Feb 052011

Interesting election law case.

Ohio law prohibits counting provisional ballots which are cast in the wrong precinct, even if they are cast in the wrong precinct as a result of poll worker error.

Harsh, but ok.

Despite this law, the Secretary of State entered into a consent decree requiring that the board of election count miscast votes by provisional voters (a) using their SSN as ID (b) which are miscast as a result of pollworker error.

The losing candidate in a race for county judge sued: this violates equal protection, because similarly situated provisional ballots miscast as a result of pollworker error are being treated differently based on the arbitrary criteria of whether or not they fall under the consent decree.

This issue has not yet been decided, but the Sixth Circuit said there is a likely enough chance of victory that the injunction against the certification of the election should stand while the underlying issue is resolved.

The Hamilton County Board of Elections is appealing. It’s a bit odd to appeal to the Supreme Court an order sustaining a preliminary injunction pending resolution of the underlying issue, but in an election case it makes sense – every day which passes is another day the judicial office isn’t filled.

That said, I would be astonished if the Supreme Court hears the case.

The Board thus began investigating the disputed ballots and subpoenaed over four-hundred poll workers. R.38-7 (E-mail correspondence at 2). At Board meetings held on December 16 and 17, the Board interviewed over seventy poll workers. R.38-2 (Dec. 16, 2010 Board Meeting Tr.); R.38-3 (Dec. 17, 2010 Board Meeting Tr.).

However, on December 20, the Board contacted the Secretary of State and indicated that it still needed to issue approximately 1500 subpoenas to poll workers. R.38-7 (E-mail correspondence at 2). The Board asked that the Secretary permit it to stop interviewing the poll workers and instead send questionnaires to the poll workers. Id. The Secretary agreed. Id. at 1. After sending out questionnaires to the remaining poll workers, the Board received back 830 completed questionnaires. R.38-4 (Dec. 28, 2010 Board Meeting Tr. at 69).
Hunter v Hamilton County, US Court of Appeals for the Sixth Circuit, 2011

The underlying problem is that Ohio law only allows out-of-precinct provisional ballots to be counted if they were cast out-of-precinct as a result of pollworker error. So, to establish the presence or absence of pollworker error, the district court decided that it should subpoeana all of the poll workers in precincts with out-of-precinct provisional ballots, and interrogate them about the circumstances of the casting of each.

This is just not going to work. On the average election day that I’ve worked, I’ve processed between two and three dozen provisional ballots. If you ask me the next day, I might remember details about some of them; if you ask me five, six weeks later, I’m going to stare at you blankly and tell you that, beyond what I wrote down at the time, I remember nothing.

I understand that the presence or absence of pollworker error may be indeterminable absent something like this. But this process – wherein hundreds of pollworkers may be subpoeaned – doesn’t render the question answerable; it just consumes the time of the pollworkers and the courts.

A better solution would be to say that out-of-precinct provisional votes should be counted for those races for which the provisional voter had the right to vote, and not for others.

Voting:

A quick rundown of how I’m planning to vote on Tuesday, with (brief) explanations instead of the usual 1000 word tomes.

Governor: Dale Ogden (L). Meg Whitman has spent a fortune failing to convince me that she can succeed at doing what Arnie promised to do. Jerry Brown is more responsible than any single other living politician for helping construct the state of California’s current framework of ungovernability. I reject them both, and am slightly more sympathetic to the Libertarians than to the Greens when I look for third party candidates.

Senator: Barbara Boxer (D). Carly Fiorina came into HP, failed to understand its corporate culture, the motivations of its employees, or what made it a great company, then proceded to change the company in ways which destroyed all three. There’s no good reason to believe she’d be any better in the Senate.

Lt. Governor: Abel Maldanado (R). Gavin Newsom is a spotlight-seeking political hack who managed to make the gay community in San Francisco love him while scoring a massive own goal for their side; then he proceeded to betray his closest friend (and prominent political aide) and his wife, simultaneously. Abel Maldanado is a socially moderate, pro-environment Republican who is willing to vote for compromise budgets. Given this choice, the answer is obvious.

