Tax Raisers Target Businesses—How Long Will Businesses Stay in CA?

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Businesses, particularly corporations, are the targets of tax raisers in the legislature, at city hall and on the ballot. Piling on business taxes in a state notorious for its poor attitude toward business, one wonders how long businesses will put up with it before leaving. As Jim Wunderman, the president and CEO of the Bay Area Council told the San Francisco Business Times, “Taxes equal Texas.”?

The state legislature recently eliminated business tax credits, suspended the net operating loss deduction, and made other moves to find budget revenue with $9.2 billion from business. San Francisco and Oakland, as examples, are looking at proposals to restructure their business taxes with the goal to raise revenue from big businesses. Coming on the November ballot is the largest property tax increase in history aimed at corporations, although in reality all businesses will feel the effect. The property tax measure is backed by politicians such as the mayors of Los Angeles and San Francisco, as well as the largest public employee unions in the state.?

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Neo-Feudalism in California

Joel Kotkin
Editor of NewGeography.com and Presidential fellow in urban futures at Chapman University

From the beginning, California promised much. While yet barely a name on the map, it entered American awareness as a symbol of renewal. It was a final frontier: of geography and of expectation.
—Kevin Starr,?Americans and the California Dream: 1850–1915

In the eyes of both those who live here and those who come to observe, California has long stood out as the beacon for a better future. Progressive writers Peter Leyden and Ruy Teixeira suggested last year that our state is in the vanguard of every positive trend, from racial diversity and environmentalism to policing gender roles. “Cali?fornia,” they said in a post on?Medium,?“is the future of American politics.”

If true, this may not be the best of news. Rather than the vanguard of a more egalitarian future, California has become the progenitor of a new form of feudalism characterized by gross inequality and increas?ingly rigid class lines, a trend that could be exacerbated in the after?math of the coronavirus outbreak, which has devastated much of the blue-collar economy. But the shift is likely to only further enhance those at the top of the state’s new class structure, those best suited for the inexorable and expanding shift to digital platforms. These are the tech oligarchs who dominate an economy that leaves most Californians less well off.

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Back to the Future? 2020 Reflects 1968

Hal Dash
Chairman and CEO of Cerrell & Associates

“Those who cannot remember the past are condemned to repeat it.”

(Philosopher George Santayana, 1905)

“Nixon, now more than ever.”

?(Richard Nixon campaign slogan, 1968)

  1. Martin Luther King and Bobby Kennedy assassinated. American cities on fire.? Protests and civil unrest across the country. Vietnam escalates and thousands of American soldiers die. A very unpopular LBJ doesn’t seek a second term. Progressives challenge the establishment. College campuses in an uproar. Chicago Convention tabs VP Hubert Humphrey for President and protests in Grant Park spark Chicago PD brutality.? Nixon wins the Presidency and things become even grimmer.?

Ugh!? 1968 was truly a forgettable year. And I voted for the first time.

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California Re-Evaluating Cap-and-Trade Program

Rachel Becker
Environment Reporter for CalMatters

As the coronavirus pandemic and recession hits California, the governor’s top environmental official has launched a comprehensive review of the cap and trade program that has been the cornerstone of the state’s strategy to fight climate change.

California has been relying on its carbon trading program for nearly half of the greenhouse gas reductions it has promised by 2030. Now, in a letter obtained by CalMatters, California EPA?Secretary Jared Blumenfeld?laid out plans for re-examining the program and whether it’s likely to meet its goals.

“The advent of the COVID 19 Crisis, the collapse of the world oil market, and the results of [the California Air Resources Board’s] May 2020 Auction are all factors that deserve careful consideration,” Blumenfeld said in the letter addressed to state Sen. Bob Wieckowski, a Democrat from Fremont.

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Manipulating the Election System…Again

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

The Democratic majority in the Legislature is at it again, attempting to manipulate election rules to favor a desired outcome with voters. It has happened a number of times in the last decade. The current effort is SB 300 by Senator Tom Umberg to place all constitutional amendments passed by the legislature in the coming days on the November ballot where the majority feels they have a greater chance for success.? Under current law, any measure that qualified after 131 days before the election would appear in the following election, June 2022 ballot.?

The Democrats are hoping to have some or all of the following constitutional amendments gain a two-thirds vote, which makes them eligible for the next appropriate ballot. If SB 300 passes and is signed into law, that election would be November.

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Please Don’t Heap New Privacy Rules on Fragile Small Businesses

John Kabateck
President, Kabateck Strategies

My friends at BizFed, the Los Angeles Business Federation, just released the results of their May survey of business owners. Among other disturbing findings on the impact of COVID-19 on the businesses, almost half of all respondents said their revenues have dropped by more than 50%.? And our organization, the NFIB, the leading small business advocacy organization in California, recently reported that as many as 50% of small businesses are destined for failure if things don’t improve soon after Memorial Day.

