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Tax-increase efforts to watch in 2016

This Op-Ed appeared in The Orange County Register on October 30, 2015.

California taxpayers received some good news this past week. The California Taxpayers Association released information that the activist coalition seeking to create a split-roll property tax system – and thereby raise taxes by removing business properties from Proposition 13 protection – seems to be abandoning efforts to place an initiative on the 2016 ballot.

Californians are some of the highest-taxed individuals in our country, and, with a record amount of tax revenue flowing into Sacramento, even hard-core high-tax advocates got the message that they were overreaching.

But, don’t relax too much, too soon. Senate Constitutional Amendment 5, which would also create a split-roll system, is still alive in the Legislature. There is also an initiative in the works that would impose an additional surcharge on any property – residential or commercial – with an assessed value of over $3 million. Yes, here in California, there is no shortage of tax increase measures waiting to jump on the 2016 ballot.

Hedge-fund billionaire environmentalist Tom Steyer has been focusing his attention on the oil industry and seems to be trying to decide between an initiative to create increased transparency on oil company revenue or one imposing an oil severance tax. A severance tax will just serve to drive up California gasoline prices.

The next consumer tax that might be headed our way is yet another attempt at increasing the tax on cigarettes. Monies from this $2-a-pack tax would go to fund research and health care for tobacco-related disease.

An unlikely but possible ballot initiative for 2016 might be state Sen. Bob Hertzberg’s idea of adding a sales and use tax on services. With personal income tax accounting for over 60 percent of the general fund, California now relies on only 1 percent of taxpayers for 50 percent of total state income. A more stable tax system is needed, but the devil not only will be in the details, but also in who is crafting the plan. I am not sure there are many that trust Sacramento with that task.

Prop. 30, approved in 2012, was billed as temporary tax hikes to increase funding for public schools. The section that increases sales tax by a quarter-cent will expire at the end of 2016, and the increase in personal income tax is set to expire in 2018.

Some extension of these taxes seems to be a given for a 2016 initiative, with two initiatives to either extend or make permanent these tax increases already on file with the Attorney General’s Office. But will they pass? Polling is showing that voters are split evenly on extending, and highly against making them permanent.

The more tax increases on the ballot, the more likely voters are to just vote no across the board. The “high tax” lobby knows this and will plan accordingly. We need to let our legislators know that they need to start focusing, not on how much more of our dollars they can get, but on what those tax dollars are being spent on, and what we, as taxpayers, receive in return.

Carolyn Cavecche is president and CEO, Orange County Taxpayers Association.

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