At first I thought that the headline writer was confused.  “California tax reform plan much too bold for Capitol,” it said above George Skelton’s column today.  “Too bold” could maybe have more than one meaning.  Surely Skelton wasn’t throwing in with the idea that massively shifting the tax burden to the lowest income levels in society was too good an idea.  But I think that is, in fact, what he’s saying.

“I would sign it immediately” if it were a bill, Schwarzenegger told reporters. “Without any doubt.”

Of course, this is a governor who constantly seeks out things new and bold. And the tax proposal was all of that — much too new and bold for most Capitol denizens, especially those representing special interests.

As Genest told me: “It shouldn’t come as any surprise that lobbyists in Sacramento are in favor of maintaining the status quo unless they are confident that the change will serve their interests. That’s why they’re called ‘special interests.’ “

Nowhere in Skelton’s article does he quote any figures or statistics citing the practical effect of the Parsky Commission’s plans.  He doesn’t mention that, under the plan, taxpayers making over $1 million dollars a year would save $109,000 annually on average, while taxpayers making between $40,000 and $50,000 would save four bucks.  He doesn’t mention that the proposal would result in a net loss of revenue to the state, causing wider budget deficits.  He does manage to mention critiques of the business net receipt tax from the side of business and industry, but offers no critiques from the opposite end, a la Jean Ross’ statement that “You could not say, ‘We’re going to tax child care so we can lower the income tax on millionaires.’ But that’s what this does.”  The fact that the BNRT would hit business payrolls and disproportionately tax companies in the knowledge economy rather than the service economy also doesn’t make it in.  Skelton never mentions that, by taxing all businesses in the state, the BNRT would effectively tax rents.

He just says it’s “too bold.”

The Parsky Commission was practically designed to shift wealth upward.  It should surprise nobody that this is what it ended up doing.  That is bold, but not in the way that Skelton means it, I don’t think.

He does give voice to where Karen Bass may steer the debate:

Bass was holding her tongue, trying not to express disappointment in the commission. When she first proposed its creation, the speaker envisioned the panel proposing something more practical and simple: reducing the sales tax rate and spreading it to currently untaxed services.

She promised a “thorough and objective public review” of the panel’s recommendations.

Good idea, but don’t stop there.

“My biggest message to dysfunctional Sacramento is to get something done,” Parsky says. “If you’ve got a better idea, get it done.”

There’s no question that flattening and broadening the sales tax base is a decent enough idea.  Under the constraints of minority rule, it may be the best one lawmakers can get, and it would prove popular if enacted.  We’ll see if the Parksy Commission report is dumped in favor of that.

We heard last week about outlines of the Parsky Commission report that would radically shift the tax burden in California.  We even heard that offshore drilling may have been snuck into the draft at the last minute.  Last week, the commission held a public meeting which featured more details, including the intimation that 3% of the population would see half of the tax break under the Parsky plan.  They made the public wait for seven hours and then gave one individual a minute to make a comment.  Yesterday, the final public meeting was held, and right before it, Jean Ross offered some facts and figures showing how the commission’s recommendation would amount to the Latvia-ization of the state of California, with a massive transfer of wealth to the upper classes at the expense of working families.

The biggest winners would be the state’s millionaires, who would receive personal income tax breaks averaging $109,000 per year. The biggest losers would be middle-income families who would receive a tiny, if any, reduction in their personal income taxes and who would pay substantially more for goods and services due to the new “value-added” tax the Commission proposes to replace revenues lost due to the tax cuts for the wealthy and repeal of the corporate income tax.

The magnitude of the shift proposed by the Commission is nothing short of stunning. The changes to the personal income tax structure alone would reduce income taxes paid by the poorest 62 percent of California taxpayers by $4 per year, on average, while providing six-figure breaks to the millionaires. The bottom 81 percent of the income distribution – the vast majority of all Californians – would receive 10 percent of the personal income tax cut, while the top 0.2 percent would receive 27 percent of the benefits.

