Commonweal Institute Blog

Hats off to Annette Nellen for the clever framing she used in her article regarding revamping California's tax laws in order to increase state income.

An individual knows that if he is content with his spending, but struggles to pay for it, he needs to rethink his income stream. Perhaps his salary hasn't kept up with inflation or he needs to retool and get a better job. An individual also knows that if he wants or needs to spend more - get a finer car or raise another child - he needs a raise, an extra job, or a better paying one.

California needs to do the same. If legislators and the governor are content with the spending side of the budget and want or need to spend more, such as on health care or education, they need to rethink the state's revenues - they need to get the state a better paying job.

Can't the state just get a "raise" by increasing tax rates? Sure, but California's personal income tax top rate of 9.3 percent is already high, as is our sales tax (8.75 percent in some California cities). Increasing these rates could lead to loss of business activity in the state, tax evasion and damage to both low-income and high-income taxpayers.

How can California get that "better paying job?" It can improve its tax structure. Three of several possibilities: improve use tax collection; broaden the sales tax; and reduce generous income tax breaks.

As you read her article, note that she never once says anything about raising taxes, which would be anathema for Republicans and many other California voters. Instead, she talks about "getting a raise" and a "better paying job". She's setting the frame of the discussion by analogy to family finances: The state of California is like an individual facing a disconnect between available financial resources and desired expenditures.

As a result, Nellen's proposed solutions not only sound eminently reasonable, they also avoid pushing that critical psychological button. Let's hope they gain traction with the legislature and the governor.