected now at over 6% — is the same for everyone. But while all suffer the same rate of inflation, those with lower incomes tend to have lesser means of adapting to the increases in consumer prices. The suggestion from Biden’s White House chief of staff Ron Klain that inflation is a “high-class” problem is insulting.

Click here to read the full article at the Whittier Daily News

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California Is Swimming In Money. How Will Gavin Newsom Spend California’s Budget Surplus?

January 7, 2022 By Sophia Bollag 1 Comment

For the second year in a row, California’s budget is poised to avoid economic fallout from the coronavirus pandemic, leaving Gov. Gavin Newsom with a good problem: how to spend a projected $31 billion surplus.

By Monday, Newsom must unveil his proposal for the 2022-23 fiscal year, which starts July 1. His proposal will kick off months of negotiations with lawmakers, who face a June 15 deadline to pass a budget.

Analysts predict the state’s highest earners will continue to prosper and pay high taxes, resulting in another big surplus. The budget Newsom signed last summer included a projected $80 billion surplus, which allowed lawmakers to provide COVID-19 relief and send stimulus checks to millions of Californians.

The nonpartisan Legislative Analyst’s Office has recommended that lawmakers appropriate no more than $3 to $8 billion in new ongoing spending, and use the rest on one-time expenses that won’t force cuts in the future when there’s less cash available. The office also advocated for lawmakers to add to reserve accounts in anticipation of leaner budget years in the future.

Newsom has said he wants to use most of the extra money for one-time spending on areas including budget reserves, pension debt and the social safety net. He has also suggested more stimulus checks could be on the table.

“I think that’s the approach: fiscally disciplined, recognizing this is not a permanent state, recognizing the one-time nature of most of these dollars,” Newsom said in November.

MORE POLICE FUNDING

In November, after a spate of high-profile retail thefts, Newsom announced that his 2022 budget proposal will “substantially” increase funding for cities to crack down on organized retail crime.

Assemblywoman Cristina Garcia, who leads the Assembly Budget Subcommittee on Public Safety, said she thinks addressing retail theft makes sense, but wants to see specifics.

“We need to do something to deter those crimes and hold people accountable,” the Bell Gardens Democrat said. “I want to see the details and see that the funding is used effectively and not just padding departments.”

She said she also wants to see more money in the budget to change a culture of hazing in California prisons.

Last year, The Bee reported on two California State Prison-Sacramento officers who died after reporting harassment, hazing and corruption by their colleagues. One officer’s death was ruled a suicide. The other died of a fentanyl overdose. Since then, the state has moved to fire two officers and discipline 10 other employees at the prison.

Garcia also pointed to the case of a prisoner who was tortured and beheaded by his cellmate, which officers failed to report for hours.

“Breaking the law and being in jail shouldn’t be a death sentence,” Garcia said. “Being an officer shouldn’t be a death sentence either.”

MORE MONEY FOR SCHOOLS

Newsom intends to steer more money toward screenings for dyslexia and add more funding for early education, he told The Sacramento Bee in an interview last month. Newsom has dyslexia and wrote a book last year inspired by his struggle to read because of the condition.

He said his proposal will aim to help kids who “start behind.”

“We did a lot more last year than we did the prior year, and this year’s budget’s gonna see a hell of a lot more, forgive my language,” he said. He also said he wants to expand literacy programs through First 5, a state program for kids under 5.

Click here to read the full article at the Sacramento Bee

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One Indicator Shows California’s Recovery Is Incomplete

December 14, 2021 By Kerry Jackson 3 Comments

Despite assurances that California’s economy is a treasure to behold – “We are world-beating in terms of our economic growth,” says Gov. Gavin Newsom – the post-pandemic recovery has a gaping hole in it. State unemployment is the highest in the country.

Federal data for October show that the jobless rate improved from September’s 7.5% to 7.3%. That puts the state in a last-place tie with Nevada, and far off Nebraska’s best-in-the-nation 1.3%.

Texas and Florida, rivals in many ways, posted far better numbers in October, 5.4% and 4.6% respectively.

The Bureau of Labor Statistics also reports nine of the 15 metropolitan areas posting the highest jobless rates in the country are in California. This includes the Los Angeles-Long Beach-Anaheim metropolitan area statistical area, which has an unemployment rate of 7.1% – 373rd in a list of 389 metro regions.

Newsom can brag about California “dominating in every category,” and being home to the “fastest growing companies, the most influential companies in the world,” as he did at October’s California Economic Summit.

But an economy that has a jobless rate as high as this state’s isn’t fully healthy, a fact that hasn’t gone unnoticed. The Public Policy Institute of California’s November survey found that 52% expect bad times ahead, while only 47% expect good times. Four months earlier, the outlook was just the opposite: Only 44% expected bad times ahead, while 54% thought the future looked good.

