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Sacramento Taxaholics Need Treatment for Cigarette Tax Addiction

Posted by The Master Cylinder on May 31, 2013

If “the power to Tax is the Power to Destroy,” then liberal Democrats in the California legislature are the political version of the Death Star.

State legislators last week were rebuffed in their attempts to raise taxes on gas, soda, property, tobacco, strip clubs, shopping bags, mattresses and likely other items that Californian’s choose to use or must use in addition to the $7 billion/year in tax increases they approved in 2012. But lest you feared that the emboldened supermajority had given up the fight, Senator Kevin DeLeon has vowed to get his multi-billion dollar tax increase back on the Senate Floor.

Deleon’s legislation, SB 768, increases taxes on cigarettes by billions  – but the tax increase is not the only thing that should concern voters.  As currently written, SB 768 would circumvent California’s constitutional protections for school funding approved by voters, shortchanging our schools billions, puts additional burdens on struggling businesses with new bureaucratic reporting requirements at time when they can least afford it and takes billions more from taxpayers, while doing absolutely nothing to help balance our state budget, fund schools, keep criminals in jail or fix our state’s roads. .  And that doesn’t even include the increase in criminal activity and enforcement costs associated with a likely increase in cigarette smuggling that accompanies the relentless hiking of sin taxes.

Locally, termed out Senator Correa, running for a seat on the state Board of Equalizaton (BOE), has seen first-hand the power to destroy,  and intervened on behalf of his constituents and worked across the aisle with others who are interested in reform of taxing agencies.

Correa should look at Deleon’s legislation closely given Correa’s interest in reform if only because by its own admission the BOE suggests that “large scale bulk smuggling can be a problem” after a significant increase in Cig tax (See CDPH and BOE cites).  This isn’t a new problem and but it’s one that’s likely to get much worse if this legislation were to be enacted into law.

According to a recent OC Register article, “Organized criminals are producing cigarettes that mimic American-brand cigarettes and selling them in predominantly ethnic Orange County neighborhoods at drastically reduced prices. It’s quick cash and smugglers face light penalties if caught.”

Hopefully the entire Orange County delegation will stand firm against any measure that increases taxes and promotes smuggling and criminal activity.

Now is not the time for higher taxes – they destroy jobs and hamper economic recovery.  Nor should government be in the business of promoting smuggling and criminal activity.  Do Sacramento politicians really need more of our money to waste with no accountability?




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Costa Mesa: Anti-Outsourcing Candidates Genis and Stephens Duck Outsourcing Question

Posted by The Master Cylinder on September 6, 2012

Check this out from Mickadeit’s new column on the Costa Mesa “Feet to the Fire” candidate forum. It’s a passage about how the status-quo candidates reacted to a question on outsourcing:

I asked [Sandy] Genis and [John] Stephens whether they would outsource any jobs and, if so, which jobs or departments. Both said they would have to study it. This was disappointing. The city has been studying this almost two years and has issued reports. Nobody is better read on Costa Mesa than Genis. Stephens says he’s read the charters of at least a half-dozen other cities. Both have had ample time to come up with a plan for any outsourcing they might entertain. Or to simply say that outsourcing is off the table with them. I wrote in my column that I would ask this question. The best they could say, however, is that they wouldn’t outsource public safety, which, when pressed, appeared to mean paramedic service.

Oh my. Talk about duck-and-cover. Is this the same Sandy Genis who gets lionized by characters like Vern Nelson at Orange Juice Blog as some fearless, super-knowledgeable Joan of Arc?

Here’s the translation of the non-response from Genis and Stephens: “Yeah, we KNOW we’ll have to outsource. We KNOW we can’t go back to the way things were and keep everything internal and give the unions what they want. But we just CAN’T SAY IT because we need the union and anti-Riggy forces support, or else we don’t have a prayer.”

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Brown Bringing Tax Hammer Down On Lumber

Posted by The Master Cylinder on August 2, 2012

Perhaps the state motto should be changed to “The Taxman Cometh. And Cometh. And Cometh.” That’s the animating spirit of state policy under Governor Jerry Brown, whose Adminstration deals with the huge perma-deficit by levying taxes hither and thither without regard to the human or economic cost.

The Brown Administration’s is proposing a budget trailer to “reform” the Timber Harvest Plan by creating a Lumber Retail Sales tax that would be assessed on the purchase of any lumber product at the point of sale.  The funds generated from this tax would be used to fund state and industry regulatory agencies.

At what cost? This proposed tax would target small businesses and do-it-yourself consumers who utilize lumber products. Many of these small businesses, which use lumber regularly, have already been devastated by recent financial events.

Home builders, carpenters and roofers – just to name a few – were very successful during the housing boom, and now many can barely find work.  Under this plan, when these hard-working Californians do find work, their cost of doing business will be even higher. How can any intelligent policy maker or elected official consider this is a smart plan to promote economic recovery.