Secretary of State: Debra Bowen (D). She came to office four years ago promising to restrict the use of unverifiable (and unsafe) electronic voting machines. She did so. She deserves re-election for the simple reason that she kept her primary campaign promise, with the result that elections in California are now more secure than they are in much of the country.

Attorney General: Steve Cooley (R). He’s a relatively nonpartisan conservative who supports modifying three strikes; his opponent ran a DA’s office which has been embroiled in a scandal involving the DA’s office not turning over impeachment evidence about cops with disciplinary records involving dishonesty. That was a fundamental failure of a basic job duty, and blaming it on the SFPD should not earn her a promotion.

Insurance Commissioner: why is this an elected office, again?

Superintendent of Public Education: all I know about this is that it’s shaped up to be a race between the candidate backed by the administration and the candidate backed by the teachers. Since I have no children in the public schools, I don’t follow public school politics enough to know more, so I’m inclined to not vote on it.

Assembly: Ray Bell (L). I voted against the Democrat in the primary for reasons involving local county politics (and because one of his opponents was one of the best candidates i’ve seen anywhere in a long time). He’s guaranteed a win in the general election, so I’m voting for a third party candidate to increase their visibility and numbers.

Congress: Anna Eshoo (D). I’m reasonably happy with her as a representative and don’t think any of her opponents will do a better job.

Proposition 19: Yes. It’s far from a perfect bill, but legalizing possession and growth of marijuana, and allowing some legalization of sale, is a step in the right direction. Aside from the (uncertain) situation with respect to corporate drug-free workplace policies, where I’m somewhat sympathetic to the danger that companies may be unable to comply with both this law and federal contracting regulations, my objections to Prop. 19 are that it doesn’t go far enough, not that it goes too fa.r

Proposition 20: No. I voted for the independent redistricting commission for the state legislature, two years ago; how about we give it a chance, and see how it works, before extending its power?

Proposition 21: No. This is tough: more money for parks (many of which were almost closed last year), tied to a minor increase in the vehicle license fee, balanced by free park admission – it’s a reasonable policy choice which I would vote for as a legislator. But I don’t like ballot-box budgeting; it makes the overall state budget problem worse.

Proposition 22: No. More ballot box budgeting. In a good cause, sure … but aren’t they always in a good cause?

Proposition 23: No. A temporary suspension might be in order (although even then, if we really believe that global warming is a problem that must be addressed, don’t we need to address it regardless of whether we’re in good economic times or not?). But this isn’t temporary: the trigger is a condition of extremely low unemployment … meaning the suspension may be indefinite.

Proposition 24: No. (1) Complicated tax policy is why we have a legislature. (2) I like some of the changes the measure would repeal while disliking others. (3) More ballot-box budgeting.

Proposition 25: Yes If a majority of the legislature can put together a budget which is balanced and which doesn’t require tax increases, they should be able to do so.

Proposition 26: No. Increasing the number of things which require a 2/3 majority vote, and simultaneously incresing the number of things which must be sent to the voters for a 2/3 majority vote, is a recipe for gridlock and further structural inflexibility, making it even harder for government to function than it already is.

Proposition 27: No. We voted to create this redistricting commission two years ago. Nothing has changed. How about we give it a try before repealing it?

The Fairbanks daily news (by way of Political Wire) reports that Republican Senate candidate Joe Miller “said he would support an amendment for term limits as well as an amendment repealing the 17th Amendment, which allows for the direct election of senators by the public rather than by state legislatures.”

Given that Mr. Miller is one of the tea party insurgents who has recently stunned everyone by defeating incumbent (or near-incumbent, like Mike Castle) legislators in party primaries, this is insane.

I mean: I’m aware that there’s an a somewhat popular argument in conservative circles that repealing the 17th amendment would result in Senators that were more concerned about states’ rights (being creatures of the state Legislatures and, in theory, subject to their control). I assume that’s the reason Mr. Miller is in favor of it.

But it makes no sense when considered in line with the rest of the tea party narrative: if the root of the nation’s problems is that evil politicians have sold out our national patrimony by borrowing money to buy votes, how does it make any sense to divest the electorate of the power to pick Senators, instead vesting it in the hands of the very politicians whom the tea party derides?

