Sunday, June 3, 2012

California's Fraudulent 9/11 License Plates and Tax Increases

Personalized license plates are a large source of revenue for cash-starved states with little expense courtesy of prison factories. For example, California has reaped $250 million from its ten specialty plates. If residents wish to pay extra for such a plate, then that’s a matter of personal choice.

But not when the state markets them through false and misleading statements, that if communicated by a private party or enterprise, could lead to civil or criminal prosecutions or otherwise violate consumer protection statutes.

California’s legislature enacted a specialty license plate after 9/11. An American Flag is partially obscured by clouds and the slogan “We shall never forget.” The personalized plates cost $50 to purchase and then an additional $40/year. California has collected $15 million from these plates over the past decade.

The Department of Motor Vehicle’s web page provided until last week that the plates’ purpose is “to fund scholarships for the children of Californians who died in the September 11, 2001 terror attacks and help California’s law enforcement fight threats of terrorism.”

This published statement was technically true in that 15% of the funds were initially set aside for scholarships.” However, the state’s treasurer cancelled the scholarship program in 2005 after disbursing only $21,381 in scholarships. That barely covers one year of tuition, fees, room and board at a University of California campus.

The continuation of the scholarship purpose is a misrepresentation that could be labeled fraud in the private sector.

40% of the funds have gone to anti-terror training programs, but the remaining funds have been diverted to other purposes, of which the most outrageous is $3 million being “borrowed” by Governors Schwarzenegger and Brown to the general fund.

That California’s politicians would use the American tragedy of 9/11 to fleece California drivers is reprehensible.

Remember Vice president Al Gore in 2000 campaigning on “lock boxes.” Lock boxes do not exist with government funds. Green is green. Revenues are fungible. Monies can be transferred from account to account, so long as the legislature approves.

That brings us to California’s current, recurrent budget crisis. California’s budget deficit is a bottomless pit. The legislature and governors on a bi-partisan basis attempt to paper over the deficits with smoke and mirrors.

Once again this year a “balanced” budget was enacted with excessive enthusiasm. It has once again fallen apart.

With half the budget gone the state was looking at a $9.2 billion deficit in January. The deficit rose to an estimated $16 billion in May, and may reach $19 billion by the end of the year. Income tax revenues fell $3.5 billion short of estimates while spending rose $2.1 billion.

Governor Brown’s proposal is to “temporarily” raise the sales tax to 7.5% and impose a surtax on millionaires. He defines “temporary” as 7 years and millionaires as those earning $250,000 annually since $250,000/year times 4 years equals a million dollars. I hope Yale taught the Governor more than that.

The highest tax rate on millionaires will rise to 13.4%. The current marginal tax rate of 9.3% kicks in at an income of $48,000.

California has a 10.9% unemployment rate, worse than all states except Nevada and Rhode Island. 2 million Californians are unemployed while a net 1.6 million residents have left the state since 2000. Businesses are fleeing the state. The state’s business climate is ranked worse in the nation. Expensive housing, high taxes, excessive bureaucracy, high utility costs are crippling the economy.
48% of the state’s residents do not pay income taxes, so California relies excessively on the so called 1% to carry the state.

12% of the nation’s population resides in the state, but 1/3 of the nation’s welfare recipients are in California.

The Governor’s response is to raise taxes. Instead of trying to broaden the economic base of the state, the Governor’s approach is to squeeze larger amount exactions from a shrinking base – a proven recipe for economic disaster. Governor is acquiring the reputation as the Greece of the United States.

His published agenda is to plug the budget deficit by raising an additional $6-7 billion annually in tax revenues. Unless the revenue increases are approved the higher education systems, the University of California and the California state University Systems will be slashed. The Presidents of UC and Cal State are advocating for the tax increases.

The Governor’s budget plan though calls for an additional $7 billion in expenditures, mostly to cover pension liabilities. The legislature will gladly pass the spending increases, but the expected tax revenues will not come in. The deficit will rise.

In short, Governor Brown is peddling snake oil to the voters. He’s selling tax increases to solve the state’s budget problems, but his purpose is to spend.


I posted the above on June 3. The Orange County Register had an article yesterday that qualified families were not told of the scholarship fund, or of they applied, were informed they were ineligible.

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