People may think your office only deals with taxes, but you’ ve weighed in on everything from human trafficking to affordable housing. Why do you feel it’ s so important to take on these other issues?
As the state’ s independent fiscal watchdog, we are looking at the integrity of where our dollars are being directed. We do that in a number of ways. We pay all the State’ s bills, monitor revenues and dispersants, handle payroll for over 250,000 State employees and California State University employees— and prepare the State’ s comprehensive financial reports. I take positions on policy issues because, by virtue of my office, I also have a seat on 70 different boards and commissions that have a policy range from taxes to public pensions and much more. Human trafficking, for example, relates to my work on the victims compensation board. So, I do feel like it is important to weigh in when we see gaps in policies that could betterserve Californians.
You have advocated for California to undertake comprehensive tax reform. Is overhauling Proposition 13 the logical first step in updating the system?
My effort is one void of recommendations at this point, because I think there is so much public awareness and education that has to be done around our current tax structure. I think if you were to ask your average Californian where their taxes go, they would just look at you with a blank stare. They understand that taxes fund schools and a lot of the community services they’ re used to, but in terms of where their actual dollars go they probably would not be able to give you a good answer. So this needs to be done, but many of these changes will likely have to be on the ballot and so there needs to be broader awareness by the public.
What I have been doing is looking at the entire system. The tax structure we rely on today was primarily constructed during the 1930s, when we were still very much a goods- and manufacturing-based economy. Economic shifts have leapfrogged over that type of economy to a services-related economy, to a knowledge-based economy, to an internet of things economy to now a gig economy that has really turned our tax policy on its head. So reform can’ t just tackle one aspect of the system. Prop 13 really wasn’ t reform. It didn’ t look at the entire system or how tax burdens would be shifted as a result of capping local property tax rates. I know there are proponents of just Prop 13 reform or of just expanding sales tax services. There are proponents of looking at how we can provide more exemptions and assistance for middle-class and lower-income households. All of that is fine, but frankly, the tax structure is like a water balloon: If you start squeezing any one part of it, you’ re going to have reverberations throughout the system.
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The tax structure is like a water balloon: If you start squeezing any one part of it, you’ re going to have reverberations throughout the system.”
We rely heavily on taxing the highest earners. If we lower their rate, how do we make up that shortfall?
I think the fact of the matter is that we’ re always going to have a system where those who make more should be taxed
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