California’s taxation debate runs wild on Tax Day 

April 15 used to be simply the day that federal and state income tax returns were due.

However, with political angst running amok, it’s been transformed into Tax Day with capital letters, pitting those who believe they’re taxed too much by wasteful governments against those who insist that taxes are too low and vital services are dying.

Thus, hundreds of tea party tax protesters gathered at the state Capitol on Thursday — while union leaders and liberal politicians ramped up their pro-tax rhetoric.

The California Teachers Association touted its pending ballot measure that would repeal some big corporate tax loopholes that the Legislature and Gov. Arnold Schwarzenegger enacted last year as they temporarily hiked personal income, sales and car taxes.

Meanwhile, the union-backed March for California’s Future, which entered Sacramento County on Thursday and will arrive at the Capitol next week, trumpeted a $40 billion increase in taxes on corporations and upper-income Californians “to obviate further cuts to public service programs that polls show a majority of California voters support.”

The liberal California Budget Project issued a report contending that poor Californians pay proportionately much higher taxes than the wealthy, albeit with shaky logic and somewhat outdated data. The group also argues that “California is a moderate tax state.”

Not to be outdone, Assembly Republican leader Martin Garrick issued his own tax burden compilation, arguing that state sales, gasoline and income tax rates are among the nation’s highest, thanks to those temporary increases enacted last year, and complaining about the billions of dollars in added tax boosts introduced by Democratic lawmakers.

It’s enough to make your head explode. While the tax debaters don’t exactly lie, they tend to use selective data or interpretations of that data to bolster their arguments.

To paraphrase Goldilocks and the Three Bears, whether Californians’ tax burden is too high, too low or just right is obviously not a settled issue, nor will it ever be.

The debate rages, of course, as Schwarzenegger and legislators contemplate this year’s version of the state’s perpetual budget crisis. The current hole is about $20 billion, which would equate to a 40-plus percent increase in income taxes or a two-thirds boost in sales taxes. But it would represent only 1 percent of the state’s personal income.

Given the two-thirds vote requirement for new taxes, and the fact that lawmakers already boosted them last year, another substantial tax hike this year is a very remote possibility at best.

Politicians are hoping that they’ll see a revenue windfall from a recovering economy or aid from Washington that would ease their dilemma and protect them from having to make deeper cuts in education, health care and other services.

Dan Walters’ Sacramento Bee columns are distributed by the Scripps Howard News Service.

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Dan Walters

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