Will courts save California from the tax-zombie apocalypse?
If you watch the hit television series, The Walking Dead, or if you are a fan of horror movies, you know that zombies are fictional walking corpses with an insatiable hunger for human flesh. But in many respects, some California politicians act like real zombies. Upon election to office they are gradually transformed into tax-ghouls with an insatiable desire for our money. Fortunately, the California Supreme Court has an opportunity to prevent the coming tax-zombie apocalypse in a case called Schmeer v. County of Los Angeles.
As PLF attorney Tony Francois posted, in Schmeer, the Los Angeles County Board of Supervisors enacted an ordinance prohibiting stores from using plastic bags, while allowing them to sell paper bags to customers for ten cents. But the Supervisors went further. They also dictated that stores could only spend the money from paper bag sales in a way the government directed. The issue is not that customers must pay ten cents for a bag, or that plastic bags are prohibited. The issue is the government’s attempt to evade state constitutional voter requirements to raise taxes and fees. Taxpayers sued to prevent the County from enforcing the ordinance, but both the trial court and the court of appeal upheld the ordinance. PLF filed a letter, on behalf of itself and the Howard Jarvis Taxpayers Association, asking the state supreme court to accept review of the case and reverse the lower courts’ ruling.
For decades California voters have played a game of whack-a-mole with politicians who relentlessly devise new schemes to extract higher taxes and fees from the public. First came Proposition 13 in 1978, which amended the constitution to require that any special taxes imposed by local governments must be approved by a two-thirds vote of the electors. But elected officials found ways to get around this requirement by claiming new charges were not special taxes, or that the government unit imposing the tax was not subject to the two-thirds requirement. In response, the people passed Proposition 218 in 1996. Proposition 218 amended the constitution to require that all taxes imposed by any local government must be approved by the voters – a simple majority for general taxes, and a two-thirds majority for special taxes. But the state and local governments found a new way to thwart the will of the voters by using their “police power” to collect additional revenue under the guise of fees.
In 2010, California voters approved Proposition 26 to curb the proliferation of regulatory fees that devoured more taxpayer money without voter approval. Proposition 26 amended the constitution again by defining taxes as any levy, charge, or exaction of any kind. Local governments may still collect revenue to fund worthy causes or programs, but not without voter approval.
Without prior voter approval, Proposition 26 prevents the Los Angeles County Board of Supervisors from collecting new fees from paper bag users and expending that revenue to fund public awareness programs. By eliminating the collection of funds by government – in effect, removing itself as the middle man – the Board of Supervisors believes it has found a loophole to Proposition 26.
If it is allowed to stand, the Schmeer decision invites an apocalypse of new taxes and fees. The state and local governments would be given the green light to add any number of new charges just by removing themselves from the collection process. For instance a local government could require BBQ restaurant customers to pay a surcharge on their check and require the restaurant owner to spend the proceeds by promoting vegetarian lifestyles. Or, motorists could be forced to pay fees to gas stations which would then be forced to spend the money on programs subsidizing the purchases of costly alternative fuels. The list is only limited by the government’s tax and spend appetite. The issue is not the worthiness of the funded programs, but whether government has followed the law.
Proposition 26 should have prevented the Los Angeles County Board of Supervisors from ordering third parties to collect certain charges and directing how the money may be spent. If you disagree, or if you find the above examples are too extreme to be true, then take drastic action: you may have been bitten.
What to read next
PLF asks the U.S. Supreme Court to rule that there is no “legislative exception” to the unconstitutional conditions doctrine
It seems that some governments and courts prefer to treat Supreme Court precedent as an option, rather than a requirement. The Supreme Court has ruled—twice—that it’s unconstitutional for government to … ›