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Archive for the ‘Parsky Commission’ Category



Parsky Tax Panel: Headed for a Box Canyon?

Thursday, September 3rd, 2009

parskyGerald Parsky, chairman of the bi-partisan panel tasked by the governor to propose reforms for California’s tax structure, has pledged that his group’s complex proposals will be available in draft bill form for public consumption 72 hours before the commission’s next meeting on Sept. 10.

This would be a big improvement, because most of the complex items discussed by the Commission on the 21st Century Economy so far have not been spelled out in detail or offered for adequate public review before meetings.

“We are seeking to craft legislation to reflect the recommendations the commission puts forward,” Parsky told Calbuzz. But, he cautioned, “We’re not here to take the place of the Legislature,” and expects that if the commission proposes any actual laws that the Assembly and Senate would deal with them through normal channels, including committee hearings.

If however, you want any idea what the commission is going to propose – good luck. You can check out the two-pager Parsky likes to refer to here, where all you’re going to find is a PowerPoint presentation with items like:

Personal Income Tax (PIT)
– Simplified Rate Structure (two brackets)
– Standard Deduction
– Itemized Deductions for mortgage interest, charitable giving, property taxes
Note: a condition to the proposal regarding PIT is that all AGI brackets, as shown in our last presentation , will receive a reduction in taxes. If this objective cannot be achieved with two brackets, consideration will be given to other alternative structures

All righty then.

The so-called “Blue Plan,” put forward by some of the Democrats (blues) on the commission to counter the “Red Plan,” put forward by some of the Republicans (reds), is deader than a doornail. However, a proposed “pollution tax” is still under consideration along with a split-roll property tax. But some big guns have come out against both of these elements. And they’re not too crazy about the business net receipts tax – one of the Red Plan’s love children.

Parsky and some of the governor’s appointees want to eliminate the corporate income tax, flatten the personal income tax and generally tilt California’s very progressive tax structure away from its reliance – they say, over-reliance — on the wealthy. Most of the liberals on the commission would go along with some of these kinds of changes – like reducing capital gains taxes – but only in exchange for balancing elements that would not benefit the rich at the expense of the middle-class.

The liberals bolted, for example, when after promising a plan that would be fair to all income levels, Parsky’s team offered a proposal that would dramatically raise personal income taxes on the poor and middle-class while reducing them for the wealthy.

There’s also been some grumbling about the meetings-after-the-meetings Parsky tends to hold, wherein he dismisses the public and the press and then huddles with commissioners to work out the real details. “How are we going to handle this going forward?” we’re told he asked fellow commissioners and staff, after the public and media were ushered away last Friday in Los Angeles.

Now, at least, Parsky has pledged to have actual, detailed, legislation ready for public review before the Sept. 10 meeting. A fancy PowerPoint presentation won’t do. The Legislature doesn’t vote on outlines, it votes on bills. And if Parsky wants his commission to propose boxcanyonambush-275laws, then that’s what has to be on the table.

Increasingly, however, we’re afraid the Parsky Commission is looking like another big fat Schwarzenegger waste of time and resources. Or as one member of the group said of Parsky: “He’s led the commission down a box canyon.”

Calbuzz just doesn’t want to see the public get bushwhacked.

Weekend Swap Meet: Taxes, Death & Sarah Palin

Saturday, August 1st, 2009

carbontaxA bump for Keeley: One largely overlooked finding in news coverage of this week’s much-discussed PPIC poll was evidence of strong statewide support for a pollution tax on carbon-based fuels.

As a political matter, the finding is significant because the California Commission on the 21st Century Economy – aka the Parsky Commission - is considering such a levy as part of a package of liberal proposals, as the group works towards a formal recommendation for reforming state tax policy.

In the poll, 56 percent of those surveyed said they support a carbon tax, with 35 percent opposed. Democrats – 73-to-20 percent – and independents – 52-to-39 percent – both back the idea, while Republicans oppose it 60-to-33 percent.

The carbon tax question was one in a series that PPIC asked to test public attitudes about global warming. Six in 10 Californians believe that the effects of global warming have already begun, while 75 percent say immediate steps are needed to counter its effects.

