12

Reich visits Capitol on CEO pay, oil extraction tax

It’s Robert Reich day at California’s State Capitol.

No, there hasn’t been an official proclamation. But the former U.S. Secretary of Labor, now a UC-Berkeley public policy professor, will be under the dome Thursday to speak on behalf of two bills introduced by Bay Area lawmakers.

Reich is doing a news conference with state Sen. Mark DeSaulnier, D-Concord; state Sen. Loni Hancock, D-Berkeley; and California Labor Federation Executive Secretary-Treasurer Art Pulaski in support of DeSaulnier’s SB 1372, which would create a new corporate tax table that increases taxes on businesses with big disparities between the salaries of their workers and their CEOs. The bill is being heard Thursday morning by the State Governance and Finance Committee.

“For example, if the CEO makes 100 times the median worker in the company, the company’s tax rate drops from the current 8.8 percent down to 8 percent. If the CEO makes 25 times the pay of the typical worker, the tax rate goes down to 7 percent,” Reich wrote on his blog Monday. “On the other hand, corporations with big disparities face higher taxes. If the CEO makes 200 times the typical employee, the tax rate goes to 9.5 percent; 400 times, to 13 percent.”

“Pushing companies to put less money into the hands of their CEOs and more into the hands of average employees creates more buying power among people who will buy, and therefore more jobs,” he wrote. “For the last thirty years, almost all the incentives operating on companies have been to lower the pay of their workers while increasing the pay of their CEOs and other top executives. It’s about time some incentives were applied in the other direction.”

And, Reich will testify to the Senate Public Education Committee in favor of SB 1017 by state Sen. Noreen Evans, D-Santa Rosa, which would create an oil extraction tax to fund higher education, health and human services, state parks and more.

Reich endorsed a similar student-organized ballot measure effort last year, saying that using oil severance tax revenue for education “should be a no-brainer. It will only improve our schools. The real question is why California hasn’t done this long before now.”

The California Chamber of Commerce this month put both bills on its list of “job killers,” arguing they create barriers to economic development.

“The economic recovery is still the number one issue for Californians,” Chamber President and CEO Allan Zaremberg said when announcing the list. “These bills pose a serious threat to our economy and, if enacted, would dampen job growth in the state.”

Of Evans’ bill, Zaremberg said “an oil extraction tax will drive up consumer prices, push jobs away and upset a fragile economy that is showing strong signs of life.”

14

Proposal for oil severance tax rises anew

From the Legislature, to an unsuccessful effort toward a ballot measure, and to the Legislature again: The oil-severance tax is back.

State Sen. Noreen Evans, D-Santa Rosa, rolled out her SB 1017 on Wednesday with a rally at California State University, Sacramento. Flanked by student leaders and California Tax Reform Association executive director Lenny Goldberg, Evans said the tax is estimated to raise about $2 billion per year.

“California is realizing an economic recovery but as both the State Auditor and California Budget Project have concluded, without new revenues the state remains on unstable financial footing,” Evans said. “California remains the only oil-producing state in the nation that does not impose an oil extraction tax. Meanwhile, our debts grow, our population increases, and our services are strained while new revenues from our own natural resources earn $331 million a day for big oil companies. Not taxing oil extraction is simply fiscally unsound.”

SB 1017 would impose a 9.5 percent severance tax on the extraction of oil from ground or water within California’s jurisdiction. Half the revenue would be distributed into an endowment and split three ways among the University of California, California State University and California Community College systems, while health and human services would get 25 percent and state parks would get 25 percent.

The idea has been kicking around here for many years, and this isn’t even Evans’ first bite at the apple: She carried SB 241 just last year, but it never made it out of the Senate Appropriations Committee.

A UC-Berkeley-based student group called Californians for Responsible Economic Development began circulating petitions for an oil-extraction-tax ballot measure last April; when they missed their signature-gathering deadline in September, they started anew with a revised measure. But in November, the group changed its name to Students’ Voice Now and announced it would partner with lawmakers to push for a bill instead.

“Tuition levels are vulnerable to a fluctuating economy,” said Harrison “Jack” Tibbetts, a UC Berkeley senior and author of the California Modernization and Economic Development Act. “The endowment avoids this reality by growing during a booming economy and protecting students and their families during the bust. Many other states who tax oil extraction use this same model and have a flourishing education system.”

But Gov. Jerry Brown has pledged not to raise or create any taxes without voter approval, and so isn’t likely to break his promise and embrace this bill, especially as he seeks re-election this year. Anti-tax groups quickly noted this amid their own opposition.

“Governor Brown has been very clear: now is the time for fiscal restraint and government efficiency,” said Beth Miller, spokeswoman for Californians Against Higher Taxes. “But Senator Evans clearly isn’t listening. Instead she is focused on raising taxes on hard-working Californians and creating a huge new, unaccountable government bureaucracy.

SB 1017 promotes a tax Brown already said he doesn’t support, and for which voters have no appetite, Miller said. “Just two years ago, voters approved more than $6 billion in higher taxes and earlier this year the governor announced the state had a $4 billion budget surplus. Voters want Sacramento politicians to hold the line on taxes and work to make government work better and smarter – not create more government and taxes.”