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Posts Tagged ‘Bob Hertzberg’

State Senator Bob Hertzberg is a smart man; smart enough to know the power of language. According to his bio, as an undergraduate English major, he wrote a 400-page handbook titled A Commonsense Approach to English.

To paraphrase a quote attributed to the late US Senator Everett Dirksen: A deft turn of a definition here, and a subtle re-characterization there, the next thing you know, we are dealing with some serious money!

And that has been Hertzberg’s game plan since he returned to the legislature in December 2014.

He introduced SB 8, a bill cloaked by a seemingly harmless name – the Upward Mobility Act. The senator described it as a tool to “modernize” the state’s tax structure. He admitted it would be designed to yield another $10B in tax revenue.

The bill died, but that did not stop Bob from reintroducing a replacement: SB 1445.

As SB 8 proposed, this new bill would extend the application of sales tax to services, a direct hit to all segments of society – the middle class, most notably. As he did with SB 8, he is characterizing it as “modernization.”

The only thing being modernized is the state’s access to our wallets.

But the “serial hugger” is not stopping there.  He again whipped out his English to Taxation dictionary to conjure up SB 1298.

His objective is to do an end run around Prop 218’s requirement for voter approval of tax increases by redefining “sewer service” to include stormwater projects. Perhaps “serial wordsmith” would serve as a better moniker for him. Please read the excellent editorial concerning 1298 in the Daily News. 

The bill has a worthwhile objective.  It is designed to encourage recovery of stormwater. No one is arguing with the benefits it offers to our drought-stricken state.

But it is dangerous to override the benefits of government transparency and the legislative process.

Californians are being asked to pony up more cash to fund a growing list of expensive projects.  In Los Angeles alone, we are being asked to pass a permanent increase in the sales tax for the MTA.  The city and county are considering spending over a billion dollars to provide housing to the homeless.  There is also the trainwreck of HSR absorbing funds that could be used to enhance the state’s water capacity.

Our state and local governments have no grasp of prioritization.  Capital budgeting is completely absent in the minds of Hertzberg, his colleagues in Sacramento and counterparts at the local level.

Taxpayers have a right to weigh in on what needs attention and the means of paying.  To do so requires presenting the big picture of competing needs. Let the people decide what is most important and authorize appropriate funding levels.

We do not have unlimited funds; we can only afford what can be sustained without breaking the bank.

Sneaking around the voters and playing word games, as Hertzberg has been doing, is disrespectful to all of us.

 

 

 

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Thoroughly Modern Millie was a Tony Award winner.

State Senator Bob Hertzberg is rolling out his own sequel.  The only problem is the production cost.

Actually, the real problem is we will be the ones bankrolling it if Bob gets the green light. It is the most expensive tax scam concocted, more than California HSR.

I’m talking about SB-8. Bob’s name for it is the Upward Mobility Act.  Who can’t like something with a name like that? Leo Bloom and Max Bialystock would be proud of the deception used to promote it.

Hertzberg claims it is about “modernizing” our tax system, to align it with our service-sector dominated economy of today. He correctly points out that the current approach to taxation was developed back when the goods-producing sector (manufacturing, mining and agriculture) was the revenue driver.

However, his modernization logic is irrelevant and baseless.

Service providers and their counterparts in the goods sector pay income taxes, as they always have.  A dollar of net income counts the same for a service sector firm or provider as it does for a manufacturer, mining operator or farmer. It always has.  The size of each broad industry segment in relation to the other does not impact total income. Income, from whatever the source, is fungible, just like money.

Bob’s energy would be better utilized if he led the charge to cull tax breaks and government programs that have outlived their usefulness, as well as tackle the state’s very expensive employee compensation and benefits.

So why is he blowing smoke by falsely correlating the objective of SB-8 with the ever-changing nature of the economy?

Because he wants your money: $10 billion more per year of it.  No matter the noble purposes he has in mind for the additional taxes, it is going to cost a large segment of the population big time.

Part of the increase, perhaps a big chunk, will come from levying a sales tax on services.  No matter how you cut it, it will disproportionately  burden middle income taxpayers, who would pay it on vital services such as insurance, tax preparation, legal costs to defend themselves in court, communications, car repairs…you name it.  It is not too different in concept from the Stamp Act of 1765.

The sales tax rate has more than doubled since 1962. Let’s make an already regressive tax even more onerous by applying it to everyday services!

But wait!

Bob said there would be a reduction in income taxes across the board.

Let’s see – half of the state’s income tax revenue is paid by the top 1% of earners, according to the state’s Legislative Analyst’s Office,  very progressive to say the least. Perhaps Bob will reduce rates for middle-income taxpayers much more than for the wealthy, but even he recognizes the dangerous volatility associated with relying on the wealthiest segment to carry most of the income tax load. Such a move would magnify that dependence. On the flip side, a proportional cut to all brackets would greatly diminish income tax paid by the wealthiest.

No matter what, middle- and low- income earners, who pay relatively little personal income tax today, stand to benefit the least from an income tax cut. They have far more to lose than gain with SB-8’s strategy.

According to an article in the Sacramento Business Journal, Governor Brown expressed reservations about SB-8:

Politically, the idea of applying the sales tax rate to professional services would look like an attempt to “burden the ordinary folks.” 

The plan “may be logical with some green-eye-shaded accountants, but I don’t know that from the political point of view that is very viable”.

In response, Sen. Hertzberg said the governor had not seen the completed tax proposal and he thinks Brown would change his mind.

“People are making assumptions on limited information and it’s just not accurate. The governor is a brilliant guy … I think he will like the proposal when he sees what it will look like.”

If anyone is to be blamed for limited information, it is the senator, himself. Hertzberg introduced the bill back in December 2014.  That’s seven months ago, sufficient time to share with the public its criteria and mechanism….and maybe even an estimate summarizing how much of the $10 billion per year each segment of the population could be expected to bear. And he hasn’t even briefed the governor despite the wide-ranging implications of the bill?

He is behaving like a car salesman who withholds negative information about the product in hopes of inducing the customer to sign on the dotted line.

At least there is a lemon law providing some degree of protection for the customer who buys a shiny new car.

If SB-8 becomes law, good luck on getting relief.

SB-8 would be the largest permanent tax increase in the history of the state. It would require a voter initiative for final approval, but do not expect transparency in how it would be worded in the ballot. After all, it is all about modernization.

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