If the State of California ends up sending a $400 tax rebate to all state taxpayers regardless of their income in response to high gas taxes, don’t thank the Legislature or Gov. Gavin Newsom.
The credit will likely belong to a gentleman by the make of Paul Gann who was part of the dynamic tax crusading duo of Howard Jarvis and Paul Gann that gave politicians their comeuppance for giving lip service to tax relief throughout the 1960s and into the late 1970s.
Both were behind the 9.0 Richter scale tremblor known as Proposition 13 that shook California government to the core. Before Proposition 13 became law, governing bodies came up with spending plans and simply increased tax rates to cover any shortfall instead of reducing spending.
Voters passed Proposition 13 in 1978.
The more gregarious Howard Jarvis who ran small town newspapers and also ran unsuccessfully for the U.S. Senate in 1962 plus several times to serve as Los Angeles’ mayor was the face of the property tax revolt that capped annual property assessments at 2 percent.
Gann, who was in real estate and automobile sales before an unsuccessful run for the U.S. Senate in 1980, was the face of Proposition 4 that passed in 1979.
Known as the Gann Initiative, it capped government spending at 1978-79 levels with adjustments allowed for inflation and population growth. The voter approved initiatives requires excess taxes to be refunded when the Gann Limit is reached.
That happened for the first time in 1989 when the state budget surplus exceeded the Gann Limit by $16 billion. Then Gov. George Deukmejian followed the law as imposed by the people as all taxpayers were cut checks for $400 to eliminate the excessive surplus revenue the state legally couldn’t possess.
Deukmejian did not mislead people. He didn’t claim it was government largeness or his political will to refund the money. He credited to the Gann Initiative passed by voters.
The same can’t be said for Gavin Newsom, the only other governor’s hand forced by Proposition 4.
Last year the state has a surplus of $76 billion or roughly $45 billion more that legally allowed under voters’ will.
Newsom didn’t present it as a tax rebate as dictated by Proposition 4. He characterized it as the Golden State stimulus rebate to help people deal with the economic ravages of government-imposed shutdowns to deal with COVID-19.
It was a self-serving dishonest spin at the least. And at worse, it could have violated the letter of the law given the rebate didn’t go exclusively to just taxpayers per se.
There is little doubt that all adults regardless of whether they are on welfare, wipe out their income tax obligations via deductions, own property or sleep on the streets are taxpayers. The state’s vacuums up money in many ways with a big one being sales tax. Rare is the adult who avoids paying sales tax at some point throughout the year.
The formula for the Golden State stimulus factored in minor children of taxpayers who already receive tax breaks for said dependents.
The upcoming state budget surplus pegged at $45.7 billion by Newsom in January could go $23 billion higher based on a projection issued in late February by the state Legislature’s Analyst Office.
If that happens, the surplus will clearly trigger the Gann Initiative mechanism requiring refunds. Funny, but based on the size of last year’s surplus that had to be refunded that came in at $600 per taxpayer, this year they’re talking about a “gas tax rebate” of $400 per taxpayers. That $400 is proportional to the lower surplus that law could force to be refunded this year.
The spin — blatantly embraced by red and blue politicians alike with yellow-belly stripe a mile wide — that it’s a gas tax rebate because the California Legislature feels our pain at the pump is as big as a lie as claims last year’s $600 was to help us deal with the economic fall-out of government lockdown dictates.
The money they refunded as the Golden State stimulus to deal with COVID — and want to refund as a gas tax rebate — is money the state is not legally entitled to hold.
It is why there is nary a peep from quarters in Sacramento that swoops down to try to ravage any surplus they can to fund glorious new spending initiatives about the gas tax rebate proposal. When the dust settles the $400 per taxpayers will likely end up being funded completely with money that exceeded the voter-imposed Gann Initiative.
The people you should have been grateful for last year for the $600 check and this year if a $400 check materializes are Paul Gann and those who supported his imitative at the ballot box in 1979 and not anyone walking the corridors of the State Capitol today.
As for those disingenuous politicians that specialize in ignoring the law and the numbers when they engage in class warfare, the debate about whether every taxpayer including Mark Zuckerberg et al should receive a $400 gats tax rebate check regardless of their income is like the firefighters going about their duty by pouring kerosene on a burning house.
There is absolutely no doubt that if it wasn’t for huge capital gains pocketed by Elon Musk and other wealthy individuals the state would not have breached the Gann Limit last year or this year.
Yet Sacramento politicians stuck it to those that paid the most by denying them a penny in tax rebates.
So, what if they don’t obviously need a $600 rebate based on their personal financial need? The final tax bill we all pay doesn’t go through a litmus test as to whether we can afford it based on our personal financial situations.
It is why a tax rebate as mandated by the California Constitution when it was amended by passage of Proposition 4 in 1979 that’s dressed up as a gas tax rebate should go to all taxpayers.