Jon Coupal: The dark side of Assembly Bill 8

October 23, 2013 

On Oct. 18, The Bee published an op-ed extolling the virtues of Assembly Bill 8, a complicated bill which, among other things, granted regulatory relief to agricultural interests and the trucking industry. It is no wonder that our friend Paul Wenger with the California Farm Bureau and Bob Massman of the California Trucking Association were the authors of the op-ed.

But there is a real dark side to this legislation. Because of its passage, all California motorists will now be paying $2.3 billion in additional taxes and charges for vehicle registration, smog abatement and new tire purchases. Adding insult to injury, taxpayers will find their hard earned dollars being used to subsidize programs such as the purchase of all electric cars, like the Tesla, that few can afford. Money will also be lavished on the hydrogen network designed to service vehicles of which only about 250 currently exist.

On the surface, it may seem to make sense for agricultural and trucking interests to take a deal – any deal – that reduces the burdensome regulations under which they suffer. Indeed, on any legislation which reflects a straight-up vote reducing these burdens, the Howard Jarvis Taxpayers Association will be fully supportive. But for citizen taxpayers, this particular deal was horrible.

With all the burdens Sacramento imposes on taxpayers – we already have the highest state sales tax in all 50 states, the highest marginal income tax rate and the highest gas tax – why would anyone not with a public sector union or allied with radical environment interests support a multibillion dollar tax hike?

Worse yet, the real problem for taxpayers with the approval of this kind of legislation runs much deeper than its immediate cost because it was passed in the Legislature using the technique of bribing unconvinced lawmakers to vote yes by offering the prospect of reduced regulation on businesses important to those lawmakers’ districts. Nine Republicans, who usually put taxpayers’ interests first, were persuaded to support AB 8 by the lure of reduced regulations.

While our association believes that business is shouldering an unreasonable burden of regulations, especially compared to other states, these regulations should be judged individually on their merits. The offer of reform should not be used by the majority party to solicit payoffs – higher taxes – in return for doing the right thing.

However, against type, it is Republicans in the Capitol who provided the votes to guarantee this bad legislation became law. And it is not the first time.

Sadly, we are sensing a trend. Last year, the Legislature placed a new 1 percent tax on the sale of lumber, with four Republicans providing the votes to put the measure over the top. Here, the bribe was that some restrictions on the timber industry would be lifted.

At this point, it is important to note that our association is nonpartisan. More than a third of members are Democrats and in the past taxpayers have had the support of some Democratic lawmakers who recognized that taxpayers are the backbone of a prosperous economy.

However, the majority party in the Legislature is now dominated by those who want to raise more revenue and seem willing to use any stratagem, no matter how sleazy, to get it.

Thankfully, only a few Republican legislators drank the “higher taxes in return for regulatory reform” Kool-Aid while most voted against. Those opposing the deal knew well that the regulatory relief granted by the Legislature this year can be taken away next year with a simple majority vote in each house. The majority party has broken too many of these “deals” in the past not to grasp that this is a real possibility.

And the $2.3 billion tax hike? That will never go away.

Trading permanent tax hikes for what may prove to be temporary regulatory relief is a deal with the devil. For those agricultural and trucking interests that are deserving of a better regulatory environment, their support for AB 8 may have reflected the best of intentions. But good intentions only make for a suitable paving surface to a certain location better left unmentioned.

Coupal is president of the Howard Jarvis Taxpayers Association, California’s largest taxpayer advocacy organization.

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