And that’s the “good news.” The Commission would repeal the corporate income tax and the state’s portion of the sales tax and replace it with a new tax on business net receipts – a tax that has never been tried anywhere in the US – that the Commission’s own consultant notes would raise prices of goods and services, while exerting downward pressure on wages and benefits […]

Some might be willing to support these changes if they ended California’s persistent budget crises. But again, the Commission’s own estimates predict that revenues raised by the new tax system would grow more slowly over time than those raised by the state’s current tax system. Thus, the Commission’s recommendations would lead to larger, not smaller, budget shortfalls in the future.

At the committee hearing yesterday, commissioners requested an analysis of the impact of the recommendation for taxpayers, and it came out precisely as Ross stated – “The 10 million taxpayers making less than $50,000 would pay $100 million more in taxes while the 7 million taxpayers who make more than $50,000 would get $6.8 billion in tax cuts.”

This will not be a consensus document, most of the liberals on the panel won’t sign it.  And even the news reports today acknowledge that the changes would “largely benefit the wealthy.”  Clearly the Governor will put his weight behind it, but that’s meant nothing in Sacramento for several years.  The question is whether the Democratic Legislature would dare to massively reward the rich so nakedly by accepting these recommendations.  Because the business community is actually against it, worried about the effect of the net receipts tax, I’d still guess no, but people should be letting their Representatives know that they will not get away with a transparent shift in wealth from the middle class to the super-rich.

CalBuzz points out some correspondence between Bush Ranger Parsky and the rest of the Parsky Commission:

As we first reported late Wednesday, tax reform commission Chairman Gerald Parsky sucker-punched at least some members of his panel by sending them an unexpected, last-minute recommendation to generate “tens of billions of dollars” of new revenue by vastly expanding offshore oil drilling in state waters.

***

The recommendation came as a shock, not only because the offshore issue was only casually discussed during the commission’s months of hearings, but also because it deepened the atmosphere of secrecy and sleight-of-hand in which Parsky assembled the agenda for the panel’s final, crucial meeting. As a political matter, such an expansion of offshore drilling would also directly conflict with decades of state policy, in which environmental protection of coastal waters and beaches have trumped economic issues, resulting in a long-held moratorium on new leases.

The proposal for more offshore drilling seems to have worked its way onto the commission’s plate at least in part at the request of conservative Hoover Institution economist Michael Boskin, who also sits on the board of Exxon Mobil.

How oil drilling got into a so-called tax commission shouldn’t be a surprise when there was a faux transparency.  The website laid out a slew of emails and written conversations, but apparently Parsky and his cronies were working on something else entirely.

This is not the process that gets to determine whether we will set up oil rigs off of the entirety of our coast line.  That is an entirely seperate conversation, and frankly Mr. Parsky, I don’t care one iota what you think about that.  Not that I really much cared about what you thought about our revenue system either at this point, but this was not your assigned task and frankly none of your business.

It’s nice to see that ExxonMobil has its dirty hooves in just about political conversation where it can possibly make a buck. But if ever anybody thought that the Parsky Plan had any credibility as any sort of unbiased scheme, well, that can just about be written off right about now.

When business groups began to object to various provisions in the Parsky Commission effort to upend the tax structure in California, including anything that even smelled like an increase (even though the plan had to be revenue-neutral to clear the Legislature), I figured the effort was dead and buried.  It appeared that the entire effort was a complete waste of time, and the effort to Latvia-ize the state by shifting the tax burden from the upper class to the lower class had been sniffed out and extinguished.  However, the recent secrecy on the part of the commission, after a pledge of transparency, has many wondering if the shock doctrine is alive and well.

The plan is that, just about 24 hours from now – or 11 a.m. Thursday, to be precise – a state commission will consider and potentially adopt a proposal for an entirely new tax system for the state of California.

It would be a radical undertaking, slashing some taxes, eliminating others and establishing a new tax about which no one in California is familiar. No one can say with anything approaching certainty how much it would cost businesses and consumers or how much revenue it would generate to finance state services.

