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The Leonard Letter:
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Leonard Letter 2/1/10
THE LEONARD LETTER
A weekly electronic newsletter about
California government, business and taxes
Bill Leonard, Member
State Board of Equalization
February 1, 2010
Find these stories online at: http://www.billleonard.org/
QUOTE OF THE WEEK
"The government is like a baby's alimentary canal: a happy
appetite at one end and no responsibility at the other."
--- Ronald Reagan (February 6, 1911– June 5, 2004), 40th President
AROUND THE STATE
***Want Job Growth? Lower the Cost of Labor***
As far as the “jobs, jobs, jobs” mantra, we can spend with borrowed money, which is not popular with voters, or we can look at what is right in front of our noses. To stop the hemorrhaging of jobs, the obvious thing for government to do is lower the cost of labor by cutting back on payroll taxes paid by employers and workers.
I plugged in data for an imaginary California worker making $45,000 a year who is single with no deductions and here is how it breaks out:
Gross pay (per month): $3,750
Federal income tax: $543
FICA (social security): $232.50
Medicare: $54.38
So already out of a gross pay of $3,750, this hypothetical Californian has over $829 taken out by the federal government before he gets a dime. But we need to add California’s payroll taxes.
California has four State payroll taxes which are administered by the Employment Development Department (EDD). They are Unemployment Insurance and Employment Training Tax, which are employer contributions, and State Disability Insurance (SDI) and Personal Income Tax (PIT), which are withheld from employees' wages.
So if we add another $495 withheld for SDI, along with $871.73 for state income tax withholding, the worker is left with just $1,553.39 out of a gross pay of $3,750. It boggles my mind that workers are not rising up in protest. Think of all the people who are scrimping to save $20 here and there to make ends meet. Imagine what a temporary holiday from withholding taxes would do compared to various stimulus programs tried so far. I find it obvious that allowing workers to keep the money they make would relieve a lot of angst and provide major stimulus to the economy.
This has a direct effect on the cost of labor. If payroll taxes were not so high, employees could get higher take home pay at less cost to the employer. So employers could afford to hire more people while increasing take-home pay for all workers.
As far as withholding taxes employers pay, already mentioned are Unemployment Insurance and Employment Training tax. Add to that workers’ compensation expenses which vary but add significant cost for employers.
I am urging a temporary suspension of these payroll taxes. But going forward, Republicans should begin a dialogue with workers in this country. Yes, the government performs many vital and important functions, but I submit if you ask someone who makes $3,750 a month but only sees $1,553 of it, that worker will probably not believe he is getting as much from the government as the government gets from him.
***Here's an Example***
Last week the Los Angeles Area Chamber of Commerce was touting the success of a particular tax break, tax credits for film production. Supposedly 60 film productions that were threatening to leave the state stayed here and generated $710 million in spending, including $310 million of direct wages. On the one hand, it is good that the state recognized that high taxes were driving jobs out of state. On the other hand, the state picked this one industry to help on taxes, leaving countless other employers and their workers to pay our state's high taxes. Tax credits are just too narrow and everyone suffers when the government picks winners and losers. Instead, government should lower everyone's tax rates; that would be the ultimate tax break.
http://www.lachamber.com/index.php?src=blog&srctype=detail&blogid=46#comments_section
***Private Park Possibilities***
In the midst of a $20 billion state budget deficit, we need to look at all creative options for reducing state expenditures. We are not the only state in this fiscal mess—though we do take honors for having the biggest hole in our budget. Arizona recently announced that it will be closing many of its state parks because it does not have the money to keep them open and operating. Governor Schwarzenegger made a similar announcement last year and there was predictable public outrage at the idea of losing the use of some cherished California recreation.
The response to Arizona's announcement is instructive. Warren Meyer, the owner of Phoenix-based Recreation Resource Management, suggested that the state parks slated for closure "could easily be kept open to the public under private concession management." His company already operates entire parks for the U.S. Forest Service and says that because he can run the operations at a lower cost than the government, he is able to make a profit and pay the government an annual fee.
