SEE GEORGE WILL'S COLUMN ON TOM CAMPBELL BELOW

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1/28/10

 

 

 

 

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I write today first with a sincere word of thanks. Your encouragement for my candidacy for Governor in California has been personally, deeply rewarding.

I initially made the decision to run for Governor because I believe that my level of record of public service (especially on the state budget), and my willingness to present specific, pragmatic solutions to our most pressing problems would enable me to help chart a better course for our state.

Like you, I am motivated by a desire to serve our state and country. I've devoted my entire career to public service and to teaching, which I consider yet another form of public service.

Today, I remain firmly committed on that path with an announcement that I'll be running for the U.S. Senate instead.

We face a fiscal crisis of epic proportions at the national as well as the state level.

Every day brings more evidence of the need for fiscal restraint in Washington, and the huge danger to our country from printing money. Truly, in my lifetime, I have never seen the growth of federal government spending more out of control. The consequences will be both inflation in the very near future, affecting us all, but retirees especially, and a tremendous burden on the next generation that will have to pay back what has been borrowed. The federal deficit has more than tripled in a single year. That's suicidal for our country.

When I was in Congress, I was twice rated by the National Taxpayers' Union Foundation as the SINGLE MOST FRUGAL Member of Congress, based on the bills I had introduced and co-sponsored to control spending. I have a Ph.D. in economics; Milton Friedman was my faculty advisor; I was the last budget director of California to serve while the budget balanced; my whole background, training, and career has pointed to the primacy of fiscal responsibility.

Many of you helped me in 1992, when I almost won the Republican primary for U.S. Senate. I narrowly lost, and the Republican who won, went on to lose to now-Senator Barbara Boxer. She has been in the Senate for 18 years, after a race which many analysts say I would have won had I been her opponent. The economic times are now even more critical than then; and it is, thus, even more important now than it was then that Californians have a fiscally sound representative in the U.S. Senate.

Another consideration in my decision was that the dynamics of the race for Governor are such that I would have faced two billionaires. The path of public service and teaching is rewarding, but it does not afford one the ability to invest millions of dollars in a campaign for office.

Nonetheless, I am mindful of the help of so many friends for my campaign for Governor; deepest thanks for your own generosity. Contributions to my Governor's campaign allowed me to create and maintain the most substantive, best reviewed political website in our state's history and communicate with well over a million Californians directly. The experience gained in that effort is not lost.

In 1982, Pete Wilson was running for Governor. He switched to run for the US Senate instead, won that race (against Jerry Brown), was a superb US Senator, then, 8 years later, was elected our Governor. There is, indeed, precedent for being pragmatic in seeking public service. But the overwhelming factor should be one's love of country and state, and deep commitment to making each better. Our country is at a very perilous point in economic terms, and in terms of the size and intrusiveness of government. I believe I can help to restore our nation's economic health, and spirit of independence.

I wanted you – one of my earliest supporters -- to know why I've chosen a different direction to do so.

I ask for your help in this new endeavor. With warmest thanks for all your help,

As always,

Tom

P.S. Tonight, I will host a telephone townhall meeting with supporters and voters to discuss the uncontrolled spending in Washington. Please join this meeting by registering here. I would love to speak with you and kick-off my campaign for Senate on the right foot.

 

Paid for by Campbell for Senate 2010

 

 

 

 

 

 

 

 

 

When I was State Finance Director, I was also a member of the Franchise Tax Board, the entity of state government that administers the income and business tax. I learned a great deal from being in that position, and want to implement several of those lessons.

 

 

The cost of living in California also sends jobs to other states, and our state sales tax adds to that effect. Here is the relevant comparison of state sales taxes:

It’s very hard to compete for jobs when one of our neighboring states has no income tax at all (Nevada), and another has no state sales tax (Oregon).

Sometimes I hear the attempted rebuttal that our property taxes are low. It’s true that our property tax rates are low, thanks to Prop. 13. The amount of property taxes Californians pay, however, is high: number 10 in the nation. Property is so much more expensive here than in other states, we end up not being a bargain in terms of median property taxes. That’s what employers consider when deciding whether to hire someone in California, or Texas, Nevada, Oregon, Arizona, etc., where median property taxes are all lower than here.