Legendary California journalist Dan Walters recently pointed out that eight of the 10 states with the lowest unemployment rates in October were red states, and nine of the 10 states with the highest jobless rates were blue. It’s a sharp reminder that public policy plays a substantial role in joblessness.

“It could just be coincidence, of course, but maybe those red states with low unemployment rates have regulatory and tax policies that encourage job-creating investment and maybe California and the other blue states with high jobless rates are perceived as being hostile to business,” he says.

Walters was being charitable. Taxes and regulation always impact job numbers, and both are uniquely heavy burdens for California businesses. Regulation stifles innovation, which promotes job growth, and we know taxes negatively affect employment because lawmakers say as much when they hand out tax breaks to companies expecting them to put people to work.

Lockdowns also figure in the state’s high jobless rate. Many businesses that were forced to close never reopened, and some that did still aren’t operating at full capacity. By October, the state had regained only a little more than two-thirds of the 2.7 million jobs that were lost due to the lockdowns.

California policymakers have come to think they can do whatever they want, and the hard work of previous generations that built this state will save them from the negative economic consequences that spin off their plans. It doesn’t work that way, though. There’s too much garbage in, garbage out in Sacramento.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

This article first appeared in the Pacific Research Institute

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It Is Forbidden

December 2, 2021 By Kerry Jackson 6 Comments

From ketchup to construction materials, California lawmakers’ impulse to ban is inexhaustible.

There is nothing so useful, so convenient, so inoffensive that it can’t be banned in California. Los Angeles, the largest city in a state that started the fast-food boom, has decided that condiment packets should be treated as a suspicious substance. They haven’t been banned outright, but customers can get ketchup, mustard, relish, and other spreads in their takeout orders only if they request them. The ordinance applies to restaurants with 26 or more employees (apparently a magic sum in the Golden State). It also forbids workers from handing out napkins and plastic utensils with takeout orders unless customers ask for them. By April 2022, all L.A. restaurants will have to comply.

Two months later, the entire state will come under the same limitations. The recently passed Assembly Bill 1276 prohibits “a food facility from providing any single-use foodware accessory or standard condiment, as defined, to a consumer unless requested by the consumer.” The law will apply to both dine-in and takeout orders.

Somehow, we are told, California’s inexhaustible urge to ban virtually any item humans have found worthwhile will help the world avoid the disaster of man-made global warming. “If we are to overcome the extreme climate challenges we face, we will have to alter or otherwise transform all our habits relating to fossil fuel products, including plastics, and our essential natural resources, like forests,” said L.A. councilman Paul Koretz, who coauthored the city’s ordinance. (Note: California produces only about 1 percent of global greenhouse emissions.) Or perhaps the ban will just help clean things up, since Californians are evidently careless and unrepentant litterbugs. “Plastic utensils and condiment packets create unnecessary trash, pollute waterways and harm marine life. CA is changing that!” tweeted assemblywoman Wendy Carrillo, co-author of AB1276, last month.

Condiments, napkins, and plastic utensils are joining a lengthy list of consumer products already banned or restricted, including single-use plastic bags, plastic straws, Styrofoam food containers, sales of new gasoline- and diesel-powered automobiles (to end by 2035), new gas stations (in Petaluma and Novato), natural gas connections in new homes (which began in Berkeley), and plastic shampoo bottles in hotels.

Just as rust never sleeps, neither does the political impulse to forbid. In Los Angeles, for instance, the city council’s Public Safety Committee has approved a plan to expand Fire District 1, a tract that includes many of the city’s high-density commercial zones. The move “would effectively ban timber and wood-frame construction in much of the city,” says Pacific Research Institute fellow Nolan Gray. The prohibition would include “many rapidly growing neighborhoods near transit,” forcing developers “to use concrete and steel, building materials that come with substantial added financial and environmental costs.” The stated intent is to improve fire safety, but the move will provide no clear benefits while raising construction costs, Gray says. A Los Angeles Department of Building and Safety review determined that expanding Fire District 1 would raise building material costs by at least 10.6 percent and possibly as much as 47.1 percent. The sharply rising home costs that are sure to follow will price even more people out of a housing market that’s already among the nation’s most expensive.

Unlike most California prohibitions, the building-material ban isn’t a vehicle for virtue-signaling. According to Gray, it’s “being advanced by and for business and labor interests in the concrete industry, which has aggressively promoted the measure as a way to ban competition.” This comes as no surprise, since California policymaking is often shaped by powerful union interests. But bans are bans, and those who must live with their consequences don’t much care what motivates them. For them, the hassle is the same.

