Some California Leaders had some thoughts.

Sen. Harris:

Repealing the estate tax is a giveaway to those at the top — not something that will create jobs. We have to oppose this plan.

— Kamala Harris (@KamalaHarris) November 2, 2017

Senator Feinstein:

“It’s unbelievable the lengths that Republicans will go to give the richest Americans a huge tax cut. The Republican tax bill will likely increase the deficit by $1.5 trillion and slash key deductions and credits for working families in order to give the richest Americans and large companies a tax cut.

“I’m particularly concerned about limitations on essential tax provisions that benefit working families and the middle class. This bill would harm families and is a non-starter for me, and I’ll fight to defeat it in the Senate.”

Mortgage Interest Deduction

The Republican bill caps the mortgage interest deduction for new home purchases at $500,000. All told, 18 counties in California have median home prices above $500,000 including Alameda, Contra Costa, Los Angeles, Marin, Mono, Monterey, Napa, Orange, San Benito, San Diego, San Francisco, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Sonoma and Ventura.

“Owning a home is an essential part of the American dream. Capping the mortgage interest deduction could create a huge barrier to homeownership and depress existing home values across the country.”

Sales and Income Tax Deductions

The Republican bill eliminates the deduction for state and local income taxes. In California, 5 million households claimed the income tax deduction in 2015.

“Ending this important deduction for the middle-class would mean income could be taxed twice and could lead to the reduction in critical state and local services. Republicans should scrap this one-sided effort and work with Democrats to pass true tax reform that ensures working families aren’t hurt and everyone pays their fair share.”

Minority Leader Pelosi did a Facebook live event. In a previous event, she had this to say of her 14 Republican California colleauges:

“We would hope that our colleagues would use their numbers – 14 – to influence the Republican leadership to take this out of the bill – and a bill that’s a disaster in so many other respects as well,” Pelosi said. “But short of that, we indict them for causing great harm to their constituents, financially, community-wise and to our great state.”

“Are they so weak that 14 of them could not weigh in and say, ‘This is not right for the future of our country’?” she said. “Have they no power? Have they no influence with the Republicans?”

House Majority Leader Kevin McCarthy, who apparently forgot to add the caveat, “except for Californians.” He has a twitter video here.

“Every single American is going to keep more of what they earned.”

Speaker Rendon:

“The dangerous Trump-Ryan-McConnell tax plan throws California taxpayers under the limousine. Under the rushed-together Republican tax plan, hardworking Californians could pay up to 22% more to subsidize tax breaks for billionaires and big corporations. Cutting the mortgage deduction in half hurts homebuyers and the housing industry. Proposition 13 lowered California property taxes, but the Republican tax plan effectively raises the property tax for many California homeowners. Adding insult to injury, the Republican tax plan makes Californians pay taxes on taxes we already pay. Whether it is students with loan debt or builders trying to create affordable housing, millions of Californians will be harmed by the Republican tax plan. No member of Congress from California can support this plan and look their constituents in the eye.”

Rep. Mark Takano on Speaker Ryan’s plan – (D-Riverside)

“The House Republican tax plan is a massive transfer of wealth from Californians and middle-class families to wealthy individuals and large corporations. Limiting deductions for state and local taxes, capping the mortgage interest deduction, and eliminating the student-loan-interest and medical-expense deductions are all policies that are specifically designed to hit Californians, who already contribute more to the federal government than they receive.

“The winners in this plan are the small percentage of people who already possess the largest share of our country’s wealth. Repealing the estate tax benefits only those with greater than $5.6 million in assets. Repealing the alternative minimum tax would allow wealthy individuals to avoid paying their fair share, including President Trump, who would save millions of dollars if this provision is passed into law. And permanently cutting the corporate tax rate to 20% from the current 35% would only benefit the corporations that are already enjoying record profits.

“Shifting money from middle-class Californians to the wealthiest individuals and corporations in America is bad policy in any environment. But given the severe inequality in our country and the struggle many working families face every day, this plan is simply indefensible.

“I strongly oppose this legislation and don’t see how any California Republican could support it.”