This might make sense in a world where the state legislatures had already been ‘taken back’. But they haven’t been.

Proposition 21 is a microcosm of the difficulty facing California voters, and the structural incoherence of our political system.

The idea is simple: add a $18 fee to the annual vehicle license fee, direct the money to the state parks, revoke the state park day use fee (which is currently levied on a per-vehicle basis) for most vehicles registered in California, and thereby give everyone free access to the state parks in exchange for the fee. (Campgrounds and paid activities would still cost more).

The initiative was put on the ballot after the Governor suggested, as part of last year’s budget deal, that 2/3 of the parks be closed in order to save money; public outrage prevented that from happening, but the danger always remains that it will happen again. So activists organized a drive to put a measure on the ballot to protect the state parks from budget cuts, and to ensure funding for them even when the legislature is searching around looking for money.

So in that regard it seems like a good idea: everyone likes the parks, and closing them to save money in one year is economically foolish (as failure to maintain them will cost more money in the long run, and as closed parks are nonetheless a public nuisance in the sense that we can’t afford to keep people from breaking in, using them, and then either leaving a mess behind or suing the state when they get injured). This measure would take an unpopular dumb idea and put it beyond the grasp of the Legislature.

True, it would impose a flat fee cost on every car owner in the state … but it’s a relatively minor one, and it’s balanced by the fact that the day use fee for state parks would be effectively eliminated, so the cost to most people would be very low. (There’s some danger, as the libertarian opposition to the measure points out, of vehicle fees becoming the twenty-first century sin tax … but we’re not at that point yet).

And yet …

One of the fundamental problems in California over the years has been that the voters, irritated at the Legislature, have repeatedly passed measures making it impossible for the legislature to touch the funding of this year’s sacred cow, or to raise taxes without voter consent; meanwhile, we’ve passed measures requiring funding particular programs and selling bonds (thereby requiring the Legislature to fund interest payments). So with each passing year, the Legislature’s freedom of action is constrained a bit more, and the places it can look to resolve the state budget become more limited, and so each resolution of the budget has a larger effect on a narrower range of state programs, fueling voter outrage and causing the voters to decide that the Legislature can’t be trusted to protect this year’s sacred cow …

That’s precisely the dynamic here: the Legislature considered virtually obliterating the state park system. They decided not to, because the voters got pissed off. But we don’t trust them to continue not doing that, so we want to deny them the ability to do it … without actually solving the general problems preventing the legislature from passing a budget. We’ll carve outt this particular exemption, increasing the pressure on everything else, and not resolving the underlying problem.

Were I a legislator, I would vote for this program in a heartbeat.

But I’m not.

And I remain unconvinced that using the initiative system to mandate particular taxing and spending policies, thereby putting them outside the realm of things the legislature is allowed to effect, is a wise idea.

The political scandal du jour in California is the report that Meg Whitman employed an illegal immigrant housekeeper for nine years. The housekeeper is suing her (alleging failure to pay for all hours worked and failure to pay mileage reimbursement for using her car for errands, plus failure to promise to keep her job open after pregnancy leave). The housekeeper says that Whitman knew she was an illegal and fired her when she asked for help with her legal status; Whitman says she didn’t know and fired her when she found out.

This is a silly scandal.

Let’s assume for the moment that Whitman is telling the truth: she didn’t know. She hired a hispanic housekeeper, in California, and didn’t know whether or not she was here legally. She made no effort to answer the question, which indicates that either (a) she didn’t care, (b) she just blindly assumed that anyone working as a housekeeper must be here legally, or (c) she suspected and didn’t want to have her suspicions confirmed.

The generous interpretation is that she didn’t care – just like most people hiring housekeepers don’t care. I mean, really: if I hire someone to clean my house, what I care about is whether or not there is reason to believe that the person is going to do a good job, and how much I’m going to have to pay them.

