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Tom Campbell

Repealing State Sales & Corporate Taxes Sep 29th

by Tom Campbell // Comments

The Commission on the 21st Century Economy, which is responsible for reforming California’s tax structure, is expected to recommend in a report today that California repeal its state sales and corporate taxes.  On the basis of what I know at present, I favor this proposal. Here’s why.

1) A net receipts tax will replace a business tax and a sales tax. This is a huge incentive for manufacturing businesses to locate in California. They presently pay a business tax, and a sales tax on all their inputs. Both will evaporate. To see why a net receipts tax is better than a business tax, consider that if a manufacturer lowers its cost of operation, it pays more tax under existing law, because it makes more business income. Under a net receipts tax, it keeps all the savings.

2) A net receipts tax will allow us to drop the very top income tax brackets. I was never a class-warfare politician; though I suspect those that are will criticize. The key here is that lower income folks will no longer pay sales tax, so they will be better off. And eliminating the top income brackets smooths out the flow of revenue, which has been boom and bust, depending on the stock market, because of our high marginal income tax rates, and the fact that we don’t offer any break on capital gains, not even the reduction the federal income tax affords.

3) It is almost always wiser to tax consumption than income. A net receipts tax is a consumption tax. People do less of that which is taxed. If income is taxed, less income will be produced. If consumption is taxed, people will consume less, meaning they will save more, not that they’ll produce less income.

CONCLUSION (for now, pending getting further details)

The proposal should be analyzed under two tests:

1) “Does it increase jobs in California?” By inducing cost-cutting manufacturers to locate here, it appears to do so.

2) “Is it fair?” Given the fact that 50% of the income taxes in California are paid by 3% of filers, the tax system is unfair today. Creating fewer brackets is more fair. Also, by eliminating sales tax on final items, the change helps poor people. By spreading the tax to services as well as products, it brings down the tax and hence the price for products, which are more consumed by poor as a percentage of their income, compared with services.

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  • John Yang
    In this system of taxing services, most businesses are able to pass on the tax increase to consumers. Lawyers, landscapers, barbers can just increase their prices to cover the tax. However, certain businesses would not be able to do so, such as medical practices, that rely on fixed reimbursements from third party payers. This would affect these types of businesses disproportionately.
  • robertloza
    Mr. Campbell. I have heard you on radio talk shows for years, and you seem more like just another angry white man to me, than a viable alternative to run this State. Angry that Republicans don't control the State Legislature, angry that half the population in this state (at least) doesn't share your 'beliefs' or 'values', angry that most of the people in the world don't behave the wayyou want them to, or come from the right place. I have heard you make many accusations and promises, yet there is no substance to your programs - because simply saying "Less Government. More Freedom, Individual Liberty" doesn't mean anything. Literally, what freedom do I not now have that you can give me? I mean, specifically. Is 'Individual Liberty' a quantifiable action or activity that I do not now have, or is it code for some vague 'American' principle - like self-determination or independence? If so, I can tell you that I already have that in spades - put myself thru college, started my own consulting business, proudly doing my part by paying my taxes.

    Laying off a few thousand government workers, and short-budgeting a few 'entitlement' programs doesn't mean we have less government - it means instead that state workers will have to someone else's work, too, and that some of our citizens will have to go without health or emergency services at some level. If our State government is so rife with corruption, waste, and unnecessary programs, than my question is what have you been doing all these years? Where is the list of (specific) wasteful corruption? the list of useless programs? the specific list of departments and government services that we don't need? Please be specific, and start with your own district, would you? All I've ever heard come out of your mouth is negative, dismissive and angry rhetoric. You are far from a refreshing change, you do not give specific or detailed answers, other than the usual GOP talking points. Your 'honest' talk about tackling big issues is simply telling people we have budget problems and illegal immigrants. Wow, what a mind.
    None of your 'solutions' will ever see the light of day because you don't know how to legislate effectively, and so you're free to offer simplistic and ideologically driven alternatives - you know there's no chance at all of them ever being tested. Yet they work well enough to keep getting you elected, and I that's about where I came in anyway.
    Sorry, I'm unconvinced.
  • TomCampbell
    Dear Mr. Loza,
    I wonder who you're thinking of? I'm not in office. I left the US Congress in 2000. I was a State Senator from 1993-1995. So your comment about my saying things to keep getting me re-elected appears a bit misplaced.

