Hurting Business Owners Is No Way To Help The Poor

When George Washington was on his deathbed, his doctors tried to save his life by bleeding him, which was considered good medicine at the time.

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California businesses must feel like the father of our country did when he tried to stop the bleeding but the well-intentioned practitioners wouldn’t be stopped.

With California’s income taxes, sales taxes, energy prices and other costs at or near the highest in the nation, plus a regulatory and legal climate that escalates costs and creates high-risk uncertainties, many businesses have left the state, reduced hiring or cut hours and wages.

California’s poverty rate is 23 percent — 27 percent for children. There are now 12 million Californians enrolled in Medi-Cal, the safety-net health insurance program for low-income people.

This is a crisis, and California has to take action to address it. But we shouldn’t take actions that are inspired by the medical beliefs of George Washington’s doctors.

A proposed ballot initiative called the “Lifting Children and Families Out of Poverty Act” is exactly that kind of action. The measure would open a hole in Proposition 13 and start to draw money out of California real estate valued at more than $3 million.

The proposed mechanism is a property tax surcharge. It would begin at 0.3 percent on assessed property values over $3 million and rise to 0.8 percent on values greater than $10 million. Although it would apply to both residential and commercial property, its greatest impact would be on California businesses.

Property taxes bring in about $55 billion to the state treasury annually, and the state Legislative Analyst’s Office estimates that the surcharge would collect between $6 billion and $7 billion in its first year. But the money would not go into the general fund. None of the cash would be available to pay for Medi-Cal and none of it would be allocated toward Proposition 98’s minimum funding requirement for education.

Instead, the billions would go into a new special fund called the Lifting Children and Families Out of Poverty Fund, which would be used to fund programs and make grants to organizations that provide services.

Which programs? What organizations? Where? These decisions would be made by the California Department of Education. The measure would put the CDE in charge of reviewing plans and annual reports submitted by communities that apply to become “California Promise Zones” eligible to receive money from the fund.

The ballot measure would increase funding for cash grants to the poor and for subsidized tax-refund checks to low-income workers. It would spend billions on subsidized child care, loans for child care providers, grants for students studying to be child care providers, and loan forgiveness for child development professionals. It would also pay for preschool in designated areas, and for home nursing visits to check on families with young children.

About 10 percent of the money raised would be spent on job training, including tax credits for businesses that participate in the training programs.

But education, training and child care, while important, are not going to lift people out of poverty unless they can find good jobs.

A true anti-poverty agenda would be focused on improving the conditions for business expansion and job creation throughout California. It would include tax cuts, an end to lawsuit abuse, and an effort to prune unnecessary regulations, as well as funding for education, job training and child care.

We’ll never cure poverty by bleeding job creators. That’s the medically proven path to the tomb.

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