If Props 30 AND 38 pass, they might BOTH raise our taxes

Richard Rider, Chairman, San Diego Tax Fighters Richard Rider, Chairman, San Diego Tax Fighters 7 Comments

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Here’s today’s unsettling thought for California taxpayers — a factoid not being discussed. Props 30 and 38 can BOTH pass and, if the stars align right, raise our taxes TOGETHER.

As we all know, these are two competing massive state tax increases on the November ballot. When we have two conflicting measures that pass, the one with the most votes takes effect.

But as I understand it, the winner takes effect only on the CONFLICTING provisions — in this case, the increase in the state INCOME tax. If the “losing” prop includes OTHER provisions, then they still take effect.

So if Prop 38 passes with more votes than Prop 30 (and Prop 30 gets 50+% of the vote), then we will the the Prop 38 income tax rates — PLUS we will increase our state SALES tax.

Best of both worlds! IF you are a state or local government employee.

NOTE: If my interpretation of how this works is wrong, I would WELCOME a sourced correction. I’m not 100% sure I’ve got it right — but I think I’m correct.

FOOTNOTE:

Here’s what the stalwart leader of the SD Firefighters union tweeted in response to this possible double tax increase:

Frank De Clercq ‏@fadeclercq
@sandiegorostra @SD_TaxFighters Hopefully!

If asked how much taxes should be raised, the union bosses’ answer is ALWAYS the same: “More!” Their rapacious greed literally knows no bounds.

On the subject of “greed,” Thomas Sowell put it well:

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Comments 7

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    Good research, Steve. Thanks for adding that.

    For those that don’t read the article, its thesis is that the double tax will be settled in court — IF both pass, and Prop 38 gets the larger majority. Even the CA Legislative Analysts Office could not give a definitive answer.

    So at the VERY least, we are at RISK of both taxes being implemented. I have NO doubt that, in such a scenario the governor and/or some public employee labor unions will try to get the sales tax activated — via the court system.

    So it appears to be a crap shoot. And in this case, the taxpayers can only lose — not win.

  3. I looked at the analysis at the following link (there is a box on page 2 discussing what happens if both pass).

    http://vig.cdn.sos.ca.gov/2012/general/pdf/30-title-summ-analysis.pdf

    I also reviewed the actual text of each initiative and there are provisions in each regarding conflicts. Both provisions clearly spell out that if both initiatives pass, the tax provisions of the measure receiving fewer votes would not go into effect (i.e. both sales and PIT of Prop 30 and PIT of Prop 38).

    The part about the non-tax portions of the initiative still going into effect likely refers to the “trigger” cuts of Prop 30. In the scenario that both pass and Prop 38 receives more votes, the “trigger” cuts contingent upon passage of Prop 30 would likely still go into effect. THAT’s the part that might be litigated.

    Of course, all this is moot if, as the polls seem to suggest, both props go down.

    Clear as mud ?

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    Many thanks for drilling down, Almis. “Mud” is indeed descriptive of the legalities and possible outcomes of these two measures.

    It would be helpful if you could provide the actual language from the props that says that ALL taxes in one would be blocked by taxes passed in the other. What I find is, as you say, muddy — and perhaps is different. Here’s what I think is the pertinent text from Prop 30 (page 84 of the ballot book).
    http://vig.cdn.sos.ca.gov/2012/general/pdf/text-proposed-laws-v2.pdf#nameddest=prop30

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    “In the event that this measure and another measure that imposes an incremental increase in the tax rates for personal income shall appear on the same statewide ballot, the provisions of the other measure or measures shall be deemed to be in conflict with this measure. In the event that this measure receives a greater number of affirmative votes than a measure deemed to be in conflict with it, the provisions of this measure shall prevail in their entirety, and the other measure or measures shall be null and void.”
    ===========

    I don’t think that one measure can declare “null and void” the NONCONFLICTING parts of another measure that also passes, though with a lower majority vote. So it seems to me that it’s possible — or even likely — that the sales tax COULD still be implemented in the scenario I present in my piece.

    “Turgid” is another way to describe this mess. I claim no clairvoyance in the matter. One thing’s for damn sure — if they both pass, the lawyers will profit battling it out.

    Let me know your thoughts on this.

  5. Here is the relevant section out of prop 38. Note the difference in description compared to the one out of prop 30, which you posted. The key words here are “rate-amending” and “retailers.”. The text below states that if Prop 38 tax proposals replace prop 30 tax proposals if both pass and prop 38 receives more votes.

    ————

    (a) In the event that this measure and another measure or measures amending the California personal income tax rate for any taxpayer or group of taxpayers, or amending the rate of tax imposed on retailers for the privilege of selling tangible personal property at retail, or amending the rate of excise tax imposed on the storage, use or other consumption in this state of tangible personal property purchased from any retailer for storage, use or other consumption in this state, shall appear on the same statewide election ballot, the rate-amending provisions of the other measure or measures and all provisions of that measure that are funded by its rate-amending provisions, shall be deemed to be in conflict with this measure. In the event that this measure receives a greater number of affirmative votes than any such other measure, the rate-amending provisions of the other measure, and all provisions of that measure that are funded by its rate-amending provisions, shall be null and void, and the provisions of this measure shall prevail instead.

    ————————

    The reason the Prop 30 language seems more vague is because Prop 38 is almost exclusively a tax proposal — it imposes no trigger cuts if it fails (I.e. it is designed to provide new funding for schools) whereas Prop 30 has specific programs that will purportedly not get funding if Prop 30 fails (although that is the big question the new crew in Sacto will likely get to quibble over as soon as December).

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