DNC Spokesperson Vedant Patel ahead of a Mnuchin visit to Corona to shill for this joke:

“Despite widespread agreement that the Trump-Republican tax plan would actually raise taxes on many middle class families, Donald Trump’s loyal puppet Secretary Mnuchin is jetting off to California to pitch his boss’s damaging proposal. As one of the many multimillionaires in Trump’s Cabinet, Secretary Mnuchin stands to profit immensely and can’t – or won’t – comprehend the catastrophic consequences for California’s working families if this tax plan becomes law. While Secretary Mnuchin tries to sell this sham tax bill, we hope that he avoids using any chartered flights that could cost the American taxpayers more in addition to what this disastrous tax plan will.”

California Republicans risk tax increases for their constituents

by Brian Leubitz

The feud over the tax deduction for state and local taxes continues after the recent House vote on the federal budget. Gov. Brown and Rep. Pelosi are mincing no words after all 14 California Republicans supported the budget. Brown went so far as to call the Republican members “like a herd of sheep” for voting for a measure that would increase taxes on Californians by ending the state and local tax(SALT) deduction.

But don’t worry, Rep. Kevin McCarthy (R-Bakersfield) has a plan for that:

“You know how you get to deduct where California continues to raise their rates? I don’t think it’s fair that somebody else subsidize poor management of California or New York policies,” House Majority Leader Kevin McCarthy (R-Bakersfield) told the California Republican Party convention last weekend.

“No longer can Sacramento say, I’m gonna raise the rates, just cause I’ll have the federal government subsidize it,“ McCarthy added as the crowd of conservative activists cheered him on. “They will have to be held accountable for when they want to raise taxes higher.“ (Capital Public Radio)

In other words, look over there, there’s a bathtub, let’s go hop into it because Grover Norquist told us to!

The California Republicans are hoping that the blame when the tax increases occur in California will be assigned to Democrats in the Legislature. But that seems somewhat of a gamble considering that those increases will be showing up on federal Form 1040 while Republicans control the federal government.

Look, SALT deductions are clearly not perfect, especially with respect to progressivity, but neither are any other of a number of tax expenditures. You know what else isn’t very progressive? Flattening the income tax structure to reduce taxes on the richest of Americans that, as Warren Buffet pointed out, don’t need a tax cut. Zeroing out this one deduction, while reducing taxes on the wealthy isn’t really what the Trump voters were dreaming of in their MAGA hats. And are the people really clamoring for reductions in the corporate tax rates that the Republicans are really focused on?

Pelosi, for her part, is calling on California Democrats to rally against the budget and the end of the SALT on November 3. For what it is worth, Capital Public Radio asked all of the California Republicans where they stand on the SALT deduction, with most not responding, but McCarthy and Rohrabacher said yes. We may get a full answer on how interested they feel in representing California as “tax reform” moves forward.

Is this the fight we want or the fight we need?

by Brian Leubitz

By this point, unless you’ve been living under a rock, you will have heard about Kevin de León’s entry into the Senate race next year. There have been rumblings for a while, and it seemed that he was going to enter the race whether DiFi was retiring or not. He has his shiny new website all ready to go, while she has, um, a spam site at what would be the most logical website, and a site from 2012 that is apparently selling space for google ads. She may want to have somebody look into that.

There are any number of ways to think about this race, and much of it comes from where you stand. Sen Feinstein was never the progressive California Senator, that was Sen. Boxer and now Sen. Harris. She has always been a champion for gun safety legislation, and a leader as chairwoman of the Intelligence Committee. But she has never been a progressive firebrand. According to 538’s “Trump Score”, she is in the middle of the Democratic pack. But, that’s also 12 points more favorable to Trump than would be expected from a California senator.

On the flip side, there will be no end of Democrats announcing that running against an incumbent will bring ruin and the wasting of resources that could be spent in other states defeating actual Republicans. We will have to see where KdL’s money comes from once we see a report, but given the drama surrounding his candidacy, one would suspect that you won’t see many of the usual suspects on the contribution lists.

