THE LEONARD LETTER
A weekly electronic newsletter from
Bill Leonard, Member
State Board of Equalization
August 4, 2003

"An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today." -- Laurence J. Peter (1919-1988), U.S. educator and writer

UNDER THE DOME

***What if Davis Gets More Votes Than the 'Winner'?***

This is just one question among many that are out there to be litigated, but I mention it because I have not seen it well publicized. Two California law professors, Vikram Amar and Alan Brownstein raise this scenario: Suppose that 49% of the voters punch their vote in favor of Davis, but he is recalled because more than 50% vote against him. Suppose also that the winning successor gets only 10% of the vote. Can a candidate with 10% of the vote oust a governor who got 49%? These professors think that because the U.S. Supreme Court said in Bush v. Gore that the Constitution requires each voter's ballot to be treated similarly to all others, that the vote for the hypothetical winner has to exceed the vote to recall Davis. I do not think this argument is valid but it gives a taste of the legal free-for-all that we are about to embark on.

nother interesting point is that win or lose, I think it very likely that Davis will get a higher percentage of the vote than he did last November, which was 47%.

***Who Gets Hit Hardest By Car Tax?***

SThe propriety of tripling the car tax without a vote will eventually be argued in court. But I came upon some research that may surprise the proponents of the tax, who presumably want the higher tax to provide services for low-income people. That is, national data shows that the tax will hurt low-income people the most.

The U.S. Bureau of Labor Statistics has estimates of national spending by income quintiles. Since the vehicle license fee (VLF) is based on the market value of cars, these figures provide some indications of regressivity for the VLF.

Vehicle spending, at least at the national level, is quite regressive. The lowest-earning 20 percent of households spend 2.46 times as much of their income on cars as the average household. The highest-earning 20 percent of households spend 0.71 times as much of their income on cars as the average household. These ratios would equal 1.0 if the tax were neutral (neither progressive nor regressive).

***What Might Have Been***

Last week, National Review Online featured a preview of an upcoming article about California. Peter Robinson pre-released some research that found if California had limited expenditure increases to the inflation rate plus population growth, the state would have saved $58 billion since 1998. For those who have not experienced National Review Online, it is the hippest site for a daily dose of policy analysis and good humor. http://www.nationalreview.com/

The author's calculations run as follows:

Year ---Population growth---Actual Spending---Limited Spending ---Savings.

1998 --- 0.0% --- $52.9 billion --- $52.9 billion --- $0.

1999 --- 3.7% --- $57.8 billion --- $54.9 billion --- $2.9 billion.

2000 --- 9.0% --- $66.5 billion --- $57.7 billion --- $8.8 billion.

2001 --- 13.9% --- $78.1 billion --- $60.3 billion --- $17.8 billion.

2003 --- 21.5% --- $78.1 billion --- $64.4 billion --- $13.8 billion.

                                                                            Total savings: $57.9 billion

***Perhaps We Study Your Pathologies***

Last week also saw the release of a study from the venerable truth-seeking institution, The University of California, Berkeley. According to the Berkeley study there are common psychological factors linked to conservatism. Conservatives are less "integratively complex" (i.e., dumber) than others. The study says conservatives support inequality by accepting the segregationist policies of Strom Thurmond and rejecting gay rights.

The Berkeleyites conclude that conservatives -- they group Hitler, Mussolini, Ronald Reagan and Rush Limbaugh together as examples -- "preach a return to an idealized past." But all this, "…does not mean that conservatism is pathological or that conservative beliefs are necessarily false, irrational, or unprincipled." I suppose they want us to think they are balanced for including 'necessarily' in that sentence.

Perhaps a corollary to this study is that leftists have a pathological need to label everyone they disagree with as being inferior to themselves. There is a psychological term for attributing unflattering terms to others that really describe oneself -- it is called 'projection'.

***Money Camp***

Most kids dream of summer camp with swimming, horseback riding and maybe some crafts. I read recently about a new type of camp that instead features budgets and checkbooks. The goal of this Money Camp is to dispel stereotypes about money and teach campers the day-to-day money management skills that can help them achieve financial success. Skills taught include: how money works; how to earn, budget, save and invest; how to be financially independent; how thoughts and beliefs influence our wealth potential; and the power of philanthropy. This summer, The Money Camp for Kids is holding sessions in the Central Coast area of California. I encourage you to visit their website (www.themoneycamp.com) and invite them to hold programs in your area, too.

MISCELLANY

*** Did You Know?***

It takes between one and four days for the BoE to deposit your check when you make a payment? If you use the color-coded envelope provided by the BoE, it will process sooner than if you submit payment in plain white envelope.

***Three More Words to Know***

Each week, the Leonard Letter features a few of the words from a list of 100 words that some educators say every high school student should know. The full list may be viewed at http://www.houghtonmifflinbooks.com/booksellers/press_release/100words/.

25. Facetious (adj.) --- given to wit and good humor; cleverly amusing in tone: Senator Ross Johnson's 'Red Ink Diaries' brought a facetious face to the many spending abuses in state government.

26. Fatuous (adj.) --- vacuously, smugly and unconsciously foolish; delusive; unreal: The Democrats are subject to the fatuous thinking that tax increases will not further damage the state's economy.

27. Feckless (adj.) --- lacking purpose or vitality; feeble or ineffective; careless and irresponsible: One of the reasons for the enthusiasm behind the Davis recall is the public's perception that he is a feckless leader.

BOE AND LEGISLATIVE DATES

August 6 --- BoE meets in Sacramento.

August 18 --- Legislature reconvenes.

August 29 --- Last day for fiscal committee to meet and report out bills to the floor.

September 10 & 11 --- BoE meets in Culver City.

NOTABLE DATES/ HISTORY

August 4, 1977 --- President Carter establishes the Department of Energy

August 5, 1861 --- U.S. establishes first income tax (3% on incomes over $800)

August 5, 1884 --- Cornerstone for Status of Liberty laid on Bedloe's Island

August 6, 1776 --- Constitutional Convention in Philadelphia begins debate

August 6, 1946 --- U.S. officially submits to jurisdiction of World Court

August 7, 1498 --- Columbus arrives in Caribbean

August 7, 1782 --- George Washington creates the Order of the Purple Heart

August 7, 1964 --- U.S. Congress approves Gulf of Tonkin resolution

August 8, 1876 --- Thomas Edison patents mimeograph

August 9, 1974 --- Richard Nixon resigns presidency; Vice President Gerald Ford becomes 38th President

August 10, 1519 --- Magellan's five ships set sail to circumnavigate the earth

GENERAL TAX INFORMATION

For answers to your general tax questions, call the Board of Equalization information center. Customer service representatives are available to help you from 8:00 a.m. to 5:00 p.m. Pacific time, Monday through Friday (except state holidays).

Toll-free number: 800-400-7115

TDD service for the hearing impaired
TDD phones: 800-735-2929
Voice phones: 800-735-2922

HOW TO CONTACT ME

Bill Leonard
Board of Equalization
450 N Street, MIC: 78
Suite 2337
Sacramento, CA 95814
Telephone: (916) 445-2181
Fax: (916) 327-4003

 Email to: Bill.Leonard@boe.ca.gov