Yet, despite the significance of the task, despite all the unanswered questions and despite the imminence of a decision, as of this writing – midafternoon Tuesday – the details of the proposed new tax plan have not been made available for public review.

A spokeswoman told me a little after 3 p.m. there was still hope that the detailed proposal would be posted on the commission’s Web site before the day was out.

The Legislature has made no indication that they would take up whatever plan the Parsky Commission votes out, even after the Governor orders a special session to deal with it.  And with both sides of the aisle condemning aspects of the plan, liberals for the tax burden shift, and conservatives for the unknown tax increases that may be part of any deal, I wouldn’t call the prospects likely for a Parsky Commission plan to become law.  But the secrecy is certainly troubling, as well as the revival of provisions voted down by the people on multiple occasions.

But members of the tax commission are reviving the rainy-day fund idea once again. Most notably, the idea has had some of its strongest support from Democratic-appointed commissioners.

Former Assemblyman Fred Keeley said recently that while many commissioners believe the state can reduce its budget volatility through changes in the tax system, he believes the tax system isn’t so much the problem.

“My belief is that volatility of the general fund, to the degree it’s a problem, is due to the governor and Legislature with regard to spending,” Keeley said. “That can be solved by way of an appropriately designed rainy-day fund or lockbox.”

Another Democratic appointee, University of Connecticut law professor Richard D. Pomp, reminded the commission this month that he has long believed the reduction of volatility was a spending issue.

“From the outset, I have argued, and continue to believe, that volatility, which is a feature of every state’s tax system, is a spending problem and not a tax problem,” Pomp wrote. (That comes awfully close to the oft-used GOP line that California’s budget problems are “a spending problem, not a revenue problem.”)

I think these Democrats are trying to argue that volatility in the tax structure is a good thing, which it is.  But the leap from that to a spending cap doesn’t follow.  There’s a difference between spending wisely in good years and a third-party mechanism that limits the ability to restore chronic budget cuts from bad years, which is what a cap would inevitably do. (A rainy-day fund without a cap would be different, but may end up serving the same purpose.)

I stick with my prediction that the commission is doomed, but it still bears watching.

…Kevin Yamamura has more.

The California Chamber of Commerce and 33 other business groups have basically stuck a knife in the Parsky Commission with a coalition letter opposing most of the tax reforms proposed.  I’m sure they’d still love to see a flat income tax and the elimination of corporate taxes, but since they have basically refused all revenue-raisers in this document, that won’t happen.

The coalition doesn’t like removing Proposition 13’s property tax limits from business property and a proposed new “carbon tax,” both of which have been promoted by the tax commission’s liberal bloc. But it also is warning about the potentially negative effects of a “net business receipts tax,” similar to a European-style value-added tax, that commission chairman Gerald Parsky champions […]

“The California business community has consistently stated that the solution to California’s revenue problems will only come from robust economic growth and job creation,” said today’s letter to Parsky. “We believe the proposed split roll property tax and the energy tax would be extremely detrimental to California’s economy. As for the business net receipts tax, we believe it is risky and inappropriate to move forward with dramatic changes to the tax structure without first fully vetting their impact on California jobs and the economy.”

The only way for the Parsky Commission to get an up-or-down vote for its recommendations is by making the package revenue-neutral.  The CalChamber document opposes all of the tax hikes while saying nothing about the reductions.  California Democrats can be squishy, but not squishy enough to eliminate corporate taxes in exchange for nothing.  Sen. Steinberg never agreed to bring the commission recommendations to a vote in the first place.  And without an offset, they will never see the light of day.

Arnold Schwarzenegger is a wholly owned subsidiary of the Chamber of Commerce.  Even in the unlikely even that the legislature ignores this letter and passes some plan including split-roll or a carbon tax or a business net receipts tax, there’s no way the Governor signs it.  The Parsky Commission is dead.