The poll-takers also asked whether people favor a “cap and trade” system of regulating greenhouse gas emissions. Although Californians also favor such a plan, they do with only a plurality of 49-to-40 percent, with both Democrats and independents backing it by smaller margins than the carbon tax; Republicans oppose it, but like it slightly more than the carbon tax.

fred keeley_0102A tax on carbon-based fuels is one element of a plan for overhauling the state’s tax system that has been presented to the Parsky Commission by Santa Cruz County Treasurer Fred Keeley, a former Assemblyman, who leads the commission’s liberal faction. Keeley’s proposal calls for the “pollution tax” to move inversely with the price of crude oil, in order to put a floor under the price of gasoline.

“As proposed, the fuel tax will help to stabilize state revenues and reduce volatility by providing a steady source of revenue,” Keeley said in a presentation to fellow commissioners. “By supporting the clean energy and transportation industry, which many investors view as the next growth industry, this proposed tax reform will advance California’s role as a leader in the clean energy sector.”

(Memo to Fred: Hey, clean out your cell phone voice mail, man – how are we supposed to get a fresh quote?)

milton-friedman

Shock doctrine: threat or menace? Calbuzz bets that Tom Campbell, the Dudley Do-Right of  California politics, is the only candidate in America to issue a press release in which he gets all misty on the occasion of the, uh, third anniversary of the death of Milton Friedman.

“This Friday would have been Milton Friedman’s 97th birthday,” Campbell announced to the state’s political press corps, many of whose members, remarkably, might have remained otherwise oblivious to the occasion (we name no names). “He passed away in November, 2006, vibrant and insightful to the very end of his life.”

Ah, Milton, we hardly know ye’.

Nothing if not terminally earnest, the Republican wannabe’ governor recounted his long, personal history with the hard line conservative economist, who served as Campbell’s faculty adviser at the University of Chicago, before finally getting around to the political pandering: “On his birthday, it is an appropriate moment…to take a warning from his life’s work about current attempts to inject government regulation more and more into our country’s economy.”

Indeed.

Coincidentally, a very different view of the late Professor Friedman was propounded yesterday by state labor leader Willie Pelote over at California Progress Report.

“…economic shock therapy is based on the theories of University of Chicago economist Milton Friedman, who strongly believed that governments should play no role in the economic sphere other than to protect the rights of property owners…(S)ocieties in which these policies have been enacted are generally characterized by increased poverty, an ever widening gap between rich and poor, and a widespread host of social and economic problems most commonly associated with Third World countries.”

Boy, we just can’t wait for that constitutional convention to Bring Us All Together.

SarahPalinWavingGoodbyePalin Redux: As Politico was reporting Friday that Sarah Palin has decided to stiff  the Simi Valley Republican Women by backing out of her previously announced speech at the Reagan Library (Palin let them know via Facebook), Calbuzz was still trying to get our heads around the erstwhile Alaska’s governor farewell address.

To us, she mostly sounded like your teenager, who wrecks the family car, then insists you should loan it to her again because if she thought she was going to wreck twice, would she even ask?

“It is because I love Alaska this much, sir, that I feel it is my duty to avoid the unproductive, typical, politics-as-usual, lame-duck session in one’s last year in office. How does that benefit you? With this decision now, I will be able to fight even harder for you, for what is right and for truth.”

What…evvverrr…

Fishwrap: eMeg Spends, Steve Spins, Sarah Pales

Friday, July 17th, 2009

megauctionThe road to Damascus: While the Capitol Knucklehead Patrol keeps flailing in their efforts to pass a new budget, Calbuzz — issue oriented and solution driven, as always –- experienced an epiphany about how to stem the tide of red ink: Let’s let eMeg do it.

The campaign of Republican wannabe governor Whitman –- aka The Political Consultant Relief Act of 2010 –- announced this week that the candidate had kicked another $15 million of her own dough into the race, bringing her self-contributions to $19 Large to date.

This works out to $123,376.62 per day (or $5,140.69 an hour) since announcing her candidacy in February, according to sources in the Calbuzz CFO’s office; at this rate, she can pay off the deficit in a jiffy * and save all of us a lot of trouble.

