The Newport Beach Chamber of Commerce has consistently maintained that only a strong economy will generate the level of tax revenues needed to sustain the state's necessary programs. The state needs continued investment in economic activity and jobs in the private sector to enhance state revenues. The chamber is all about investment. Investment in our businesses will encourage employers to stay and expand in California.
In order to achieve and warrant investment in our state, business needs a stable, predictable tax environment in which to operate. There must be a restoration of the public's trust in the stewardship of taxpayer dollars through transparency, spending restraint and accountability.
Taxes matter to business. Business taxes affect business decisions, job creation and retention, plant location, competitiveness, the transparency of the tax system and the long-term health of a state's economy. Most important, taxes diminish profits. If taxes take a larger portion of profits, that cost is passed along to either consumers (through higher prices), workers (through lower wages or fewer jobs), or shareholders (through lower dividends or share value). Thus a state with lower tax costs will be more attractive to business investment and more likely to experience economic growth.
The chamber recognizes the severity of the problem and encourages the Legislature and the governor to avoid the popular temptation to want to inflate revenue projections or borrow money from the future. The chamber suggests that in the near term the state should use an across the board reduction in spending levels rather than targeting education or public safety specifically.
The state should look to payments to those citizens who are here illegally as a source of more drastic reductions in spending. Additionally, the state needs to begin to address the issue of pension reform as it looks to balance future budgets. The bottom line is that the proposal simply does not dramatically and fundamentally address remedying the problem itself. It merely seeks to apply yet another Band-Aid to the illness.
RICHARD R. LUEHRS is president and CEO of the Newport Beach Chamber of Commerce.