The problem is, however, that the entire premise of the use of employer sanctions to enforce immigration laws is that the employer is required to care. I don’t know what the rules are for employing housekeepers, but corporations have to establish the immigration status of their employees (I have to prove that i’m a citizen, every time I take a new job). The idea is that reducing demand for illegal immigrant labor will inhibit illegal immigration, and we’ve set up a structure where most employers are required to check the status of their employees and not hire them if they’re illegal.

Individuals hiring independent contractors are almost certainly exempt as a matter of law; but as a matter of ethics, I don’t see why an ethical obligation that requires Google to confirm the immigration status of its employees doesn’t also require me to confirm the immigration status of my employees.

That said: this is a minor sin. It wasn’t interesting when it was Zoe Baird, it’s not any more interesting today.

Now, maybe she cared, but she just blindly assumed that her employee was here legally. That’s significantly more damning – given the economics of the industry, the low wages paid to housekeepers and housecleaners, it’s ridiculous to assume legal status. You could only make such an assumption if you had little to no understanding of the economics of the industry or, really, of the life of the average Californian. Especially given the scandals involving politicians and illegal immigrant housekeepers and nannies more than fifteen years ago, the notion that people in those professions might be illegal immigrants is well established in the national consciousness.

But there’s no evidence that she had such an assumption.

On the other hand, maybe she was wilfully blind. The houskeeper’s allegations that the social security department had told Whitman’s husband that her SSN was invalid, and that she told Whitman she couldn’t leave the country, suggest wilful blindness. But even then … probably most people who are employing illegal immigrants are wilfully blind to the immigration status of their workers. This is a common enough sin that it shouldn’t be a bar to public office, any more than a speeding ticket or use of soft drugs should be: it really isn’t relevant to the question of whether or not the politician would do a good job as a servant of the people, and it isn’t a crime of sufficient moral culpability as to indicate conduct beyond the pale.

I’m not going to vote for Meg Whitman. But the fact that she employed an illegal immigrant, knowingly or not, is a silly reason to decide that.

———

I’m far more concerned with the allegation that she was a bad boss who basically took advantage of her employee. But this is a he-said, she-said situation, where I have no strong reason for believing one party over the other; absent other evidence, I can only suspend judgment and note that, if the allegations are true, I would expect displeasure with her among Whitman’s employees in general … and to wonder whether a poll of the people who worked for Whitman directly at E-Bay indicate such displeasure.

———

I’m amused by one thing, however.

Why did Whitman hire an illegal immigrant in the first place?

Because that’s the kind of housekeeper the market provided.

Why?

Probably because illegal immigrants are willing to take housekeeping jobs at lower prices than citizens are.

Isn’t this one of the primary liberal arguments regarding illegal immigration?

Does Meg Whitman think she would have been better off if she had had to pay her housekeeper the prevailing rate sufficient to entice citizens to do the job?

I suspect not.

Her rhetorical positions on immigration suggest that she thinks that society as a whole would have been better off if she had had to pay her housekeeper the prevailing rate sufficient to entice citizens to do the job.

So the question arises: given that she wasn’t willing to pay such a price herself given the existence of a cheaper alternative, what does she think the effect on demand for such services would be if the cheaper alternative were to go away? And has she factored the harm to the people who decide to do without the service into her estimates about the effect on society as a whole?

Sep 282010

Near the end of this episode of Forum, the Libertarian candidate for Secretary of State alleges that the way to get corporate money out of politics is to repeal the top-two primary, which she goes on to say only passed because of all of the corporate money spent to ensure its passage.

Proposition 26 is another seemingly simple proposition. It would change the state constitution to say “Any change in state statute which results in any taxpayer paying a higher tax must be imposed by an act passed by not less than two thirds of all members elected to each of the two houses of the Legislature.

It then goes on to define “tax” to be “any levy, charge, or exaction of any kind imposed by the State“, except for


  • a charge imposed for a specific benefit or service, granted directly to the payor and not to those not charged, which doesn’t exceed the reasonable costs of providing the benefit;
  • a charge paid to enter or use state property, or to rent or lease state property,
  • a fine imposed by the courts

It would also retroactively nullify any “tax” adopted after January 1, 2010.

In addition, it would place the burden of proving that something isn’t a tax or that the amount of a charge isn’t more than needed to cover reasonable costs, on the state.

