Dan Walters

By Dan Walters
dwalters@sacbee.com
Published: Friday, Nov. 9, 2012 – 12:00 am | Page 3A

Darrell Steinberg, the president pro tem of the state Senate, says he wants to use the Democrats’ new supermajorities in the Legislature to reform the state’s taxation system and the initiative process.

Both certainly need judicious overhauls, but it’s very unclear whether Steinberg & Co. are interested in true reform or merely want to advance their ideological agenda and/or solidify their control of California politics.

The devil, to use a shopworn but apt phrase, is in the details.

A time-tested principle of taxation is that it should be applied to a wide base with low rates.

California’s sales and income taxes do just the opposite, applying very high rates to very narrow bases, and the state moved further in that direction Tuesday with the passage of Proposition 30.

That makes the state’s revenue stream extraordinarily volatile – up one year, down the next – as the economy expands and contracts.

When taxes pour into the state treasury, politicians quickly spend them on new services or selective tax breaks, and when revenue declines, as it inevitably does, the state is left with severe deficits.

The Legislature itself recognized the need for tax stabilization a few years ago, joining with former Gov. Arnold Schwarzenegger to appoint a blue-ribbon tax reform commission. But its members were sharply divided, and its final report – advocating big changes in sales and income taxes to broaden bases and lower rates – was ignored.

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