Is this the time to be hobbling their recovery with more costs??

In December 2019, the Attorney General released a study that found compliance with the California Consumer Privacy Act (CCPA), which took effect on January 1 of this year, would cost California business approximately $55 billion dollars. Stressed business owners were already worried about those costs, including hiring lawyers and technology experts to re-engineer their company systems.??

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Budget deal shields neediest Californians, shifts burden to middle class

Laurel Rosenhall
Reporter, CALmatters

The work of crafting a pandemic-era state budget was never going to make California Democrats happy. The question, as soon as the economic fallout from the coronavirus became evident this spring, wasn’t whether there would be cuts, but rather, who would take them and how deep they would go.?

The answer, detailed in an agreement Democratic lawmakers and Gov. Gavin Newsom reached to close a $54 billion deficit, is that middle-class families are likely to feel the biggest burden, while the neediest Californians are largely — though not completely — spared.?

Unless the federal government comes through with billions of dollars in stimulus funds, state government employees will lose about 10% of their compensation, and California’s two university systems will lose a combined $602 million, raising the possibility of tuition increases. On the other hand, programs that help people who are homeless, elderly or dependent on the government for health insurance — as well as funding for K-12 schools and community colleges — will not suffer most of the cuts that Newsom proposed last month.?

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California’s 21st Century Megadrought

Jeffrey Mount and Michael Dettinger
Jeffrey Mount is a Senior Fellow at the PPIC Water Policy Center. Michael Dettinger is a Visiting Researcher, Scripps Institution of Oceanography and was a research hydrologist for the U.S. Geological Survey.

A recent paper on climate change in California and the West has been in the news and raising concerns. Based on extensive analysis of tree ring data—a good measure of summer soil moisture—the authors postulate that most of the region is in an unfolding “megadrought” that began in 2000 and is the second worst in the past 1,200 years.

What does this mean for California water management? If the state is in a megadrought, it means a great deal. We should plan accordingly.

Megadrought is a term of art, but essentially it refers to decades-long periods of low precipitation and soil moisture, often associated with reduced mountain snowpack. These periods are chronically dry, with less frequent wet years and drier dry years.

California’s climate signals suggest that the state is experiencing a megadrought along with much of the West, as evidenced by precipitation and, perhaps most important, temperature anomalies.

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Unmasking an Opportunity and a Reckoning

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

Announcements from a number of law enforcement officials that they will not enforce Gov. Gavin Newsom’s mask order comes with both an opportunity and a reckoning.?

The opportunity arises with the ability to test a theory behind the defund police movement that asserts that non-sworn public officials can mediate and deal with situations that do not require use of force. The reckoning is the natural outcome of police attitude toward the changing laws from felonies to misdemeanors that frequently put the perpetrator of crimes back on the streets with no punishment to the frustration of law enforcement.? If there is no enforcement, why bother?

The Sacramento County sheriff, among others, found that it is “inappropriate for deputies to criminally enforce the Governor’s mandate” on masks considering the “minor nature of the offense.” Other law enforcement agencies up and down the state made similar? statements.

It is an attitude born out of frustration by law enforcement officials expressed over changes in California law that make it more difficult to penalize what the laws now define as misdemeanor rather than felony offenses, many crimes valued at $950 or less. You can sense the link between the situations. If dealing with devalued felonies aggravates law enforcement, why try to enforce an unenforceable order when no penalties are assessed?

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Why Sacramento Fails California—And Itself

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

There is no better symbol of Sacramento’s failure as California’s capital than the 18-foot-tall stainless-steel sculpture, by artist Jeff Koons, standing outside the city’s downtown arena. It cost the city and the NBA’s Sacramento Kings $8 million. Officially named? “Coloring Book #4,” it’s really a representation of the Winnie the Pooh character Piglet.?

It also expresses Sacramento’s porcine business model. As our state government hogs ever-greater authority for itself at the expense of California communities, our capital city controls more of our tax dollars, and our lives.

We now live in the fifth decade of California’s great era of centralized power. In the 1970s, liberals seeking equality in local school funding and conservatives seeking local tax limits robbed California’s local governments of most of their fiscal power—and gave it to the state Capitol. Ever since, the single greatest enterprise in Sacramento—pursued by governors, legislators and various interests—has been the expansion of stat power.?

Downtown Sacramento is a living monument to our centralized era. In response to all that state power, Californians have had to spend more money to influence and elect Sacramento’s power players. This spending created an army of lobbyists, consultants, organizers, party officials, and media mavens, who turned once-sleepy downtown Sacramento into their campus, with office towers, snazzy venues like the arena, and expensive extra, including Piglet.?

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