Tax reform has taken center stage in Washington.
Just last week, the House Ways and Means Committee approved the House’s tax reform proposal, while the Senate released its own tax reform proposal.
If you picked up a newspaper in California, you would have thought the sky was falling.
Among the howls of protest are complaints about provisions to cap property tax deductions and end state income tax deductions. A group of Democratic legislators argued how tax reform will allegedly make it harder to build low-income housing. The Oakland Raiders are even complaining that tax reform will make it more expensive to build their planned new stadium in Las Vegas.
These criticisms span the ideological spectrum, but the constant complaining have one thing in common.
It is truly difficult to enact sweeping tax reform in Congress, despite widespread popular support for many key components of the current tax reform effort.
Anyone who has ever read Showdown at Gucci Gulch about the last major federal tax reform effort in 1986 knows that it will be a minor miracle if any reform proposal is enacted this year.
And as PRI’s Wayne Winegarden wrote recently on Right by the Bay, these proposals aren’t as sweeping as you might think, despite the howls from California’s special interests and political class. While a step in the right direction, true tax reform would come in the form of a flat tax.
I believe a tax reform proposal that ends California’s giveaways might be a good thing.
Right now, federal tax breaks obscure California’s expensive state tax burden. Take those away, and hard-working Californians will finally realize just how much Sacramento is spending each year and how high the Legislature’s liberal majority has raised your taxes to pay for their spending wish list.
Who knows? People might even demand an end to the status quo once they are finally feel the pinch of California’s astronomical state tax burden. The proposals being discussed in Congress just might be the spark we need to get long-overdue tax and spending reform in Sacramento, and that would be worth any hit that may come to our bottom lines.
Tim Anaya is communications director for the Pacific Research Institute.