California should consider contracting with the Warren Meyers of the world. We could keep our unique recreational resources open to the public, maintain them properly and generate income for the state.
http://www.goldwaterinstitute.org/article/4204
***Naming Rights***
Last week the head of the State Senate Darrel Steinberg said he was proposing that the Legislative Office Building across the street from the Capitol be renamed in honor of Bill Cavala who was a long term key confidant to the Democrat legislative leaders. I have no doubt that Bill carried a lot of these legislators on his back doing behind the scenes political and legislative work. However, it struck me that maybe we are missing a revenue opportunity here.
After all, major corporations pay big bucks to have their names on sports arenas. It's time California joined the auction. Let's accept bids from all comers for getting their name on any state property if they pay an annual license fee. I am not talking about selling the property or selling any political favors. I am only talking about being able to place an appropriate sign on the building or park or highway or even a prison.
With Valentine's Day coming up soon we could rent out banners in front of the State Capitol with slogans like: "Bill loves Sherry." Who knows? This is just crazy enough that it might work.
ISSUE FOCUS
***Bigger Pie***
Reason magazine's Matt Welch penned a delightful piece discussing the leftist idea that in order for one group of people to have something, someone else must give something up. To them, the idea that everyone can prosper by rolling back the hand of government is untenable. As an example, Welch looked right to California and wrote:
"It’s an alluringly simple vision, this notion that public policy challenges can be solved merely by lifting some gold off one end of the scale and plopping it down on the other. You see it every day, for example, in California, where for decades the conventional wisdom has held that the proximate cause of the Golden State’s periodic fiscal meltdowns is Proposition 13, the 1978 ballot initiative that caps annual property tax increases. If only those greedy homeowners gave up a bit more of their pie, presto! No more budget problems."
Those who are currently coming after Prop. 13 right now know that it is political suicide to go after the "greedy homeowners," so they are targeting their attacks on business property, including golf courses, as I wrote about last week. The U.S. Supreme Court last week ruled that corporations, as groups of individuals, are entitled to exercise their right to free speech. Those same groups of individuals are also entitled to the property tax protections offered to all Californians by Prop. 13.
For those who cannot make that leap in thinking, consider Welch's other thoughts:
"There are three fatal flaws in this line of thinking. The first is that it fails to acknowledge, let alone explain, the fact that we keep placing more and more gold on the 'government services' end of the scale without seeing anything like a commensurate increase in results….
"The second flaw in zero-sum economic logic is that by consciously whittling down issues to a single, hermetically sealed scale, policy makers overlook the complexity of consequences, whether intended or not….
"The third and most infuriating aspect of zero-sum economics is that its practitioners suddenly forget to apply the same standard to one of the few entities that can accurately be described with a pie metaphor: government budgets—especially on the state and local level, where printing money is not an option and sometimes you aren’t even allowed to run a deficit."
http://reason.com/archives/2010/01/08/more-than-zero
MISCELLANY
***California Trivia***
Question 4: Where was the first four-level freeway interchange built?
Answer: near downtown Los Angeles. Now known as the Bill Keene Memorial Interchange, it was completed in 1953 where the Hollywood (101) Freeway meets the Harbor/Pasadena (110). Traffic reporter Keene would refer to it as "The Stack."
http://articles.latimes.com/2001/jun/07/local/me-7558
Question 5: Which State Senate District in 1960 had 6,036,771 people to represent?
BOE AND LEGISLATIVE DATES
Monday, February 15, 2010 --- Washington's Birthday
February 17, 2010 --- Ash Wednesday
February 23-24, 2010 --- Board of Equalization meets in Culver City.
February 23-March 15, 2010 --- Voter Information Guide available for public inspection from Secretary of State
February 27-28, 2010 --- Purim
March 12, 2010 --- Deadline for filing nomination papers for the June election
March 17, 2010 --- Declaration of candidacy extension if incumbent does not file for re-election
March 18, 2010 --- Randomized alphabet drawing to determine order of candidates on June ballot
March 23-25, 2010 --- Board of Equalization meets in Sacramento
March 25, 2010 --- Legislature’s Spring Recess begins upon adjournment (J.R.51(b)(1))
March 28, 2010 --- Palm Sunday
March 29- April 6, 2010 --- Passover
March 31, 2010 --- Cesar Chavez Day
April 2, 2010 --- Good Friday
April 4, 2010 --- Easter
April 5, 2010 --- Legislature reconvenes from Spring Recess (J.R. 51(b)(1))
NOTABLE DATES/ HISTORY
February 1, 1947 --- Legislative leaders met to complete negotiations on how they would spend the State's money to construct a highway system. By the 1940s Californians reliance on the automobile and need for an up-to-date highway system was well established. To meet this increasing need, the legislature appropriated $2.8 billion to build this superhighway program, which pre-dated the federal program of the 1950s. To read some history about California’s highways, go to:
http://www.cahighways.org/itypes.html
February 1, 2003 --- The space shuttle Columbia broke apart and burned while reentering Earth's atmosphere, killing all seven crew members.
