Budgeting at the Ballot Box

0

As a result of Republican state legislators refusing to help solve the budget crisis, Gov. Jerry Brown may over the next few years have little or no opposition. But is it good for our state’s 4.2 million small businesses to have a one-party state, even if it appears to be a democracy? We are unaware of any nation with 40 million people that operates in the interest of small businesses when it has only one effective party.

California, more than any other state, has repudiated Republican candidates since 2008. This is not because Californians, including small-business owners, believe that the Democratic Party effectively advocates for our interests. In fact, until recently, a clear majority of small-business owners supported the Republican Party.

Only a few years ago, a vast majority of Californians recalled Democrat Gray Davis (chief of staff during Brown’s first two terms in office). After the recall, Californians overwhelmingly voted for Republican Arnold Schwarzenegger for governor. Even Latinos preferred him to a Latino candidate, former Lt. Gov. Cruz Bustamante.

Brown, as the leader of what is now effectively a one-party state, will have an opportunity to lead without effective opposition. The question for the small-business community, the community that is responsible for creating 60 percent to 70 percent of new jobs in California, is whether the governor will use the excuses that many other Democratic governors in the past have used to thwart legitimate small-business expectations. Without effective Republican opposition, the governor is in a position to demonstrate that he is committed to the needs and aspirations of the small-business community.

With the defeat of Brown’s bipartisan efforts to have a June ballot measure that would continue Schwarzenegger’s tax increases, the governor’s most effective option is a simple one: He should design a November ballot measure, with significant small-business input, that will return California to its glorious golden days under his father, Gov. Edmund Brown, and Gov. Ronald Reagan. The ballot measure should not be limited to the inadequate Schwarzenegger tax increases that will solve only a small portion of our budgetary woes.

This November ballot measure should be revised to be the first modern and progressive tax system in California since the 1960s under Govs. Brown and Reagan.

Wide range

The ballot measure should be designed to provide for a wide range of tax changes that are pro-small business, including startups, and to ensure that our business community can secure qualified California workers for our increasingly complex jobs, rather than seeking foreign workers under the H-1B visa program. This includes having an excellent K-12 system and access to our public university system for all qualified students.

Examples of taxes that would return us to the golden age:

First: The Internet, which is now almost universal in its usage, must pay its fair share of taxes. This includes eliminating the unfair competitive advantage that Amazon.com, which does not collect California sales taxes, has over our local businesses that must collect these taxes.

Second: Proposition 13 is grossly unfair to small and new businesses, and young families. These groups are the key to our future growth. But they are taxed at rates 10 to 20 times higher than old businesses and families that have owned their homes for more than 40 years and, therefore, make no mortgage payments.

Third: There are more billionaires and multimillionaires in California than in any other state, and perhaps in any other nation except China. Therefore, a 2 percent surtax should be applied to all incomes above $1 million. It should be set aside for technical assistance and capacity building for our small businesses to expand, and to ensure a space in our elite public university system for all qualified students.

Fourth: Almost two-thirds of California’s increasingly modern economy is dependent upon services, not goods. Therefore, the sales tax should be revised to also cover all services, except health services, that involve transactions of $1,000 or more. This modification could allow a decrease in the general sales tax rate of at least 25 percent and still generate far more revenue.

Fifth: California should no longer be a slave to an incomprehensible and unjust federal tax system that taxes small businesses at a higher rate than it taxes billionaires such as Bill Gates and Warren Buffett. Instead, the governor should develop a simple but progressive state tax structure. This could be limited to a relatively low rate for incomes under $250,000, a moderate rate for incomes between $250,000 and $1 million, and a surcharge for all income above $1 million.

The implementation of the above five tax changes would not only eliminate the state’s $26.5 billion deficit, but could additionally provide as much as $25 billion a year to promote pro-small-business policies, including a quality education for all Californians.

These November tax ballot measures could enable California to have the best and most modern small-business tax structure in the nation. And since small businesses generate 60 percent to 70 percent of all new jobs in California, we could once again have one of the lowest unemployment rates in the nation, instead of the second highest.

Maria Rosas is owner of M&D Pecanland and treasurer of the Latino Business Chamber of Greater Los Angeles; Jorge Corralejo is chairman-chief executive of the LBC-GLA.

No posts to display