Whitman’s early embrace of the famed Governor Al Checchi strategy seems designed with two basic purposes: 1) to intimidate and demoralize the opposition and 2) to bypass the media, old and new, in controlling the message and introducing herself to voters through a no-doubt stirring set of TV spots, a movie that Californians have seen before but never really warmed to.

For Whitman, the first problem with her Checchi strategy is that one of her primary rivals is Insurance Commissioner Steve Poizner, who made his own pile in Silicon Valley and who keeps assuring us that his campaign will be “fully funded”; in other words, even though he’s currently throwing around nickels like manhole covers, when the deal goes down, he’ll spend whatever it takes.

“This election isn’t an eBay auction and you can’t win by out-bidding your opponent,” cracked recently arrived Poizner flack Jarron Agen. “With the economy in a recession, our message to Meg is: don’t stop at $15 million, spend it all and do it locally.”

Meg’s second problem is that while she seems intent on running a saccharine, Morning in America campaign – “Young voters find inspiration, common ground at San Diego MEGa WOMEN event,” her treacly website proclaims this week – both Poizner and the earnest Tom Campbell seem determined to talk about issues that actually matter to GOP voters.

Poizner noticeably stepped up his substance quotient in recent days, picking a fight with Nancy Pelosi in a speech about water delivered in Firebaugh, which was aimed straight at the heart of the conservative base in the drought-stricken Central Valley, where he also picked up another half-dozen ham and egg endorsements from local mayors, supervisors and tax assessors.

Next he showed up at Thursday’s big meeting of the tax reform Commission on the 21st Century Economy in San Francisco to ally himself with Republican true believers of the Arthur Laffer jihadist brigade: “As Governor, I will cut taxes for Californians,” he said after testifying to the commission.

While his woefully unspecific blanket statement at first glance seems kinda silly, Poizner’s red-meat-and-potatoes pitch is less designed for subtlety and weed whackers than for seizing hearts and minds among the true-believing anti-tax Republican base.

*(Calbuzz truth squad: Actually, if eMeg keeps giving her campaign money at the current rate, she’ll spend about $57 million of her fortune by next November’s election. Our Green Eyeshade Division advises that paying off California’s $27 billion deficit would take her slightly longer – until July 17, 2606. And we’re pretty sure she doesn’t have that much.)

palin winkStop the presses: Sacramento is not the worst state capital in America. In fact, according to the National Journal’s analysis of “The Six Most Dysfunctional State Governments” in the nation, California comes in a sorry sixth, scoring only 6.25 points out of a possible 10, and trailing South Carolina, Alaska, Illinois, Nevada and New York.

The magazine rated states according to four critieria, and while we scored big in “Policy Challenges” (10) and “Leadership Problems (8),” we lagged far behind in “Criminality” (1) and “Media Circus” atmosphere (6). Calbuzz notes that four of the five states finishing in front have had recent sex scandals while Alaska has Sarah Palin’s ongoing snowbilly soap opera saga. Memo to Arnold and Co. — Let’s get busy up there.

Calbuzz gets results: The worst idea of the year , Sen. Leland Yee’s effort to take control of the University of California away from the Regents and give it to the Legislature has died a quiet death at least for this legislative session.  “I guess the Regents have pretty powerful friends, that’s all I can say,” said Yee, D-S.F. Or rational ones, anyway.lorettacycle

Inquiring minds want to know: If Loretta Sanchez — she of the wacky Christmas cards – were to give up her seat in Congress and get herself  elected to succeed Arnold, would she forego the Governor’s Mansion for the Playboy Mansion?

Follow that story: Latest on the effort to free San Francisco journalists Laura Ling and Euna Lee, imprisoned in North Korea, is here , here and here.

Blue Plate Special: The Parsky Commission — you know, the bi-partisan panel charged by the governor with coming up with a unified proposal to restructure California’s tax system — on Thursday decided to accept for study the proposals from liberals to be thrown into the mix along with proposals from conservatives already in the hopper.