http://www.nasa.gov/columbia/home/index.html
February 2, 1848 --- The treaty ending the Mexican American War was signed. The Treaty of Guadalupe Hidalgo formally ceded the territories of most of the American Southwest to the United States, including all of California. On the same day the treaty was signed in Mexico, the brig Eagle sailed into San Francisco carrying the first Chinese workers to enter California. Both events would heavily influence California's history from that date forward.
http://www.loc.gov/rr/hispanic/ghtreaty/
February 2, 1856 ---After leaving the Democrat Party because of its pro-slavery policies, U.S. Rep. Nathaniel Banks (R-MA) becomes first Republican Speaker of the U.S. House of Representatives. He was elected on the 133rd ballot.
http://www.archives.gov/northeast/boston/exhibits/banks/
February 2, 1957 --- Julia Morgan, architect of more than 700 buildings in California, died. She is best known for her work on Hearst Castle. As an undergraduate at Berkeley, she was encouraged by her professor and mentor, Bernard Maybeck (see below), to apply to the Ecole des Beaux-Arts in Paris. Although it took two years before being admitted since women were not welcome at the time, she eventually became the first woman to graduate with a degree in architecture from the esteemed academy. She has been inducted into the California Hall of Fame.
http://www.californiamuseum.org/exhibits/halloffame/inductee/julia-morgan
February 3, 1870 ---After passing the House with 98% Republican support and 97% Democrat opposition, Republicans’ 15th Amendment was ratified, granting the vote to all Americans regardless of race.
http://www.thenextright.com/category/blog-tags/15th-amendment
February 3, 1847 --- An appeal was answered for relief for the ill-fated Donner Party. The immigrants, who had suffered from poor decisions, timing and luck, had been stranded for months near the crest of the Sierra Nevada. In Yerba Buena (today's San Francisco), a collection was made at a meeting called by the Alcalde, Washington Bartlett. They raised $800 to purchase provisions, clothing, horses, and mules, to rescue those souls still stranded.
http://www.donnerpartydiary.com/
February 4, 1959 --- President Eisenhower informed Republican leaders of his plan to introduce 1960 Civil Rights Act, despite staunch opposition from many Democrats.
http://www.presidency.ucsb.edu/ws/index.php?pid=11771
February 4, 1960 --- Two years after construction began, the San Francisco Giants moved into Candlestick Park, their home for the next 40 years. The Giants and Los Angeles Dodgers became the first West Coast major league baseball teams when they left New York in 1958. Candlestick Park became known as one of the windiest and coldest stadiums in the country. The Giants moved their offices to Candlestick Park this day, but the team would work out of a locker room until the facility is completed a few months later.
http://www.ballparks.com/baseball/national/3compk.htm
February 4, 1789 --- The Electoral College unanimously voted George Washington to be the first president of the United States.
http://www.whitehouse.gov/history/presidents/gw1.html
February 4, 1945 --- The Yalta Conference convened with Franklin Roosevelt, Winston Churchill and Joseph Stalin meeting to establish the formulation of Allied military strategy in World War II.
http://avalon.law.yale.edu/wwii/yalta.asp
February 4, 1853 --- Benicia became the California State Capital and remained that until February 25, 1854.
http://www.parks.ca.gov/?page_id=475
February 5, 1851 – The City of Marysville in Yuba County was incorporated. Marysville was named for Mary Murphy Covillaud, the wife of the landowner Charles Covillaud.
