Solana Beach voters will vote on a business tax, Proposition L, on June 8,
2010. The proposed tax is supported by the Mayor, every council
member, and a few established business owners. In opposition are
various tax advocacy groups and many owners of smaller, growing
businesses.
The argument the City Council makes for the tax is
that it has cut services to the bone, has had problems receiving its
share of property tax revenues from the State, and can't make ends
meet. The established business owners, supporting this bill argue that
business must pay "its fair share" for basic city services.
I
oppose this tax for three reasons and so should you:
1- Taxes
are not absorbed by business. Businesses either (a) pass
through taxes in the form of higher prices or (b) eliminate employment.
The unintended consequences of local business taxes are suffered by the
poorest members of our community in the form of higher prices for
staple goods or lost employment. Additionally, the residential rental
tax provision will be passed through to tenants, by landlords.
Residents choose to rent in more affordable communities resulting in
higher vacancies.
2- The tax is anti-growth. One
argument supporters use is that Solana Beach is one of the few cities
in the County that doesn't have a business tax. This should be
celebrated rather than disdained. Real wealth comes from entrepreneurs
rather than government. Attracting upstart businesses to Solana Beach
should be a priority because they grow into to big businesses. Growing
businesses hire more people, who purchase goods and services in our
city, and potentially relocate here. This practice expands our city's
tax base.
Moreover, the support from established businesses
smacks of Rotarian Socialism. Transferring the
burden on new businesses reduces competition for the established ones.
It is a tacit barrier to entry designed to limit consumer choice and
sustain higher consumer prices. When businesses use the hand of
government, to limit its competition, it is a a moral outrage.
3- It
won't work. Mayor Campbell admitted that the projected
deficit will be substantially more than the current one. The Council
will be forced to raise business tax rates more to meet that deficit.
We will create a never-ending cycle of taxing business to the point of
relocation, which reduces future tax receipts. Investment property
owners will face a larger vacancy rate and property prices will decline.
The
solution is austerity. If we learned anything from the collapse of Greece, and the impending collapse of the State of
California, it' is that we have entered an age of a "new normal".
That "new normal" points to the unfortunate but obvious fact that we
can't spend more money than we earn. Citizens slash family budgets,
businesses cut expenses , and now government must face this unpleasant
but natural fact as well.
I'm not convinced the Council has truly
implemented an austerity program. In the past four years, the City of
Solana Beach has:
- increased salaries and benefits some 8% in the General Government
Department ($100,000)
- increased salaries and benefits some 15% in the Public Safety
Department ($500,000)
- increased salaries and benefits some 20% in the Public Works
Department ($200,000)
- added a full-time position in the Community Development Department
City of Solana Beach employees average over $100,000, in salaries and
benefits, while those in the private sector earn far less. When the
private sector exists to enrich the public sector, we regress to a
system not unlike our country's colonial period.
The Solana
Beach Council, unlike its counterparts at the State of California,
should be commended for its initial attempts at austerity. We should
encourage more of the same rather than to empower them with a vehicle
that allows it to stifle the one hope we have at a prosperous city.
Proposition
L is insufficient bandage on a gaping wound. Let's cauterize that
wound.