This is a smart move by the commission, which will now ask the governor for an extension of its term for at least another 45 days or so. The current leaders of the Legislature have pledged that whatever single proposal comes out of this group will get a straight up or down vote in both houses — an unparalleled  opportunity for a group of politically  and economically savvy outsides to affect fundamental change in California. If they don’t blow it by failing to find a compromise set of ideas.

Memo to Calitics: Thanks for the Link

Thursday, June 18th, 2009

friedrich-engels1To: Calitics Commissar David Dayen
From: Useful Idiots Phil and Jerry
Re: Your infantile disorder

When we read your hissy fits about Calbuzz’s coverage of the Parsky Commission, the words of Friedrich Engels came to mind:

“What childish innocence it is to present one’s own impatience as a theoretically convincing argument!”
(Programme of the Blanquist Communards)

As regular readers of Calitics, we admire your passion, if not your common sense. But let’s be clear that our mission at Calbuzz is quite different than the ideological ranting that is your stock in trade: it’s called “journalism.”

Let’s be blunt: You knew bupkus about the maneuvering and politics unfolding behind-the-scenes at the tax commission until we started covering it. To attack us for digging out the story is to mistake the map for the territory, using the same kind of tiresome, rigid,  WATB ideological projections as you decry in the Yacht Party.

Unlike you, we don’t pretend, to ourselves or anyone else, that we know enough about economics, tax policy or public finance to lecture our readers about such matters or tell them What Is To Be Done. (You don’t either, but we’ll leave that between you and your comrades for your next self-criticism session.)

We see our job as ferreting out the facts of what’s going on politically with policy-makers; with all due respect to our MSM and online colleagues, there simply hadn’t been a hard look at the commission’s work, and the strategies behind it, before we started reporting on it a few weeks ago.

That you would have remained clueless about what was happening there, and would therefore have nothing to throw your little temper tantrum about, is to underscore the huge difference between the Calbuzz brand of political reporting and what Lenin would call the left-wing “infantile disorder” that defines Calitics.

As you’ll recall, this fundamental contradiction came fully into view at the Democratic convention, when your netroots pals couldn’t stop slobbering over Barbara Boxer at her press conference, while we old guys just did that old boring thing of asking her hard questions.

We’re just sayin’.

P.S. We’ll leave to others the task of analyzing your obsessive use of the words “fetish” “fetishism” and “fetishistic,” which is probably a matter best dealt with in therapy. You might consider asking our in-house political psychiatrist, Dr. P.J. Hackenflack, for some help.

The Budget News That Really Matters

Monday, June 15th, 2009

tax-calculatorThis week’s coverage of the budget mess will surely focus on the wars of words and heavy breathing arising from Sacramento committee hearings and press conferences – but the most far-reaching California political news will unfold at UCLA’s De Neve Plaza.

That’s where the Commission on the 21st Century Economy will convene at 9 a.m. Tuesday to hear expert testimony about the “business net receipts tax,” a wonky notion that’s about to bust out of weed-whacking obscurity to take center stage in the most important political debate of 2009.

parsky

The commission – popularly known as the “Parsky Commission” after its chairman and Arnold go-to-GOP-guy Gerald Parsky – is a few weeks away from sending the governor its recommendations for retooling California’s clunky tax system. The tax structure is a vestige of Industrial Era policy-making that, as much as any single part of Sacramento’s broken governance system, is responsible for the endless and tiresome Hatfield-McCoy debates over the state’s tangled and troubled finances.

In a rare, and apparently random, moment of rationality and comity, Arnold and lefty Speaker Karen Bass got together a few months ago and appointed the group to figure out how to restructure state tax policy to avoid the boom-and-bust revenue cycles that lead Capitol denizens to panhandle one year and spend like inebriated seamen the next.

While Capitol D’s and R’s engage in yet another budget food fight with all the intelligence and wit of a Lite Beer commercial – “Tastes Great!” “Less Filling!” – some possible solutions to address the state’s long-running budget woe are hiding in plain sight, as framework proposals developed by the commission.

Calbuzz sources say that what the governor wants from the group – and what it’s likely to deliver – is a package of tax changes that raise more revenue – most likely through the aforementioned business receipts tax or a broader but reduced sales tax – and simultaneously lower other tax rates – like income and capital gains.