http://www.marysville.ca.us/
February 5, 1900 --- Adlai Ewing Stevenson II was born in Los Angeles. He served one term as governor of Illinois and ran unsuccessfully against Dwight D. Eisenhower for president in 1952 and 1956. He was the U.S. Ambassador to the United Nations from 1961-1965.
http://en.wikipedia.org/wiki/Adlai_Stevenson
February 5, 1917 --- Over the veto of President Woodrow Wilson, Congress passed the federal Immigration Act. The legislation was aimed primarily at eastern Europeans, but it also barred laborers from Asia. This provision greatly affected the lives of many people on the West Coast. Starting with the Exclusion Act of the early 1880s, many attempts had been made to keep Chinese and, later, all Asians out of California and the United States. With the coming of World War I, xenophobic fears heightened, leading to the passage of this act. The Act also required a literacy test of all immigrants.
http://en.wikipedia.org/wiki/Immigration_Act_of_1917
February 5, 1866 --- U.S. Rep. Thaddeus Stevens (R-PA) introduced legislation, successfully opposed by Democrat President Andrew Johnson, to implement “40 acres and a mule” relief by distributing land to former slaves.
http://www.emergingminds.org/40-Acres-and-a-Mule.html
February 6, 1891 --- The famed Dalton Gang robbed their first train. The group--composed of three Dalton Brothers (Grat, Bob and Emmett) and a few other associates-- overtook the train near Tulare in the southern San Joaquin Valley. They were quickly accused of the robbery and fled the State with a posse in tow. The Gang moved to the Midwest to continue their crime spree, which ended only one year later in a bloody shoot-out in Kansas.
http://www.gunslinger.com/dalton.html
February 6, 1872 --- The City of Antioch was incorporated.
http://www.ci.antioch.ca.us/
February 6, 1899 --- The Spanish-American War peace treaty was ratified by a margin of just one vote after an intense fight in the United States Senate. The issues were whether America should become a colonial power and whether to establish a U.S. military presence in Cuba at Guantanamo Bay.
http://www.loc.gov/rr/hispanic/1898/intro.html
February 6, 1911 --- Ronald Wilson Reagan was born in Tampico, Illinois.
http://www.whitehouse.gov/about/presidents/ronaldreagan/
February 7, 1859 --- Emma Wixom was born in the Alpha mining camp in the Sierra Nevadas above Nevada City. She took the stage name of Emma Nevada and became a well-known opera singer. She died in 1940.
http://en.wikipedia.org/wiki/Emma_Nevada
February 7, 1862 --- This was the birthdate of one of the most influential California architects at the turn-of-the-20th-century, Bernard Maybeck. Maybeck, a native New Yorker, came to California in 1889. He quickly caught the eye of Phoebe Apperson Hearst, for whom he designed buildings and residences. He taught at U.C. Berkeley for a short time and included among his students was Julia Morgan (see above). Maybeck is probably best known for designing the Palace of Fine Arts in San Francisco, the last survivor of the 1915 Panama-Pacific Exposition. To see photos and a map of some of his most famous designs, see this link:
http://www.greatbuildings.com/architects/Bernard_Maybeck.html
February 7, 1908 --- The City of Inglewood was incorporated.
http://www.cityofinglewood.org/default.asp
GENERAL TAX INFORMATION
For answers to your general tax questions, call the Board of Equalization information center. Customer service representatives are available to help you from 8:00 a.m. to 5:00 p.m. Pacific time, Monday through Friday (except state holidays).
Toll-free number: 800-400-7115
TDD service for the hearing impaired
TDD phones: 800-735-2929
Voice phones: 800-735-2922
To reach the Taxpayer Rights Advocate’s office for assistance with any BOE issues, see http://www.boe.ca.gov/tra/tra.htm, or call toll-free 1-888-324-2798.
HOW TO CONTACT ME
Bill Leonard, Member
State Board of Equalization, Second District
Email: bill.leonard@boe.ca.gov
Northern California Office:
400 Capitol Mall, Suite 2340
Sacramento, CA 95814
Telephone: (916) 445-2181
Fax: (916) 327-4003
Southern California Office:
4295 E. Jurupa Ave., Ste. 204
Ontario, CA 91761-1428
Telephone: (909) 937-6106
Fax: (909) 937-7044
SUBSCRIBE INFORMATION
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