It would impose a similar rule on local governments.

——-

The legislative analyst provides the following example of a ‘fee’ which would be redefined as a ‘tax’ under Proposition 26:

In 1991, for example, the state began imposing a regulatory fee on businesses that made products containing lead. The state uses this money to screen children at risk for lead poisoning, follow up on their treatment, and identify sources of lead contamination responsible for the poisoning.

Other examples include the regulatory fee imposed on oil manufacturers to fund inspections of used-oil recycling facilities; the hazardous waste fee on businesses that treat, dispose of, or recycle hazardous waste (used to clean up toxic waste sites); and city fees on alcohol retailers to pay for additional law enforcement and anti-drinking programs.

The proponents of Proposition 26 believe that “Californians are taxed at one of the highest levels of any state in the nation”, and that one way this is done is via a myriad assortment of taxes disguised as “fees”; they want this measure because, they believe, imposing a 2/3 majority requirement will end the proliferation of fees.

The authors of the argument against Proposition 26 in the ballot pamphlet believe that it’s goal is to shift the burden of paying for externalities off of evil corporations onto taxpayers as a whole. (The argument being that by making it harder to impose fees to balance environmental or public health externalities, the measure makes it easier for corporations to get away with generating the externalities, and requires the general fund to pay for the damage caused by them).

I think the opponents have a point, but it’s tied up in silly anti-corporate populist rhetoric, and it misses the real problem with this initiative:

imposing a 2/3 majority requirement to raise taxes, or impose fees, deprives legislatures of flexibility, and undermines democracy by allowing the minority to hold the majority hostage. The idea behind this measure is that the current 2/3 supermajority requirement for raising taxes is achieving its goal, except for the niggling loophole the evil politicians have found, and that Prop. 26 simply closes that loophole. But that idea is bizarre: how anyone can look at the current budget-creation process in California and say that it’s working is beyond me.

Proposition 26 is inherently antidemocratic: it imposes a supermajority requirement.

Proposition 26 is bizarre in that it would allow a majority to make it a criminal act for the owner of a motor vehicle to release carbon monoxide into the atmosphere, but would require a supermajority to assess that same owner a fee for the priviliege of releasing carbon monoxide and then direct the money to cleaning the carbon monoxide out of the atmosphere – that is to say, it creates a system which makes it vastly easier to punish behavior which could instead be economically mediated.

But none of this is the real problem with Proposition 26.

Proposition 26 is inherently unworkable.

In the language of the proposition itself (emphasis added):

Any change in state statute which results in any taxpayer paying a higher tax.”

A law not intended as a tax measure which accidentally results in anyone paying more money to the state for anything would be covered. So, for example, if some inventor were to invent a flying car, which wasn’t covered by current regulations of cars, and the legislature were to decide that that car ought to be covered by the vehicle license fee … it’s a tax. Someone can sue seeking an injunction against that measure, unless it was passed by a 2/3 majority vote.

And the burden of proving that it isn’t a tax … that it doesn’t result in any taxpayer paying a higher “levy, charge, or exaction of any kind” … falls on the state.

So: anything which causes someone to pay more to the state, if it wasn’t passed by a 2/3 majority, that person can sue, and the state must prove that it wasn’t a tax, or the law is retroactively invalid.

This is a recipe for chaos.

I’m not sympathetic to the idea that we’re overtaxed, and I’m not sympathetic to the idea of supermajority requirements in general, so I may be more concerned about the failings of this initiative than is fair; I have my biases, after all, and I’m not immune to their effects. But this seems like a terrible idea, even so: the initiative is explicitly drawn broadly enough to encompass anything which causes anyone to pay the state more money … and something so broadly drawn is guaranteed to pull in more than was intended. And, by putting the burden of proof on the state, it’s guaranteed to make protecting against that broader reach extremely difficult.

That was the intent, to an extent: the proponents of this measure think that something explicitly drawn and limited will be meaningless because it’s easily manipulated and gotten around.

But … in reacting to that, they go too far, and have proposed a measure which is guaranteed to strangle what little flexibility remains in state and local government.

