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SB 974 Update

SB 974 was voted out of the Appropriations Committee today and now heads to the whole Senate for a vote.

Dueling BOE Members’ editorials appeared in the Sacramento Bee debating the subject. On May 14 Betty Yee advocated curtailing tax credits, and on May 25 Barbara Alby responded and specifically advocating for leaving the Enterprise Zone Program in tact:

The May 14 Viewpoints article by Betty T. Yee, “End state’s tax breaks to heal budget,” may be the final deadly prescription for California’s economy.

Now is the worst possible time for the state to increase its appetite for tax dollars. Do we really believe the solution to the budget deficit is to add more burdens on employers when they cannot offer jobs to unemployed Californians?

Raising taxes when there is high unemployment and budget shortfalls is tragic hubris that will make California more like Greece.

The term “tax breaks” suggests people should feel gratitude to government for not taking all of their money. Sure, the yacht tax exclusion is an easy target but a straw man. Who really cares except the yachtsmen?

But ending the mortgage deduction, stopping businesses from maximizing their tax deductions and eliminating enterprise zones in distressed communities would be an unwelcome tax increase for many Californians.

Reality is right in front of our eyes. April revenues came in $3.6 billion short of estimates. Californians are tapped out and fed up.

The progressive response to this is, “Don’t you realize government services give Californians a good quality of life?” I have another perspective.

Forty years ago I was a welfare mom, living that quality of life. My defining moment was when Ronald Reagan became governor. Within a few months he cut my benefits. I didn’t like him much back then, but he made me look at my little girl and say to myself, “Mommy has to make some new choices.”

For the second year in a row California is ranked last in the best states to do business by CEOs across the nation. Doesn’t this bother anyone? Our tax and regulation policies are creating a new culture in need of government services – the out-of-business and unemployed.

Job creation depends on capital in the economy and stable government policy that does not scare people from taking the risk of investing in California’s economic engine.

To reverse the downward economic spiral, elected leaders must encourage private employers, entrepreneurs and investors to take a risk in California. Without them, the economic engine is dead on the highway.

The solution will take compromise in the Legislature. This may be the most difficult part of a sustainable recovery agenda.

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