The Schwarzenegger Tax
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
California’s governor, Arnold Schwarzenegger, is proposing a 13.8% increase in the state sales tax as a way to close the state’s budget gap, which is estimated at $15.2 billion. If he goes that route, and if a separate sales tax increase by the Metropolitan Transportation Authority also goes into effect, Los Angeles County residents could face a sales tax on their purchases of 9.75%, according to Los Angeles Times, which reported the tax news yesterday. That’s higher than even New York City’s 8.375%. And, unlike some other states with high sales taxes, California has a state income tax, too.
Mr. Schwarzenegger, unlike Governor Paterson here in New York, is term-limited, so he won’t have to face voters in a re-election campaign. Because Mr. Schwarzenegger isn’t a natural born citizen, the Constitution bans him from running for president. But if Mr. Schwarzenegger follows through on the tax increase plan, it will damage his reputation, no matter how much he insists that the tax increase would expire after four years and would be conditional on Democratic compromises on constitutional restraints on spending.
The movie star-turned-California governor had a prominent speaking role at the 2004 Republican National Convention and is expected to appear again this year, having endorsed Senator McCain. He has also left the door open to serving in an Obama administration and has appeared together with Mayor Bloomberg, who is an independent.
If Governor Paterson can navigate his way through New York’s own fiscal crisis without a tax increase (and backs away from the Amazon.com tax increase he has already imposed) at a time when even Republican governors like Mr. Schwarzenegger are resorting to tax increases, the New Yorker will have quite a political future ahead of him. If the Democrats don’t like the pressure it puts on state spending, well, the Republicans in New York have been looking for leadership. If that fails, Mr. Paterson can always move to California, where some fiscal discipline might be a welcome thing, and Mr. Schwarzenegger, after all, is term-limited.