Proposition 25 is a simple change to the state constitution. Currently, any bill which appropriates money (unless the bill only appropriates money for the public schools) must be passed by a two-thirds majority rollclal vote in each house of the state legislature; Prop. 25 would change this to exempt a budget bill (and any other bill providing for appropriations related to the budget bill). “Other bills providing for appropriations related to the budget bill” is specifically circumscribed to only include bills called out in the budget bill.

The measure also provides a punishment to the Legislature: if it doesn’t pass a budget on time, it doesn’t get paid for travel or living expenses for the time between the budget deadline and the date a budget is submitted to the Governor.

(Interjection: why are appropriations for the public schools treated differently?)

Proponents of the measure point out that right now, we have a 2/3 majority requirement for raising taxes, and a seperate 2/3 majority requirement for passing a budget, and that this is absurd. No other state has both requirements, and having both means that even if we aren’t going to raise taxes at all, the majority party has to kowtow to the minority party for months in order to get a budget deal, as the minority ends up using the budget as a means to blackmail the majority into doing what it wants.

Opponents of the measure say that this will inevitably lead to higher spending and will force tax increases.

Opponents also claim that the bill will prevent referendums on the budget bill. Leaving aside the fact that there has never been such a referendum, and that there is unlikely to be one because of the practical difficulties, their reasoning is suspect; the actual text of the law is: Notwithstanding any other provision of law or of this Constitution, the budget bill and other bills providing for appropriations related to the budget bill may be passed in each house by rollcall vote entered in the journal, a majority of the membership concurring, to take effect immediately upon being signed by the Governor or upon a date specified in the legislation. Nothing in this subdivision shall affect the vote requirement for appropriations for the public schools contained in subdivision (d) of this section and in subdivision (b) of Section 8 of this article. This language does not on its face override the referendum power, and courts have been zealous in their protection of it. The referendum power would have to be explicitly overridden, which this clause does not do. (Indeed, this looks to me like an argument based in a misunderstanding of standard boilerplate language, which is perhaps a reason why such boilerplate should be abolished).

———-

Unusually, perhaps, it’s completely clear to me how I should vote on this one. Supermajority requirements are something which should be saved to protect vital interests – like, say, the supermajority needed to amend the US constitution, or the supermajority needed to approve bonded indebtedness. The regular annual budget isn’t something deserving of that kind of protection, and it’s particularly absurd that the current rules allow spending on education to be passed by a majority of votes while not allowing spending on anything else to be passed by a majority.

Ideally, we’d abolish the supermajority for tax increases, too; allowing a majority budget without allowing majority control over taxation is still going to leave the budget process lost in a quagmire. But any improvement is better than none. (And, honestly, if the minority can force no tax increases, allowing the majority to figure out on its own how to spend the money we have is going to lead to a less contentious, more productive process than what we have currently.)

Proposition 24 is a voter-initiated attempt to repeal four changes that the Legislature made to corporate tax law in 2008. Those changes had the effect of reducing corporate tax liability by an amount which the Legislative Analyst estimates is about $1.3 billion a year. Generally speaking, the proponents of the measure are in favor of it because either (a) they dislike corporations and think they were getting an unfairly positive deal from the state prior to the passage of the changes the measure would repeal, or (b) they think that cutting taxes in the middle of a budget crisis was a bad idea. Generally speaking, opponents of the measure are of the opinion that (a) raising taxes in the middle of a recession is a terrible idea, and (b) even if it weren’t these changes were good fo rbusiness and therefore good for job creation and the economy as a whole.

The four changes made in 2008 were:

  1. Businesses losses made in the current tax year can now be applied retroactively to previous tax years, allowing a refund of taxes previously paid.
  2. Businesses losses made in the current tax year can be applied prospectively for 20 years rather than 10 years.
  3. Tax credits given to a particular business entity can now be shared with other entities in a group of related businesses.
  4. Multistate businesses can decide which of two formulas to use to determine the amount of their income which is taxable in California.

