09.10.2012 0

California Chamber of Commerce under fire

NRD Editor’s Note: This column originally appeared at The Flash Report.

Casa Del Mar Hotel

The posh Casa Del Mar hotel

By John Fleischman — Apparently the Board of Directors of the California Chamber of Commerce is meeting tomorrow at the posh Casa Del Mar Resort located right on the beach in Santa Monica.  It’s a stunning property, I attended a wedding there once.  Marble floors, vaulted ceilings, magnificent artwork and stunning beachfront views make this one of the finest resorts in the Golden State.  I hopped online, just to see what it would cost if one wanted to stay there for one night — tomorrow night — to find that a standard room (with a “partial ocean view”) was going for a paltry $650 a night — before all of the taxes and resort fees are applied.  Of course I’m sure that the CalChamber has gotten a great deal, as the Chairman of the CalChamber’s Board of Directors, Timothy Dubois, is the CEO of the Edward Thomas Collection, which owns this luxury property (among others).

According to a several emails that I have received, like this one, there are taxpayer and tea party groups from all around Southern California looking to come and picket and demonstrate against the CalChamber at the Casa Del Mar.  Why would this be taking place, you might ask?   Apparently the CalChamber’s Board of Directors is going to be looking at taking a position on Proposition 30, the Governor Brown and the California Teachers Association supported massive tax increase measure that will appear on the November ballot.  As a reminder, if passed, this measure would impose for four years a statewide increase in the state’s sales tax, and it would impose a significant increase in the state’s income tax for the next seven years (Brown, rather dubiously, refers to this a “temporary” tax increase).  And if history is any indicator, taxpayers should have every reason to be worried about what the CalChamber will do.

The CalChamber, which bills itself as an advocate for a strong business climate in California, has a history of supporting (or not opposing) tax increases.  The most relevant example would be a few years ago, back in 2009, when a terrible budget “deal” was negotiated in the State Capitol, the center-piece of which was a massive two-year increase in the state’s income, sales and car taxes (and a big cut in the child tax credit) — as well as the placing on the ballot a measure (Prop. 1a) which, if passed, would have had the effect of extending those tax increases for two more years.  While the voters of California rejected Prop. 1a by an almost two-to-one margin, they couldn’t stop the legislature’s imposition of those taxes for two years, a hit to taxpayers of roughly $14 billion each year.  Why, you might ask, would a group that says their main purpose is to foster an environment for business to thrive in California support massive tax increases?  For one, in that budget deal, there was a “give back” to big corporations based in California of a billion dollars – a new option for these businesses to compute their tax liability to the state that was very advantageous.  A peek at the Board of the CalChamber reveals that many of the companies on it profited greatly (and still do) from that deal.  Never mind the fact that for all of those small businesses in California that file their taxes in individual returns, they were hit with a big tax increase.  And of course taking money out of the hands of taxpayers means less money for them to spend in the marketplace.

Another example, to demonstrate that the CalChamber isn’t just about supporting deals that include broad-based tax hikes in return for their 30 pieces of silver, this year conspicuously absent from the organization’s “job killer” list was Speaker John Perez’s AB 1500.  This legislation, if passed, would have been a massive, billion dollar tax increase on multi-state businesses that provide services and products to Californians.  No doubt there were companies on the CalChamber board who would be just fine with their competitors getting smacked with new taxes, providing for them a competitive advantage (how sick).

While the CalChamber does do many good things that are helpful, and I mean that seriously, some of the biggest decisions that they make, politically, are not to help create a vibrant marketplace in California for business to thrive, but are about seeking to advantage (or “protect”) some of the largest corporations in California, as I pointed out, regardless if it is at the expense of other businesses or the taxpayer of the state.

CalChamber President Allan Zaramberg in a video on his organization’s website talks about the need to elect people to office who will help promote pro-business policies in the State Capitol.  Yet rather infamously in the show-down between then-Attorney General Jerry Brown and Meg Whitman for Governor, the Chamber’s Board shut down any efforts to help elect the clearly more business-friendly Whitman when Brown started making phone calls to key players on the Board.  That incident highlighted how the most high-profile “business” organization in the state has largely been co-opted by allowing its top policy-making body to be populated by a combination of liberals, rent-seekers who are looking to advantage themselves using government, fearful people who are afraid of retaliation by politicians against their business, or those who actually do business with the government.  Sure, there are some “true believers” on the Board still, but those people seem to be in the minority.

Which takes us back to the CalChamber’s meeting tomorrow.  This group once again has to decide what it will do when faced with a stark choice.  Clearly a massive increase in sales and income taxes is harmful, not helpful to the business climate in California.  And it is safe to say that its passage would do nothing to change the political climate in the capitol, nor solve the state’s structural financial mess.  As representatives of the CalChamber have said many time over, if we create private sector jobs in California, the state’s chronic financial shortfalls will take care of themselves.  In the end, if the Chamber opposes Proposition 30 today, then they will have made a statement that they stand not only for big business, but for the small businesses that are the bigger driver for job creation in the state, who would be very hard hit by the steep income tax increase.  Or the CalChamber could endorse Prop. 30, and again put itself at odds with not only small business (the National Federation of Independent Business, California and the Small Business Action Committee, which represent small businesses around California, are helping to lead the effort to defeat this measure) but also with taxpayer groups like the Howard Jarvis Taxpayers Association (also “on point” opposing Prop. 30) as well.  I guess the CalChamber could go “French” and stay out of it all together.

The good news is, as the 2009 budget deal narrative above points out, the public has a track record of opposing steep taxes on themselves, even when “big business” tells them they should do so.  But at some point there needs to be an epiphany over at the CalChamber that perhaps all of us who are all “targets” of the liberals who run the legislature should actually stick together as a team, and have each other’s backs.  But it could be that the organization is too far gone for that — that it is no longer able to stand up to an assertive, powerful politician like Governor Jerry Brown.  Let’s see what they do on Prop. 30, and that will probably give us as good a sign as we can get.

In the meantime, cheers to those protesters outside of the Casa Del Mar.  They probably can’t afford to stay there.  But no doubt some on the CalChamber Board think they can afford to pay higher taxes.

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