Now, Kevin de León has a lot of work in front of him convincing Californians that he will be a more representative (probably not so hard) and more effective (probably much harder) Senator that Sen. Feinstein. But the remaining question is whether the election will be decided in the first election or the second. As of yet, there are no serious Republicans in the race. But, if there are only two Democrats, and only one Republican, might we see another Dem-on-Dem general? Add in a third Democrat (Steyer?) that becomes a lot less likely. Add in a second Republican, and it becomes a lot more likely. Of course, this is one of the problems of the top-2 system. It leaves a lot up to gamesmanship and the sheer number of candidates. (For example, had Top-2 applied in the 2010 AG race, we would have missed a Rep on Rep race by a few thousand votes.)

At any rate, this race will certainly be interesting. How defining it is for the California (and national) Democratic Party is still up in the air.

Law would have required release of income taxes in order to be eligible to appear on the California ballot.

by Brian Leubitz

Sometimes you never know with Governor Brown. And so is the case with SB149:

Gov. Jerry Brown vetoed legislation Sunday that would have required presidential candidates to release five years of income tax returns before their names could appear on the California ballot. The bill, SB149 by Sens. Mike McGuire, D-Ukiah, and Scott Wiener, D-San Francisco, was approved in the Legislature largely along party lines. Though it does not mention President Trump, it clearly targeted the commander in chief, the first in 40 years to withhold his tax documents from the public. (SF Gate)

With Gavin Newsom, you know how this would have turned out. He’d be all aboard this train, but Jerry gets uncomfortable. He comes up with a slippery slope argument; he questions the constitutionality. In his veto message (PDF), Brown does just that:

Add in the fact that he didn’t release his tax returns for either of his governor’s races, and you have one uneasy guy. I never thought he was *likely* to sign the bill, but I’m not sure I would have been surprised either way.

In other news, the governor made decisions on a number of other notable measures, including signing SB179 which allows the selection of a non-binary gender designation, and vetoing SB649, a telecom-backed measure that would have expedited the approval of cell phone towers.

GOP plan proposes double taxation, big savings for Trump himself

by Brian Leubitz

While there are still a lot of specifics to emerge, it is clear that the GOP tax plan would hit California hard. Of course, the biggest item that hits mostly blue states with higher taxes is the elimination of the state tax deduction. Think about how upset this would make Californians: under this plan, you would be paying taxes on the money that is going to taxes. And it is a lot of money, especially for a state like California that is a big net donor to the federal government. Details below, and Senator de Leon’s comments to the right.

The biggest deduction on the chopping block is the state and local tax deduction, which enables Californians to subtract those tax payments from their income before calculating how much they owe the IRS. In 2015, federal data shows that more than 6 million people in the Golden State claimed the deduction, worth $112.5 billion. That’s more than any other state, according to the Tax Foundation, a right-of-center tax policy research organization. California is one of just six states, along with New York, New Jersey, Illinois, Texas and Pennsylvania, that together claimed more than half of all state and local tax deduction dollars in 2014, the foundation says. (SacBee 9/27)

Putting aside the fact that Trump carried Pennsylvania, and would likely need it in 2020, that $112.5 billion represents a huge hit for the state. Now, you can imagine that the ads against such a measure wouldn’t be too hard to craft, but that doesn’t make it any less dangerous.

And of course, the GOP can’t really just sell the plan on its merits. Apparently big tax cuts to the rich aren’t very popular, so instead, they are just lying.

Republican plan to destroy health care just won’t die

by Brian Leubitz

Just in case you weren’t sure about how stupid the Graham-Cassidy bill was, there’s the big BS factoid the Republicans are spreading:

“Right now, 37 percent of the revenue from the Affordable Care Act goes to Americans in four states”—California, New York, Massachusetts and Maryland, Mr. Cassidy said. “That is frankly not fair.”(NYT)

First, being a nerd, I would point out that those four states have roughly 20-25% of the nation’s population, but whatevs. The really important part is that these are four large states that chose to expand Medicaid. That’s why the Republican governors of several states that expanded Medicaid are now actively opposing this bill.

What does it mean for California?

By 2026, California would lose $78 billion in federal money for the Medi-Cal insurance program for the poor and in federal subsidies for low-income residents who buy health insurance through Covered California, the state exchange created under the ACA. That figure represents a 13 percent drop in federal funding levels, according to the analysis, which was funded by the left-leaning think tank Center for American Progress.(SF Chronicle)

Anybody think California’s Republican Representatives will actually do the right thing for their constituents?

