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Oppose Tax Hikes to Balance the CA State Budget!
An Open Letter to the California Legislature

August 5, 2010

Dear Legislator:

     On behalf of the National Taxpayers Union's 52,000-plus members in California, I urge you to oppose any tax hikes currently under consideration. With unemployment still above 12 percent, $2 billion in tax increases on income, oil production, online shopping, vehicle registrations, and even plastic bags are the last things California's sluggish economy needs right now.

     Californians already pay the sixth-highest state and local tax burden in the nation, according to the Tax Foundation. Many of the tax hikes proposed are not only burdensome, they are irresponsible policies. Raising income tax rates, which are a notoriously unstable source of revenues, will hinder savings and investment in the economy. Higher income taxes will also contribute to migration from the state and a loss of taxpayers. A new severance tax on oil will not punish the oil companies, but will instead punish workers with job losses and consumers with higher energy prices. Also, states that have attempted to require sales tax reporting on Internet transactions or tax in-state affiliates of online retailers have not raised the desired revenues. What these taxes have done is shut down small businesses in the jurisdictions where they are imposed and brought costly litigation to the states. An increase in the motor vehicle fee will increase the cost of purchasing a car, already one of the largest purchases a consumer will make in a lifetime. A tax on plastic bags would limit consumers' options for carrying groceries home, especially low-income families. Further, plastic bag taxes, like other "sin taxes," have failed to produce the promised revenues.

     California does not have a revenue problem; it has a spending problem. California's tax rates are among the highest in the country and state spending has more than doubled in nominal terms (not adjusted for inflation) over the last decade. To eliminate chronic deficits, California needs to overhaul its tax code and reduce spending, not find ways to increase the burden on the state's taxpayers, who are still struggling in this economy.

     There is no question that California faces serious fiscal problems, and the state needs to undertake equally serious reforms. Billions in tax hikes would only add to the pain of everyday Californians, who have already had to ease up on their expenses in these lean times. It is time for state government to do the same. Please stand against tax increases and stand in favor of spending restraint.


John Stephenson
State Government Affairs Manager