The political play is to produce a tax reform bill so clean it can be introduced in both houses with assurances no one will be allowed to bog it down with amendments.  Democrats will be able to avoid drastic program cuts and Republicans can claim they’ve cut taxes.  The bill breezes through both houses on an up-or-down vote and bada bing it gets signed by Arnold and everybody goes to dinner.  No muss, no fuss, no partisan fingerprints.

The commission has already assembled three basic packages, with three elements common to all: a) simplifying, flattening and reducing income tax rates; b) cutting business taxes; c) transforming the sales tax into a business net receipts tax.

The third item is the key to the whole deal. The tax, which has been put into effect in Michigan, Ohio and Texas in recent years, is similar to the “value added” tax widely used in Europe and elsewhere.

Basically, the net receipts tax would be paid by every business in the state as a percentage of its gross revenue – minus the cost of goods and services that it purchases from other companies.  Although consumers would not pay the tax directly, as they do at the register with sales tax, they would pay more to purchase goods and services because businesses would roll the tax, along with other costs, into its pricing.

The state would collect the tax on a “unitary” basis, meaning companies that operate both inside and outside of California would be assessed on a portion of their total sales volumes, not just the business they do within the state. Also, the tax would be levied on all types of business – not only on goods, but also on services, like doctors, lawyers and accountants, for example.

Here is an example of how the tax would work, as described by the California Manufacturing and Technology Association:

“The standard way to implement a NRT is to say a business owes some percentage on the price of the product minus all taxes previously paid on the goods. If NRT rates were 10 percent, a computer manufacturer would pay 10 percent of the $50 per unit price ($5) minus taxes previously paid by the semiconductor, software and peripheral manufacturers (say $2). In this example, the computer manufacturer would have a $3 tax liability…

“(The tax) is different from the conventional system of sales tax, because (it) is charged at every stage of value addition – whereas sales tax is imposed on the final value of a transaction only.”

In all three packages being considered by the commission, the receipts tax is the big revenue driver, unlike the present system, with its reliance on income and sales levies:

Package 1
Uniform personal income tax
* 6% rate – no exemption amount, no deductions, no credits
* 6% rate — $5k/person exemption amount, with certain deductions
Eliminate corporation tax
Eliminate state sales tax
Business net receipts tax

Package 2
Simplified personal income tax
* Three brackets, rates of 0%, 4%, 7% — current credits and deductions
Investment tax credit
Reduce corporation tax rate to 7%
Business net receipts tax

Package 3
Simplified personal income tax
* Three brackets, rates of 0%, 4%, 7% — $5k/person exemption amount, deductions for mortgage interest, charitable, property taxes
Eliminate state sales tax on business investment purchases
Reduce corporation tax rate to 7%
Reduce sales and use tax by 1%
Business net receipts tax

There are two other wild card factors still on the table: a possible 18 cent-a-gallon “carbon tax” on gas, diesel and jet fuel and cuts in capital gains rates, of between 1 and 5 percent.

None of this is a done deal, of course.

Getting a consensus recommendation from the commission, which includes conservatives like former Reagan economic adviser Michael Boskin and liberals like Santa Cruz County Treasurer Fred Keeley is by no means guaranteed. Even if commissioners do agree, their proposal will be fly-specked by lefty groups who will dislike elements that are not progressive, and industry groups, who will push for business-friendly changes.

As a political matter, forcing an up-or-down vote on a package in the Legislature would address what-about-me objections from all quarters, in the same way as the prohibition on amendments to congressional legislation produced by the military base closure commission in the 1990s finally solved that intractable problem. (Or like a Pete Wilson-Willie Brown deal from days of yore in Sacramento.)

After all, the impending bankruptcy of state government should be sufficient to show players at every point of the political spectrum not only that sweeping change is needed, but also that everyone will have to compromise to keep California from sinking into the 9th Circle of Hell.

For you herbivores,  Carl Joseph of the Franchise Tax Board has produced a deep-in-the-weeds analysis of the business receipts tax here.

– By Jerry Roberts and Phil Trounstine