Dan Walters: Democrats' tax plan has too many gimmicks

Sacramento Bee ^ | 8/6/8 | Dan Walters

[SmithL]

Overall, Democrats deserve credit for being forthright about intending to close much of the state's budget deficit with new taxes, in contrast with Republicans who say they want deep reductions in spending but refuse to say what should be cut.

That said, the details of how Democrats would generate more than $10 billion in tax revenues, roughly two-thirds of the projected 2008-09 deficit, leave much to be desired – even if one accepts the underlying premise that the state's fiscal problem is essentially a lack of revenues.

The plan's core is tapping the most affluent Californians through higher income taxes, an approach with obvious political appeal since the number of those who would pay higher income taxes is tiny, but one that could backfire.

It would, however, make the state even more dependent on how well those wealthy Californians are doing in the stock market and other investments, increasing the revenue system's boom-and-bust volatility, and thus the likelihood of future fiscal crises.

That's assuming, of course, that giving California the highest marginal income tax rates in the country would not induce a mogul migration to states with low or no income taxes, such as Nevada, to avoid new levies. Democrats contend that mass tax escapism is unlikely because the wealthy can deduct the new state taxes on their federal tax returns, but ignore another fact of tax life: the alternative minimum tax that can erase such deductions.

Another questionable aspect of the Democrats' tax plan is a new version of a gimmick that the state used six years ago – suspending for three years the ability of businesses to carry forward operating losses on corporate tax returns to offset future profits.

[SmithL]

Fish gotta swim,

Birds gotta fly, and

Rats gotta tax.

[Tennessee Nana]

Please sign Congressman Eric Cantor’s petition to demand the Democrats come back to the House

http://www.callbackcongress.com/

[nina0113]

WHAT gimmick??

Line 1: How much did you make last year?

Line 2: Send it in.

[ridesthemiles]

For all those who are sick of Kalifornia’s fees and taxes::
No personal or corp income taxes in Nevada.
Low property taxes- under $1500 annual.
For sale: Near Reno:
Horse property—5.58 acres. Fenced. Cross-fenced..
3 1/2 y/o house. 24 x 24 garage. Good well. Septic.
NO SMOG.

[ripley]

“democrats’ tax plan has too many gimmicks.”

correction: the democrat tax plan IS a gimmick.