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Common Sense on the Car Tax Can Save $44 Million

August 21, 2000|JOEL FOX | Joel Fox is a Los Angeles consultant and president emeritus of the Howard Jarvis Taxpayers Assn

Something strange is happening in Sacramento. It appears lawmakers are coming to their senses over a bad bill that they passed and the governor signed into law. A legislative committee has voted to throw out the newly minted car-tax rebate plan.

How could a rebate plan be bad for the taxpayers? To understand this convoluted measure you may need a compass to follow the logic of this law.

Normally, the Legislature votes for a tax cut, the governor OKs it, tax formulas are adjusted, your tax bill reflects the lower levy and you pay the smaller tax. Not this time.

Under the plan, the Legislature voted to reduce the car tax, the governor approved it, but the tax rates were not changed. It was decided that the car tax invoice sent to taxpayers would reflect the full amount of the taxes owed on their cars under the current tax structure. Only after taxpayers pay the full tax--and a few months go by--will they receive a rebate check for the amount of the tax cut.

Gov. Gray Davis explained his support for this plan by saying, "People don't appreciate the fact that they're getting a rebate unless they see it in their hands."

No doubt the rebate check would come with a self-congratulatory letter from the governor and legislators explaining how they were able to wrestle these dollars from the $13-billion state surplus.

Executing this scheme, designed to show how fiscally prudent our government is, will cost a whopping $44 million over two years.

The $44-million figure covers the cost of mailing checks and processing paperwork. Not coincidentally, this scheme takes us through the election of 2002. However, the $44 million doesn't include the loss of interest on the rebate to taxpayers, and the gain of interest money to the state.

What was the motivation of the original law? Self-promotion for elected officials. In returning some of the surplus to the people who created it, politicians want credit and gratitude.

Taxpayers don't want a flurry of trumpets to get their money back. And maybe the legislators finally realized how embarrassing this plan is.

The turnabout started with the seemingly impossible job of having the Legislature and governor reconsider their earlier actions. Assemblyman Tom McClintock (R-Northridge), standing alone protecting the people like the sheriff played by Gary Cooper in "High Noon," introduced a bill to replace the convoluted tax cut-rebate plan with a simple alternative, a tax cut that immediately shows up on your DMV bill.

Surprisingly, when his bill was heard in the Assembly Revenue and Taxation Committee, Sheriff McClintock was joined by a posse of his fellow legislators. The bill passed 6-0. Even the author of the original bill containing the rebate plan, Assemblywoman Sheila Kuehl (D-Santa Monica), (claiming the plan had been added unfairly to her bill), voted for McClintock's alternative.

That the Legislature will reconsider a bad law is a good thing. Perhaps it will set a precedent that will lead to reviews of other hastily drawn bills and pork projects that cost the taxpayers dearly. Maybe it will even encourage other government bodies to reconsider actions that are detrimental to the taxpayers, such as the Los Angeles City Council's $4-million public money gift to the Democratic National Convention.

We should expect only one small miracle at a time and remember that the McClintock bill hasn't replaced the car-tax rebate law yet. Will both houses of the Legislature and the governor admit they made a mistake and rescind the law?

It would be more embarrassing not to.

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