11.07.2012 original publish date
11.15.2012 expanded article, updated
11.18.2012 minor update
11.19.2012 article update
California Votes in Higher Taxes, Did Government Mislead Voters?
original article written by Net Advisor™
California, USA. Voters in the Golden State approved to raise taxes — on themselves. CNN reported that new tax hikes are for “the wealthy.”
Well, that is not exactly accurate. There are several aspects to new taxes here and they affect everyone in California.
[1] Sales Tax.
The state sales tax will go up “1/4 cent.” This affects anyone who buys anything in CA. Also many people might be a bit mislead by this government math. People will not pay 1/4 of 1 cent to each purchase, they will be paying an extra 1/4% (or 0.25%) on each purchase.
example:
$100 purchase with 0.25% = $2.50 in addition to the existing sales tax.
Buying a car or shipping it to California?
Better do it before 01-01-2013. A $30,000 car will cost you $750.00 more. That’s a bit more than the “1/4 cent” sales tax increase we are led to think.
Sales Tax Depends on Where You Live
CNN also noted that the “sales tax hike, which brings that levy to 7.5%, lasts for four years,” that depends where you live in the state. The sales tax rate is not uniform throughout the state as the article suggests.
Most of California pay higher sales tax than 7.50%. Two Californian cities will pay 10% sales tax under the new law. In South Gate, a lower income suburb of Los Angles (see chart: “median per capita income in 2009“), residence currently pay 9.75% in sales tax (Source: California State Board of Equalization). With the new 0.25% tax under Prop 30, their sales tax will jump to 10%. Pico Rivera, another Los Angles city will also be hit with a 10% sales tax under prop 30 come January 1, 2013.
[2] How Government May Have Misled Voters
I would also suggest watching closely to the notion of (these new taxes) “prevents massive budget cuts to the state’s public schools and universities.”
What the state has done in the past starting with the Lottery is to replace those funds with money that would be allocated to education anyway.
Example: If the state lottery received $1.00, the state government would not need to allocate $1.00 from the general fund toward education. Thus the lottery did not increase education spending, instead, it replaced funds that would have gone to education from the general fund with the revenue from the lottery.
This is apparently what the state is doing again under the November 6, 2012 Prop. 30 ballot measure.
“The (Prop 30) money would go into a special fund for public schools and community colleges. At the same time, it would allow the Legislature to take about $3 billion from the General Fund that would have been spent on education and redirect it to other priorities.”
— Source: Los Angeles Times, 10-23-2012
And there you have it. The state had no intention to increase education funding. This law was designed to circumvent the state’s legal obligation to fund education.
[3] California State Constitution Already Protects Education Spending For Last 24 Years
In California, the state Constitution mandates 40% of the state’s budget goes to education. This was enacted under “Proposition 98” in 1988.
(California 1988): “Proposition 98 requires a minimum percentage of the state budget to be spent on K-14 education, guaranteeing an annual increase in education in the California budget. As a result of Proposition 98, a minimum of 40% of California’s general fund spending is mandated to be spent on education…”
— Source: BallotPedia.org
So some $3 Billion of the expected $6 Billion Prop 30 is PROJECTED to raise — not would raise, but might raise, will go to anything other than education.
The governor nor ANYONE else can change the 1988 Prop 98 Law without public voters in a ballot measure to amend the state Constitution. There was no ballot measure so the existing law would have stood even if Prop 30 failed.
Anyone who said that the governor or anyone else had the power to cut education exclusively, for any reason, would be violating the state Constitution.
The state can only cut education, etc., pro-rata to the total budget of the state. The state still has to spend no less than 40% of its total budget on education under Prop 98.
Voters were apparently mislead as to the laws, rules, and polices of the state. Of course our democratic leaders who were behind and supported this legislation had no interest in educating voters that they could not specifically cut education exclusively under state law.
[4] Did Prop 30 Violate U.S. Constitutional Law?
There is a legal issue here. Prop 30 is retroactive to the start of the 2012 tax year.
“Proposition 30 will raise the state’s sales tax by a quarter of a cent for four years starting Jan. 1 and increase income taxes for people who make at least $250,000 by up to 3 percentage points for seven years, retroactive to the start of the 2012 tax year.”
— Source: Mercury News, 11-06-2012
Now, I’m not a lawyer, but my understanding is that one cannot pass a law and make it retroactive.
Simple Example:
Let’s say you were wearing the color blue sometime during the last year and it was perfectly legal to do so. Then, a law was passed making it illegal to wear blue, and that law was retroactive. So anyone wearing blue over the last year would be in violation of the law and subject to its penalties.
After doing some further investigation into passing a retroactive law, I came across this:
An ex post facto law (from the Latin for “from after the action” or “after the fact”), also called a retroactive law, is a law that retroactively changes the legal consequences (or status) of actions that were committed, or relationships that existed, before the enactment of the law…
…Ex post facto laws are expressly forbidden by the United States Constitution…
Congress is prohibited from passing ex post facto laws by clause 3 of Article I, Section 9 of the United States Constitution. The states are prohibited from passing ex post facto laws by clause 1 of Article I, Section 10.
— Sources: Wikipedia and Cornell University Law School
Now, there may be a debate here.
1. Does the U.S. Constitution supersede any state law? (It does). The “Supremacy Clause” states in part:
“…the laws of the United States…shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding.
…members of…state legislatures, and all executive and judicial officers…of the United States…shall be bound by oath or affirmation, to support this Constitution…”
— Per Article VI, Clause 2, United States Constitution. Source: Cornell University Law School
Since we now know that U.S. Constitutional law superseeds ANY state law, then the following should apply.
2. Whether ex post facto may or may not be applied only in criminal cases.
Someone might argue that the (California Prop 30) law criminalizes those whose income exceeds a certain amount, and are hereby and exclusively punished for having such an “egregious” income. And if they don’t pay the extra tax, are they not then subject to criminal penalties? If yes, then, ex post facto might apply in this case, therefore making this part of California Proposition 30 law – unconstitutional.
[5] The Deficit Solution No One Wanted to Hear
In 2011 I wrote out an outline that balanced California’s state budget (report). In fact I demonstrated how to eliminate a $28 Billion deficit, and create a $1.336 Billion surplus WITHOUT raising sales tax, or income taxes on anyone.
California spent $36 Billion on “education,” and was ranked 49 out of 50 (in education) in the country. One thing that proponents of Prop 30 did NOT want to talk about is that the state was spending $26.3 Billion on welfare, $106 Million to house illegal immigrants, and $250 Million to “rehabilitate” criminals. A report by showed that in 2011, California spent $9.2 Billion on its prison system. There is your education money right there.
God forbid we cut state welfare, keep illegals in prison instead of deportation, and front $250 million a year to “rehabilitate” felons. So one can now take a wild guess where $3 Billion of Prop 30 new taxes that should have gone to “education” will now go elsewhere.
Final Note: I sent a tweet to the editor at CNN on 11-12-2012 challenging aspects of their article. We have not received any return communication at this time. If we receive any communication, will update that here.
Related News (3rd party)
Howard Jarvis Taxpayers Association Files Suit against Cal State University “after discovering personnel used taxpayer-funded resources to solicit students in favor of Proposition 30, the $50 billion tax increase on this November’s ballot.”
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