SAN FRANCISCO (CN) – Small businesses that received $682 million in IOUs from the state say California expects them to pay taxes on the worthless scraps of paper, but refuses to accept its own IOUs to pay debts or taxes. The vendors’ federal class action claims the state is trying to balance its budget on their backs.
Lead plaintiff Nancy Baird filled her contract with California to provide embroidered polo shirts to a youth camp run by the National Guard, but never was paid the $27,000 she was owed. She says California “paid” her with an IOU that two banks refused to accept – yet she had to pay California sales tax on the so-called “sale” of the uniforms.
Incidentally, I’ve been writing a few op eds lately about the California budget crisis. Their deficit is bigger than most countries’ GDPs. Here is my best impression of Bill Kristol.
Last point: For those of you who like to consider data before forming a political conclusion, I refer you to Table 7 [.pdf] in the latest ALEC/Laffer state rankings. Before I began reading this research, I figured tax cuts were great but mostly on principle. But after reading this stuff for a few months, I began to be puzzled as to why any states have bad tax policies. My only conclusion was the (Hans Hoppian) observation that a governor at most gets to play with the state’s finances for eight years. But if a governor served a life term, then–whatever horrifying things might ensue–at least the 50 states wouldn’t have such ludicrous tax codes.