Gov. signs several budget bills over the weekend

by Brian Leubitz

The Governor took little time to sign a first big batch of bills after the Legislature ended session. Specifically, he signed seven budget bills on Saturday:

• AB 109 by Assemblymember Philip Y. Ting (D-San Francisco) – Budget Act of 2017.
• AB 129 by the Committee on Budget – Education finance.
• AB 130 by the Committee on Budget – Health and human services.
• AB 131 by the Committee on Budget – Taxation.
• AB 133 by the Committee on Budget – Cannabis Regulation.
• AB 134 by the Committee on Budget – Budget Act of 2017.
• AB 135 by the Committee on Budget – Transportation.

The Budget Acts do basically what you would expect of budget bills: appropriating money to one expense or another. But one part of AB 134 seems to be getting a lot of attention:

Up to $140,000,000 shall be used for the Clean Vehicle Rebate Project.
(1) The State Air Resources Board shall work with the Labor and Workforce Development Agency to develop procedures for certifying manufacturers of vehicles included in the Clean Vehicle Rebate Project as being fair and responsible in the treatment of their workers. It is the intent of the Legislature that beginning in 2018–19 fiscal year, the Labor Secretary shall first certify manufacturers as fair and responsible in the treatment of their workers before their vehicles are included in any rebate program funded with state funds.

Two things here: First, it takes cap and trade money and ships it off to help make electric and plug-in hybrid cars cheaper. I suppose I should issue some sort of trigger warning, as the cap and trade extension bill was controversial to put it mildly. The second point to that, and probably more interesting, was the labor provision put into that extension. (See my added emphasis in the quote above.)

This has been getting a lot of attention as summary stories of the legislative session come out. Many of them are framing in this “unions are powerful” and win everything, which plainly is not true. Yet, clearly they win more they than they lose.

This provision is directed at Tesla, which as of yet, is mostly beating back attempts to organize their work force. The standard of “fair and responsible” seems a little open to interpretation, so how much this matters is an open question. Denying the incentive money to a California based company would certainly be a controversial decision, and Tesla has a backlog of Model 3 orders from across the country, but if the Labor Secretary is strict on that provision, it would certainly draw Elon Musk’s attention/ire.

Many more bills will be signed as we head into the October; even despite some setbacks (single payer to name one) this has been a very busy legislative year.

State pokes stick in the eye of Sessions, Trump, and their neo-nativist supporters

by Brian Leubitz

Governor Brown doesn’t mind confronting the federal government. He’s shown that particularly in the climate change arena as he has become the de facto American leader taking on that global crisis. However, he also likes to tread carefully.

And that was his hangup about Senator Kevin de Leon’s sanctuary bill, SB 54. And yesterday, the governor apparently got the changes he felt were necessary:

The amendments would give law enforcement agencies more discretion to notify federal immigration officials about convicted offenders in their custody and to transfer those offenders to immigration authorities.

The bill would still allow federal immigration officials to interview those in custody, though it will not permit those officials to maintain permanent office space in state prisons or local jails.

“This bill protects public safety and people who come to California to work hard and make this state a better place,” Brown said in a statement.(The Hill 9/12/17)

The changes also helped ease some of the opposition from law enforcement leaders that had been troubling to the governor’s office. And now, I suppose the ball is in the court of AG Sessions to get all mad and storm off with whatever block grants to the state aren’t glued down to the floor.

The agreement is getting praise from other state leaders as well.

“From the moment Donald Trump won the White House, California Democrats have been tirelessly working to protect and shield undocumented Californians from the federal Government,” said California Democratic Party Chair Eric Bauman.

“One of the cornerstones of that effort is SB 54 by Senator Kevin de Leon, and California Democrats are deeply grateful that he and Governor Brown have reached agreement on final language that ensures California’s law enforcement agencies are not used as instruments of federal immigration enforcement. Californians welcome our undocumented brothers and sisters, and the use of California’s peace officers against our own brothers and sisters would have been unconscionable and dangerously corrosive to the trust law enforcement needs from the community to keep Californians safe. This is a powerful message of inclusion and reassurance to Undocumented Californians, and I urge the Legislature to approve this bill as swiftly as possible.”