Incoming Executive Director
Research Program Coordinator
Governor’s Tax Policies are Misguided: A Sales Tax on Services Could Avoid Cuts in Education, Healthcare and Social Services
Berkeley , CA – Today, May 29 th , The Greenlining Institute made public its letter to Assembly Speaker Karen Bass and the leadership of the California Senate urging them to oppose the Governor’s proposed tax increases and spending cuts (letter attached.) The letter attacked the Governor’s three proposed “tax increases” as regressive and offered three equitable tax reforms that could generate an additional eighteen billion dollars annually. This includes $8.5 billion from expanding the sales tax to include services, with particular emphasis on luxury services.
The Governor’s three regressive taxes relate to:
- “Selling” the lottery to investors, capping the funds available for education and aggressive promotion of the lottery to the poor.
- Raising the sales tax rate, as opposed to expanding the sales tax base to include services. More than two-thirds (71.9%) of the state’s GDP comes from service revenue, including a very substantial amount from luxury services.
- Increases in tuition throughout the University system are, in effect, a regressive tax. Tuition has doubled at UC and CSU over the past five years and are likely to double again over the next five years.
The three tax changes that would provide eighteen billion dollars a year in additional revenue are:
- Expanding the sales tax to include all services, rather than raising the sales tax rate on goods. This would generate an estimated additional $8.5 billion a year.
- Modifying Proposition 13 to update taxes on commercial properties. This would generate a minimum of three billion dollars a year.
- Upgrading the quality of the state’s present lax tax enforcement. This lax tax enforcement relies largely on an inadequate IRS enforcement of tax shelters and the wealthy. It is estimated that this could generate $6.5 billion a year in additional revenue.
Orson Aguilar , incoming Executive Director of The Greenlining Institute said, “The Governor’s tax on college students and proposed privatization of the lottery are short sighted and unnecessary. A sales tax on services and effective tax enforcement alone could prevent any cutbacks in essential services and eliminate the need for any tuition hikes.”