This article was originally published on the City Journal

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Can Taxpayers Be Grateful This Thanksgiving?

November 25, 2021 By Jon Coupal 2 Comments

As inflation takes a bigger bite out of your turkey than you do, it may be hard to find reasons to be grateful. But the truth is we still have much to be thankful for this Thanksgiving.

Here’s a few reasons why.

In the Legislature, success is often measured not in how many pro-taxpayer bills are passed but by how many anti-taxpayer bills are stopped. And, in that regard, this past year was better than expected.

A bill that would create a California Universal Basic Income and proposed to pay for it either through a value-added tax, raising corporate taxes or implementing a tax on services died in committee. Another bill that would have created a wealth tax failed to receive a hearing before deadline. An attempt to raise the already highest in the nation income tax rate for Californians making over $1 million to as high as 16.8%, was held in its first committee. A bill to create a single-payer healthcare system, and double the state budget in the process, was tabled.

In all, eleven bills HJTA opposed failed to make it out of the legislature. Five bills we supported were signed by the governor. One bill we opposed was vetoed by the governor. Five bills we supported failed to get out of the legislature. Eleven bills we opposed were signed by the governor and one bill we supported was vetoed by the governor.

HJTA went 17 for 34 this legislative session. We batted .500. Not bad for a taxpayer group in California. For that, we should be grateful.

Click here to read the entire article at the Press Telegram

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California Analyst Predicts $31 Billion Budget Surplus

November 20, 2021 By Adam Beam 2 Comments

SACRAMENTO, Calif. (AP) — California is on track to have so much money that state officials will likely have to give even more of it back to taxpayers to meet constitutional limits on state spending, according to a new forecast from the state’s independent Legislative Analyst’s Office.

The state’s annual “Fiscal Outlook,” released Wednesday, predicts a $31 billion surplus for the 2022 budget year that begins July 1. The analyst’s office says state is on pace to have so much money that it could exceed a constitutional limit on state spending by $26 billion over three years. That could require Gov. Gavin Newsom and state lawmakers to either cut taxes, spend more money on infrastructure or — perhaps the most popular choice in an election year — give rebates to taxpayers and spend more on public schools.

“We think it will … turn out to be a pretty significant issue for the Legislature to consider in this coming budget process,” Legislative Analyst Gabe Petek said.

Newsom won’t reveal his budget proposal until January. But on Wednesday, the governor indicated his favored giving some of the money back to taxpayers. That’s what he and the state Legislature did earlier this year, approving rebates totaling $12 billion for some taxpayers in a state budget that was also projected to exceed the spending limit.

“How we framed that historic surplus last year, similarly, we will frame our approach this year,” Newsom said during a news conference at the Port of Long Beach. “I’m very proud of the historic tax rebate last year, and I look forward to making the decision that I think is in the best interests of 40 million Californians.”

California’s tax collections have continued to soar despite the pandemic. From April through June of this year, California businesses reported a record high $216.8 billion in taxable sales — a 38.8% increase over the same period in 2020 and a 17.4% increase over those months in pre-pandemic 2019. Nick Maduros, director of the California Department of Tax and Fee Administration, said it is “a sign that business owners found creative ways to adapt during a difficult year.”

Click here to read the full article at AP

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Parents Taking on the Leviathan

November 17, 2021 By Jon Couple 1 Comment

17th-century theorist Thomas Hobbes argued that members of any distinct society must subject themselves to an absolute sovereign as the only way to preserve their own lives and security. His book, “Leviathan,” reflected the political world view of the age. Proving him wrong was a small group of Puritans who established a tiny colony near what is now Plymouth, Massachusetts.

The term Leviathan as used today in political discourse simply means a large, oppressive government or force, much like the Old Testament monster from which it derives its name. And even though the United States is based on the anti-Hobbesian theory of consent of the governed, there remain large forces that demand submission from citizens.

One of those large forces is the education establishment found both at the state and federal level. Large bureaucracies backed by powerful labor organizations have a vice-like grip on how our children are taught and what they are taught.

But things may be changing. The election earlier this month, more than anything, demonstrated that parents are angrily rejecting the education Leviathan. Republican Glenn Youngkin artfully deflected Terry McAuliffe’s claim that he was a Trump clone. And most pundits believe the deciding factor in the race was McAuliffe’s gaffe saying parents shouldn’t have a say in what their kids are taught. McAuliffe’s terminal case of political tone-deafness is replicated here in California, where the California Teachers Association and its affiliated local branches are increasingly viewed negatively by voters across the political spectrum.

