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California State University East Bay

The Pioneer

California State University East Bay

The Pioneer

California State University East Bay

The Pioneer

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Taking Responsibility for the Budget Crisis

Across the state, a chorus of voices blaming California’s budget crisis on factors ranging from a broken government in Sacramento to ballooning costs on unnecessary programs, is growing louder each day.

When the state debt – which was supposed to be at $9 billion – suddenly rises to $16 billion, it is easy to understand the frustration and outrage that citizens would naturally have with the way their government is being run.

But it is time California’s people and businesses take a long, hard look at who definitively bears a large share of the responsibility for this crisis: themselves.

California’s people and businesses are not holding up to their share of the social contract between themselves and their government.

Just last month the Franchise Tax Board of California released new findings that nearly $10 billion in state income taxes go unpaid each year. Additionally, the state’s Board of Equalization reported that each year roughly $2.3 billion in sales and taxes go unpaid.

That means the state loses out on nearly $12 billion in tax revenue every year due to payments being made under the table, reporting requirements being avoided by businesses and people claiming deductions they don’t qualify for, just to name a few.

This lost revenue because of cheating the system is only the beginning however, as there is also the question of back taxes still owed to the state.

The “Top 500 Delinquent Taxpayers Report” must be issued every year under California law by the Franchise Tax Board, and this year’s list amounts to nearly $221 million as of last week among those on the list.

Some of the more famous names include actress Pamela Anderson, who owes over $500,000, and CNET founder Halsey Minor and his wife Shannon, who owe over $10 million in back taxes to the state.

While the lack of responsibility from the citizens on the list is appalling, the weak measures enacted by the state government do little to help the situation.

Currently, being on the list can “cause the loss or denial of occupational and professional licenses, including the taxpayer’s driver license,” under Business and Professions Code Section 494.5.

Enforcement of this measure is questionable at best, however, when doctors like Johnny Y. Fong of Fresno are allowed to renew their Medical Board of California license while still owing as much as $3.6 million to the state in back taxes.

The government must be more active in ensuring that citizens who owe back taxes to the state are held accountable, including more aggressively pursuing the denial of licenses.

Yet ultimately the real action that must be taken to ensure the end of the budget crisis must come from California’s own citizens and businesses.

It is unrealistic to expect that all of that lost revenue could be accounted for, but theoretically, if just 33 percent of the annual revenue lost to the state were to be accounted for over the next four years, the state would be able to pay off the debt it currently has.

In fact, the growing amount of debt has only been worsened by this lost revenue. The jump in estimated debt from $9 billion to $16 billion was, according to the New York Times, because of lower than expected revenue collections in April.

Slashes to services across every sector of government are being made in efforts to pay off the debt while legislation and propositions to raise the sales tax on all Californians along with implementing a surcharge on the income tax of wealthy Californians are considered.

The financial straits the state finds itself in are creating room for dialogue that will negatively affect people throughout California, whether it is tuition hikes for students or raising taxes on businesses and corporations in the state.

The landscape for this dialogue cannot be attributed solely to the ineptness of politicians in Sacramento, not when it is our actions causing the state to lose the precious resources it needs to right a sinking ship.

A California that can avoid raising tax rates and cutting social services is possible without resorting to partisan tactics, but only if the people and businesses of California begin to pay their share.

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California State University East Bay
Taking Responsibility for the Budget Crisis