Getting out of the budget disaster

SACRAMENTO, Calif. — The state of California is in deep financial trouble. Gov. Arnold Schwarzenegger’s proposed 2008-09 budget has a gap of up to $14 billion between providing the current level of public services and the funds with which to do it. So the governor’s answer is “10 percent cuts across the boards.”

As the devastation these cuts will bring becomes clear, the capitol is seeing thousands of demonstrators. On April 21, the noon news showed thousands of students at the state capitol, protesting the rise in college costs, an end to the dreams of many. The previous week, hundreds of nurses, teachers, caregivers, state workers and their unions made their anger clear.

Cuts of $4.8 billion to public school means fewer teachers, fewer counselors, an end to many programs including art, music and athletics. Class sizes will increase, schools will close. Another proposal by the governor will drop more than 150,000 children from the CalWORKS program in Jun 2008.

Perhaps we can give the governor a bit of praise for his foresight in proposing to reduce the number of inmates in our prisons. That will make room for some of the alienated youth our educational cuts have produced.

Over $1 billion will be cut from the health care system, restricting access for millions, reducing funds for hospitals, emergency rooms and trauma centers. Dental care and other services for MediCal recipients will e cut.

Cuts in human services will, as usual, hit hardest our most vulnerable populations, low income seniors and the disabled. For example, they have received no cost of living increase (COLA) in their monthly grants for the last six years, and there will be none this year, even as inflation continues to rise.

Why is this year’s budget such a disaster? Why must we fight so hard just to stay alive?

California has faced budget problems before. But this year the easy answers — borrowing, putting off maintenance, eliminating nonessential programs and services — have been used up. Debt service on previous borrowing will add $2.5 billion to the 2008-09 budget and is set to rise to more than $4 billion in 2009-10.

In addition, the national disaster, the “mortgage meltdown,” has increased our problems. This economic disaster is deep and wide, hitting millions of families who are trying to keep their homes and the workers who make a living in housing-related jobs. The meltdown has also cut into local property-tax collection and as people spend less, it cuts into sales tax revenue.

So, what shall we do? What about the next budget, two years, four years from now? Well, there is an answer …

In 2004 a study by the U.S. Government Accountability Office (GAO) found that 61 percent of American corporations, including 39 percent of the largest corporations, paid NO corporate income taxes between 1996 and 2000. Last year corporations paid just 14.4 percent of the U.S. tax burden, compared with 50 percent in 1940.

Citizens for Tax Justice, a non-profit group, has found that of 252 of the biggest, most profitable Fortune 500 companies, 71 paid no state corporate income taxes. CTJ has also found that the corporate tax burden in the U.S. is the third lowest in the world when measured as a percentage of gross domestic product.

Now, back to California, where the non-profit California budget Project says that in 2001, 46 of the state’s largest corporations paid no income tax to California. Also according to CBP, if our state corporations had paid the same share of their profits in corporate taxes in 2005 as they did in 1981 (before the Reagan “trickle-down” revolution), corporate taxes would have been $7.3 billion higher. In 2008 that figure would be even more — at least half of our deficit.

California’s Franchise Tax Board earlier this month released its list of the top tax scofflaws in the state. The biggest deadbeat in the Sacramento area, the B&B Property Investment Development and Management Co., Inc., owes $1,113,450.90 in unpaid corporate income taxes.

As it is now the wealthiest 1 percent of households pay 7.1 percent of their income in state and local taxes; the poorest 20 percent of households pay 11.7 percent. Let’s reverse those figures. Or let’s just restore the Vehicle License Fee tax cut of 1998. That would produce $6.1 billion.

Suppose we, the people, owned those corporations? Don’t we do the work that creates their profit? Then shouldn’t we, the people, decide what to do with that profit?

Maybe for the next election we could put a proposition on the ballot for “Public ownership of the means of production.”

Socialism — you bet!

An activist in various movements for over 60 years, Nell Ranta has become fascinated with taxes.