Genest: Tax level ‘lower than it has been for a while’

Mike Genest, the finance director under ex-Gov. Arnold Schwarzenegger, had a revealing comment in a wide-ranging budget discussion on Capital Public Radio today.

Genest, now a political consultant advising Republican senators who are in talks with Gov. Jerry Brown, was asked if Brown’s tax extension should be placed on the ballot. He said:

As a Republican, I kinda hate to say it but our tax burden is less now because of recession. The amount of the economy going to state government is lower than it has been for several years. Except for right at the bottom of the recession, you go back 30 years to find tax revenues at this low a level. So, there is a case to be made that we might need to keep those taxes at a higher level for a while.”

He went on to say, however, that Republicans “shouldn’t lose the opportunity while contemplating doing this. We ought to take that opportunity to get serious reforms.”

Politics is all about exploiting opportunities, but the brazenness of the ask couldn’t have been clearer. A Republican who is advising GOP senators in talks with Brown, acknowledges that the tax burden is low and the current rates should be continued — but that they might as well extract as much as possible since they have the leverage of a two-thirds vote that’s required to put a tax issue on the ballot (with the goal, of course, of, as Genest said, “helping the economy grow”).

The question remains whether Democrats continue to view the Republican ask as an overreach — especially if it’s known that Genest considers the taxation levels just fine.

Steven Harmon

  • Doug

    Opinions based on the ‘amount’ of the economy don’t impress me. It’s the % or the economy. As the spending base has decreased in this depression (yes, that’s what it is), of course the amount tithed to the state has gone down. But I defy you to show me where the % has gone down. No way. With all the new fees and taxes imposed, I don’t even need to see the data to know the % has gone up. Way up. The message is the same. Starve the beast – state or federal.

  • John W

    I support the tax extensions but would have to agree with Doug’s (#1) comment. One thing rarely mentioned is that, when the .25% income surtax went into effect, it disproportionately increased taxes on those at the lower end of the brackets. If somebody was in the 2% bracket, it was 12.5% increase. If somebody was in the 9.3% bracket, it was a 2.7% increase. Personally, I think that was a good thing. Based on my experience with various income tax structures in other states, our marginal tax rates are two low at the low end and too high at the high end. In Colorado, it was a flat 4.63% of federal taxable income. Steeply progressive marginal tax rates at the state level are counter-productive, because people can shift things around in a way they can’t at the federal level. I’d go for a flat 5-6% on adjusted gross income over $15,000. No deductions, exemptions or credits.