As reported in the Los Angeles Times, the head of the United Teachers of Los Angeles, Cecily Myart-Cruz, claimed that there is “no such thing as learning loss” for students who were forced into remote learning during the pandemic, saying the children learned “survival” and “the difference between a riot and a protest.”

The arrogance revealed by Myart-Cruz might explain why the Los Angeles Unified School District has seen its steepest enrollment decline in 20 years, dropping by more than 27,000 students. Disaffected parents are discovering that, while escaping the Leviathan isn’t easy and sometimes requires sacrifice, the benefits to their children are worth the cost. Charter schools, private schools and homeschooling options have exploded throughout the state.

Click here to read the full article at Daily Bulletin

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Dirty Tricks Used to Increase Your Taxes

November 4, 2019 By Jon Coupal 4 Comments

Perhaps California’s political structure hasn’t quite devolved into the kind of despotic regime like we see in North Korea or Venezuela, but that doesn’t mean we’re not headed in that direction. As reported last week in this column, the attack on Proposition 13 is now in full gear as proponents of the infamous “split roll” initiative are on the streets collecting signatures for their new $12 billion property tax increase on Californians.

The measure, entitled the California Schools and Local Communities Funding Act of 2020, would remove one of Proposition 13’s most important protections, the limitation on annual increases in taxable value, from commercial properties. Proponents of the measure have made it clear that their ultimate objective is the full dismantling of Prop. 13, even for homeowners. Taxpayers and businesses are ready for a tough battle, but there remains an open question about what happens when the other side cheats. Two things happened lately that reflect the tax-and-spend lobby’s “win at any cost” mindset.

First, with an assist from a politically biased politician serving in the Attorney General’s office, proponents were able to secure a one-sided title and summary to the signature petitions.

The title and summary that Xavier Becerra issued on Oct. 17 begins by emphasizing higher funding for education, a main selling point that is popular among voters. This title differs from the original version of a similar measure that highlighted the tax implication for commercial property — something a recent poll suggests would be rejected by voters.

To read the entire column, please click here.

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A Victory for California Taxpayers

August 26, 2019 By Jon Coupal 6 Comments

This past week a direct attack on Proposition 13 was resoundingly voted down by the California State Assembly. Assembly Constitutional Amendment 1 would have changed a key element of Prop. 13 by lowering the current two-thirds vote needed to pass local bonds and special taxes — including parcel taxes — to just 55 percent.

Bond debt and parcel taxes are paid by adding extra charges to property tax bills, sometimes for decades, which are not subject to Proposition 13’s one-percent cap. The two-thirds vote requirement is a crucial taxpayer protection because while everyone gets to vote on these local measures, only property owners pay for them.

If ACA 1 had been approved by two-thirds of each house of the state Legislature, it would have gone on the ballot, where it would have needed only a simple majority to pass. That would have changed Proposition 13 to allow tax increases for anything defined as “infrastructure” to pass with the approval of only 55 percent of the electorate in any (or every) subsequent election.

Taxpayers face a treacherous landscape in California. Legislative Democrats have more than super-majority control over the Assembly, meaning seven Democrats could oppose ACA 1 and it still would have passed. Taxpayer advocates, led by Howard Jarvis Taxpayers Association, were outnumbered by about 15 to 1 in the halls of the Capitol as lobbyists for local government entities including cities, counties, special districts and firefighters raced from office to office looking for last-minute support.

To read the entire column, please click here.

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Government Adds Insult By Cheating On Tax Collections

August 5, 2019 By Jon Coupal 2 Comments

It’s bad enough that California taxes its citizens more than almost all other states, but adding insult to injury, government entities often cheat on the way that they collect taxes.

This happens in several ways. First, there are times when a government entity knows a tax is illegal but imposes it anyway either hoping no one will notice or knowing they can collect tons of revenue while the issue is resolved in court.  This author’s first experience with governments’ complete disregard of the law occurred 25 years ago in the 1994 case of Hoogasian Flowers v. San Francisco Educational Financing Authority.

In an effort to circumvent Proposition 13’s two-thirds voter approval requirement for special taxes, San Francisco created an entity called an “educational financing authority” for the purposes of imposing a supplemental sales tax. Although the Court of Appeal easily saw through the charade and struck down the tax as illegal, the only remedy that was given was a small refund for the handful of retailers who filed the suit. Thousands of businesses never received relief and the city was allowed to keep millions in illegal tax proceeds.

Taxpayers need to remain aware that government entities at all levels have no incentive to make things easy for taxpayers. Just one recent example involves the L.A. County Recorder’s Office and the implementation of Senate Bill 2, which imposes a $75 tax on documents filed in conjunction with real estate transactions.

To read the entire column, please click here.

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