    So also does your criticism of my lack of specificity. I made a very specific set of items to cut from the state budget, and posted it on this website back in May. It's still there; please look at the topic "Budget." I propose bringing California's social expenditures, for welfare, worker retraining, and medical care, down to the average of the other 49 states. That's not because I'm cruel, it's because we can't afford to spend more.

    By less government, I mean we need to impose a screen on all new state regulations: a cost-benefit test. It's not being done at present. And all new regulations need to sunset in 5 years. If they're worth maintaining, we can repromulgate them. Today, a regulation stays forever.

    A good specific is the rule that employers have to pay time and a half after 8 hours a day in California. Nationally, the requirement is after 40 hours a week. An employer able to accommodate an employee who wants to work 4 days a week, ten hours a day, pays a "tax" in California, but not in Texas, Arizona, or Washington state.

    Another regulation prohibits contracting out for much state construction work on road and building projects. Allowing that work to go to bidders in the private sector would save money and increase employment in the private sector.

    Another example prohibits many who want to help teach from doing so, unless they are fully certificated. A more reasonable approach would allow assistants in the classroom, and in after-school programs; but union rules, adopted in state contracts, prohibit this.

    All of these suggestions would lead to less government, more freedom, and individual liberty.
  • robertloza
    Mr. Campbell

    I have already respnded to this reply some time ago.

    As I stated then, I had erred blatantly in confusing you with Tom
    McClintock!

    My statements to you regarding several issues were then not only
    inaccurate, but misdirected.

    It's unfortunate your staff did not alert you to my previous message.

    Sincerely,

    Bob Loza

    Bob Loza / Cyrano Creative
    Burbank CA
  • HCaouette
    I have this extreme distaste for bullies and playing the race card as you did, by calling Mr Campbell an "angry white male" , is the tactic of a bully.

    As for your rant on freedom, know that many of us are not content with how its being robbed from us. I never put a bumper sticker on my car, much less attended a protest. That's changed. Many of us are committed to securing our freedom for ourselves and our children.
  • adrian_s
    Wow, did someone hire this guy? The state Democratic Party or one of the unions? Or is he just a concerned tool? After all, no logical person would come to shill crony corporatism and liberal values on a Republican candidate's site in such a dogmatic, ad hominem way.

    More government, more "services" comes at the expense of individual autonomy. Just because it may not be something you are for doesn't mean other people should be forced into a government system that processes the fruits of their labor and in return, gives little back. If you want these services and over "half the population... (at least)" does as well, you can pay for them on your own.

    You think there is enough freedom? I don't know what kind of rock you've been living under. How about starting with decriminalizing drugs, prostitution, and stop legislating morality? We have the right to enforce such policies under the 10th amendment. It sounds like your idea of a refreshing change is a statist bureaucracy that gives special privileges to the few, but ignores the many. I'm sorry, but chalk me up as another one of those "angry, white men". That's the only constituency that gives a damn, yes?

    Your idea that the State has to provide for all is such a fallacy I don't know where to start. But let's humor the notion and go back years before to when the safety net was contained, it didn't serve as an incentive for illegal immigration (which would later drain our resources further), and California's standard of living was the highest of all the states.

    Tell me, you're the expert consultant: why do we make government jobs pay more than private sector ones? And why do they get special benefits to leech off of taxpayer funds in the first place? Why are we giving incentives to grow government employment, compounding the Union problem, like the SEIU, CTA, CCPOA, etc? If these acronyms don't mean anything to you, you're not paying attention. Or worse yet, you're one of their defenders.

    Onto your personal attacks: Campbell is not your typical Republican. In the last 8 years, when many Republicans were helping rack up major deficits, and out-lefting the Democrats, Tom has frequently preached fiscal restraint. He has actually suggested raising taxes to solve our budget crises. Fits the maverick label quite well, I think. And this is not where the distinctions end. He also has referenced specific departments in the past that are redundant, and has pointed exactly to what he would do to our budget, something his current competitors can't or won't do.

    All in all, I think you have let your prejudice of common sense get in the way of any sound argument you have against this man, or your ideological dogma has run any trace of it into the ground. So it's funny that you accuse him of such. Good day to you and don't come back.
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