Why would any administration want to harm consumers and small business by forcing them to pay additional taxes? Is making it harder for a prostrate industry to recover pro-growth or even compassionate? That’s a question the Brown Administration and supporters of this tax need to answer.

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Proposition 29 is Taxpayer Waste Waiting to Happen

Posted by The Master Cylinder on May 7, 2012

The June primary is nearly, and the debate over Proposition 29 grows more intense, not surprisingly since it is about the only major issue on the ballot.

Predictably, proponents are trying to focus attention on the “No on 29” being funded by the Big Tobacco bully that only cares about the potential threat to its profits. But voters aren’t stupid and can figure that out for themselves.  After all, when Proposition 10 was in the ballot in 1998, the tobacco companies were up front in their ads about their leading role against that tobacco tax, and with that issue out of the way, they focused on their policy arguments against Prop. 10.

And it nearly worked: Prop. 10, a “sin” tax to fnd early-childhood development programs, barely passed at a time of great economic growth in California (remember when we had prosperity?).

Prop 29. taxes on something bad (cigarettes) for something good (cancer research). But there are broader policy issues in the fine print that voters ought to be concerned about. Voters should question the sincerity of its laudable goal — cancer research — when you learn that this measure creates a new 9-member board composed of political appointees that would have complete control over how $735 million in new taxes are spent with no accountability to the public.

Despite the best intentions of its supporters, examples of questionable management have emerged since Prop. 10’s passage. When you consider that Prop. 10 was a better crafted measure with more built-in accountability, and that Prop. 29 imposes literally no transparency and accountability on the very people providing the funds, we can have zero confidence Prop. 29 won’t result in the abuse of tax money.

And if that doesn’t convince you of the bad policy in this measure, just read this editorial from the LA Times. You would expect that one of the most liberal publications in the country would be more than eager to stick it to the tobacco industry, but even the LA Times editorial board acknowledged this flaw and encouraged a no vote.  The last thing we need in California is another government entity using taxpayer dollars to serve their own self interests. It’s no wonder politicians have a reputation for being crooked and dirty. Voters need to put the kibosh on Prop. 29.

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“Cigarette Smugglers for Cancer Research”

Posted by The Master Cylinder on April 3, 2012

That might as well be the name of a pro-Proposition 29 campaign committee (OK, this isn’t an OC-only issue, but the November election is coming faster than we think). Prop. 29, which will be on the November 2012 ballot, would impose a 5-cent tax on each cigarette sold, or about a $1.00 a pack. The revenue, as it always does, goes toward one of those causes that no one can be against: cancer research. If approved by voters, it will amount to about a $1 billion tax hit on all those poor saps that are hooked on cigarettes. Prop. 29 creates a special commission that will dole out this these millions to whomever and wherever it sees fit – even out of the state or the country. In the best progressive tradition, the unshakable assumption is latest tobacco tax would be doled out by a special un-elected “commission” created by the initiative, on the naïve assumption that bunch of appoint “experts” can efficiently allocate these funds for the elimination of cancer and the betterment of mankind.

Who can argue with that?

Certainly not those social elements that make their money selling cigarettes on the black market. Any new law or tax that increases the price of cigarettes is like free marketing for them, creating customers who want to get more cigarettes for their money.

As Michael D. LaFaive,  Director of Fiscal Policy at the Mackinac Center for Public Policy wrote in a recent op-ed, “While cigarette tax hikes usually generate additional revenue for different units of government, they bring with them illicit activities, including smuggling by individuals and organized crime groups, violence against people and police and brazen thefts, too.”

Ultimately, LaFaive writes, “politicians don’t consider all of the costs of reaching ever deeper into consumer pockets…By hiking cigarette taxes so dramatically politicians are effectively expanding — if not creating — a highly profitable illegal market in which thieves and other people of violence can thrive at the great expense to consumers and job providers alike.”

Even with a cigarette tax below the national average, California has already started seeing the effects of increased smuggling. According to former Board of Equalization member Michelle Steel , “Cigarette-related crime is rising across the U.S. In California, 1.4 billion packs were estimated to have been consumed in fiscal year 2005-06. And 209 million packs were estimated to have been sold tax-free, resulting in a $182 million revenue loss for the state.”

This is a story as old as history. When government taxation of a service or product reaches a certain level, the incentive to evade, and to profit from evasion, becomes irresistible. This kind of taxation is always imposed in the name of a noble cause, and just as invariably turns citizens into criminals, diminishing respect for the law and ordinary government authority and habituating citizens to tax evasion. Prop. 29 will exacerbate that problem, in addition to the usual sins of raising taxes, empowering special interests and spending money on duplicative programs.

I don’t know about you, but I have about had it with funding every do-gooder program by piling yet another tax onto the backs of smokers. There is no more blood left to be squeezed out of that turnip.

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