And I’m not really shedding a tear for it.  Forcing a revenue-neutral standard on how to fix the tax structure inevitably was going to shift the tax burden from the rich, who have the clout to shield themselves from the predations of lawmakers, to the middle and lower classes, who don’t.  The very structure was flawed, and the reforms sought of a lesser order than being able to properly fund government according to the wishes of the majority.

So we can move on to the next challenge.  Calbuzz has a good scene-setter on that, referring to something that Jean Ross mentioned in our Netroots Nation panel last week.  California Forward’s reform package may include, as a condition of repealing the 2/3 rule for passing a budget (and only the budget), a raising of the threshold to 2/3 for mitigation fees on businesses, which may extend to fees on alcohol, oil production and “anything else that carries a nexus to a public problem.”  In other words, while the budget would require a majority vote, revenue (which is 1/2 of a budget) would be subject to an even higher standard than it is now, and the legislature would be constrained in their ability to respond to the impact of corporate actions that harm the public good.  Actually it could go even further than that:

But Chairman Bob (Hertzberg) insists it would be a mistake to focus only on Sinclair as the key to business support for CF reforms. The only way some of the conservatives and business people on CF would “even consider” allowing 50% to pass the budget is if there’s a whole panoply of budget reforms – pay-as-you-go provisions, controls on one-time expenditures, two-year budgeting,  performance reviews, sunset provisions AND limits on what can pass with 50% as a “fee,” he said.

But will liberals – on CF and in the Legislature – agree to circumscribe their current authority to impost fees with a majority vote? Will they agree that there has to be a “clear nexus” between charges allocated to a polluter or manufacturer of polluty stuff?

As Jean Ross puts it, ever so succinctly, “California Forward?”  I concur.

So while we appear to have sidestepped the Parsky Commission (for now), California Backward’s set of “reforms” still lurk in the distance.

We’ve been pretty critical of the so-called 21^st Century Commission for a while now. We were skeptical when Bush acolyte Gerald Parsky signed up as chair and rather unsurprised when the commission staff posted a powerpoint slidedeck with their plan (PDF) which would lead to the Latvia-zation of California. In other words, the commission’s staff plan shifted the tax burden off those making 100K+ and to lower income earners, in the name of “decreasing volatility.”  As if decreasing the progressiveness of our already fairly regressive system is the only way to do that, or even a good way.

But, today we get news, via Dan Walters, that former Assemblyman Fred Keeley has a plan to offer up another plan. The so-called “Blue Plan” which apparently has the support of at least one other member, Chris Edley, the Dean of Berkeley’s Boalt School of Law.

Keeley and Boalt Hall School of Law Dean Christopher Edley Jr. are drafting the blue plan for presentation to the commission next week in a direct challenge to Parsky, who has been pushing his vision of tax reform very hard. “I don’t think you get a consensus product by driving a stake on one side,” Keeley said.

As of yet, the details of any “blue plan” are murky with the possibility of a carbon tax and changes to Prop 13 being raised. But the mere existence of an alternative plan, no matter what it entails, is a good sign.

Parsky, as Walters points out, has been pushing extremely hard for his plan of Bush-style tax shifting from the wealthy to the middle class. Until this point, the plan seemed to be steamrolling through the commission without much of a sense of teamwork so much as a sense of inevitability.  With the mere concept of an alternative plan, that diminishes.

But, I want to take one more look at the Commission itself.  Peruse the member list. On the Legislative side you have

Hardly a group of wild-eyed DFHs there.  On the other side, you have

The Legislature picked a center-left experts on issues of taxation, the law, and social justice. I won’t deny that some of them are fairly liberal, but you also have the CEO of an insurance plan and tax professor in there. The governor’s appointment includes two former Republican legislators, one of whom is, shall we say, an outsized personality, and a slew of Bush-minded anti-tax “business” types.

In other words, there was a big ol’ rock on this scale. That’s not to say that you couldn’t get a decent result, it’s just that it would be an uphill battle and something of a surprise.