The first two of these are fairly straightforward. In general, businesses which lose money in a given year are allowed to apply that loss to future years, reducing their taxable income in those years, and thereby reducing their overall taxes. (The theory is, more or less, that since they don’t get a tax refund for a negative income in a given year, they must be able to apply the loss to other years in order to have a fair outcome over a range of years). These two provisions increased the number of years to which the offset can be applied, thereby reducing the tax burden for those businesses which lost a lot of money in one year and didn’t make enough money in other years to offset it.

The third is somewhat arcane. Apparently entities which the average person thinks of as a single business are organized as multiple businesses working together. (As a simple example of this, the company I work for also has overseas subsidiaries which are organized for financial and legal reasons as seperate “companies”, but which operates internally as a single organization and which makes no intelligible distinction between the formal “corporations” of which the company is comprised). Prior to 2008, California law does not allow tax credits (such as the research & development credit) to be transferred between these entities-which-are-different-on-paper-but-not-in-fact.

The fourth is also somewhat arcane. Businesses operating both in California and elsewhere are taxed on their income, but not on all of it; a formula is used to determine what percentage is taxed. (That formula is defined in Revenue and Taxation Code Section 25128, and I’m not sure I understand it.) The law was changed in 2008 to allow businesses to choose between that formula and a simpler one based just on the percentage of the company’s sales which happen in California.

§§§§§§

I’m torn on this initiative.

I think the first change is absurd: allowing companies to retroactively change their returns for previous years based on a loss in this year simply undermines the stability of the system; it makes it impossible for anyone to have a firm grasp on what the state’s income was in a given year, because it’s always subject to subsequent change. It creates an accounting difficulty which makes it even more difficult for regular citizens to understand what is going on, and which undermines the credibility of the system.

It might be justifiable on the grounds that it simply synchronizes state law with federal law; even if federal law on the subject is ridiculous, there’s a positive benefit to be had in synchronizing the two (because it makes the job of corporate accounting substantially simpler). But the ‘no’ side isn’t arguing that, and I don’t have the patience to try to figure out the federal rules on the subject.

On the other hand, I have no real problem with the other changes. Extending the period of future application of losses helps companies which have had really bad years and run a long-term struggle to recover; all things considered, helping such companies is a feature. Allowing tax credits to be passed around within companies which are in practice the same simplifies the life of everyone involved; and the new method of determining how to tax multistate businesses is a more plausible, easily understandable method. Both of these latter two simplify the tax code, which is in the interest of everyone that needs to interact with it.

And yet.

In 2008, before the depth of the economic crisis was visible, in the middle of a budget crisis, the Legislature changed the rules to reduce the amount of money the state takes in in taxes. This change must be looked at as part of the whole, not in isolation; and things which seem good in isolation take on the tinge of insanity when considered as part of a system.

It’s more or less impossible for the state legislature to raise taxes. These cuts, which haven’t fully gone into effect yet, will have to be balanced by a similar amount in spending reductions. But the legislature can’t seem to manage to agree on a budget without the effect of these cuts.

That suggests that I should vote ‘yes’: even if these ideas were good in isolation, now is the wrong time for them, and they have to be paid for … probably by people who are in a less good position to pay for them than the people who benefitted from them.

And yet.

Voting yes ties the legislature’s hand and makes it impossible for anyone to change these provisions again, unless there’s another ballot measure.

Lack of flexibility is one of the primary contributing factors to the state’s budget nightmares.

That suggests I should vote ‘no’: depriving the state legislature of flexibility is breaking the state government, and if I want the state government to function, I shouldn’t add to it except in extraordinary cases.

And yet.

The state legislature already doesn’t have the flexibility to repeal these provisions: such a repeal would increase taxes and therefore could only be done with a 2/3 vote of the legislature (even though it could be aodpted with a 50% vote of the legislature). There’s a one-way ratchet in the legislature, in favor of lower taxes; the legislature has the theoretical power to change this, but no practical power.

Meaning there’s no actual harm to flexibility which comes out of voting ‘yes’.

And yet: that’s a problem in this era. But it wasn’t always a problem, and it need not always be a problem. Is it right to break flexibility indefinitely on the grounds that it doesn’t matter today, even though it may matter in thirty years?

Welcome to voting, California style.