Sunday, September 09, 2012

Government by Blackmail

There is a tax initiative on the California ballot for November; Proposition 30, Sales and Tax Increase (2012), otherwise known as Jerry Brown's Tax Increase. All of the public unions support it, of course, because it backfills the pension programs for state employees. But it has other groups supporting it as well.

There is a lot of support coming from the film companies in Hollywood. At first glance that would make sense, given how strongly most people in that industry support the Democratic Party. But even so, the studios are trying to fight against films being shot in more business friendly environments. More and more films are being shot out of state and out of country. So why is there such support for a measure that would only accelerate the trend?

There are special tax exemptions for filming in California, to support the local film industry. And unlike many parts of the tax code, these exemptions are renewed annually instead of being a normal (until a new bill is passed) part of the tax code. The threat is implicit, that if the studios do not support measures supported by the permanent Democratic Party majority in the legislature, those exemptions could easily and quickly disappear simply by failing to renew them. That would not even need the 2/3 vote required by Proposition 13, passed many years ago in order to combat ever increasing taxes.

The American Beverage Association is also backing this measure, in spite of how easily it can harm their operations in California. Shortly before gaining the support of the American Beverage Association, there was much discussion among prominent Democrat politicians about how the state needs to combat obesity by putting punitive taxes on sugary drinks as is happening in other areas of the country. This discussion died down quickly after the American Beverage Association gave its backing to Proposition 30. They even donated $250,000 towards the passage of Proposition 30.

Although there is no explicit threat, at least not one where there is a written demand that could be used as proof, this is pretty clearly a case where various organizations are being threatened to support a measure that they otherwise would not, in exchange for not being harmed more directly. It is the highway man saying "your money or your life" to these groups.

1 comment:

John0 Juanderlust said...

Great analysis. I was already going to vote against it, but you brought in some new information, and connected some of the dots which I had not.
CA government is one scam after another.