Prop Zero
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Upside-Down Logic on Boost to State Tax Revenues

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    NEWSLETTERS

    The good news is that state tax revenues are up, about $2 billion over projections. The bad news is the illogic of the spin. Republicans are saying that these revenues show that the temporary tax extensions Gov. Brown wants aren't necessary. The Brown administration is pointing out -- defensively -- that this boost could be temporary or illusory.

    This would make sense, if Brown were arguing for a tax increase. He isn't. The taxes coming in now are being paid under the existing rates that he merely wants to preserve. That's right. The Republicans are arguing that because the current rates are producing greater than expected revenue, everything is fine -- and we should let the current rates drop. Which will produce less revenue.

    These additional revenues strengthen Brown's side of the argument. He could and should point -- shouting would be OK -- that economic growth and tax revenues haven't been hurt by these existing rates. So why not keep them?

    Of course, this debate about tax rates -- and essentially 1 cent in the sales tax -- is small. And merely setting a tax rate won't fix the state's budget and governing crisis. But it is depressing that the debate over something this high-profile is so upside down. California has a lot of digging to do to get out of its hole, no matter what the tax revenues prove to be.