How can we lower the tax rates of California? By constraining our rate of growth of spending. We need to spend no more each year than the year before, increased by population growth and inflation. If he had held to that since the time of Governor Davis’ first budget, we’d actually be balanced today–even with the collapse of the national and state economy. If I make it to Governor, I could implement that approach through use of the line-item veto.

 

2) Hours are wasted by Californians having to fill out a separate income tax form, different from their federal returns. For individuals, the state income tax should be a set percentage of what the individual pays in federal income tax. There will have to be some departures from this, but they should be few: for instance, the federal government taxes a portion of social security receipts, the state of California doesn’t, and we should continue that. Also, the interest on federal bonds cannot be taxed by the states. As a general rule, however, you should be done filling out your taxes when you’ve completed one form, not two.

 

3) After 2003, California became one of the very few states that taxes machines employers purchase to make products. 44 other states exempt manufacturing equipment from their sales or property taxes, 20 others explicitly exempt research equipment. California should apply its tax to final products, not the machines that are used to manufacture those products, or businesses will locate in other states that don’t tax the means of making goods. This will also result in higher employee productivity in California, which should increase employee wages, and make us a more attractive place to hire people.

 

Here is a reform I’ve been advocating for many years, that was finally made law in California as part of the budget legislation last month.

 

Many companies do business across state lines. They have income from many sources. Each state wants to tax that income. Some states simply apply a percentage formula, depending on how much of the business’ product is sold within the state. California, however, uses a more complex formula. It includes reference to the numbers of employees in California as opposed to other states, the amount of property (including real property) owned in California as opposed to that owned in other states, and the amount of sales made in California. Since California’s business tax is high, 8.86%, the 8th largest among the 50 states, the result of using this three-factor test is to create an incentive for companies with operations in many states not to expand employment, or build plants, in California.

 

California has just gone to the single-factor test, using sales, like other states have done. This removes the tax penalty for expanding employment, or building plants, within California. Here are the states that have already made this kind of change: New York, Texas, Massachusetts, Illinois, Oregon, and Arizona.

 

4) California Ready Return is a service that the Franchise Tax Board pioneered when I was a Member. For those with only wage income, this would remove the burden of filling out a return. The Franchise Tax Board would calculate your taxes for you, send you a completed return for you to review, and if you signed off, you’d be done. It’s the brainchild of Professor Joe Bankman at Stanford Law School, and a real service to taxpayers, especially those of low income. I’d like to see it made part of permanent law.

 

 

California will probably recover last of all 50 states when the recession ends. This doesn’t have to be so. Here are some specific steps we can take to make our state attractive for new jobs.

 

1) California has a culture of lawsuits. This is a factor often cited by employers for why they would prefer to expand employment outside of California. One solution is a system where people think twice about bringing a lawsuit, because they might have to pay the other side’s costs if they lose. The present system is like a lottery ticket, but with almost no price. Thus, many frivolous lawsuits are filed: why not—there’s no down-side. On the other hand, poor people should not dissuaded from bringing a legitimate lawsuit just because a defendant is wealthy. The good effect of limiting frivolous lawsuits can be achieved by making the losing party pay something–it doesn’t have to be all–of the costs the lawsuit imposed on the party that was held to be vindicated.

 

For commercial litigation, a system making the loser pay at least some of the court costs and attorneys’ fees of the winner, should apply instead. A formula that decides on that percentage, and also creates an incentive for the early settlement of lawsuits, should be adopted in California; but with an escape clause where the trial judge can take into account any cases of unusual hardship.

 

2) Unless employees by secret ballot vote to the contrary, time and a half must be paid for hourly wage employees in California who work more than 8 hours a day. Federal law requires time and a half only after 40 hours a week. The difference penalizes California employers and employees who choose to work 4 ten-hour days, for instance. California should conform to federal law.

 

3) California law does not require overtime pay for professionals; a 2005 law creates the presumption that an employee making more than $36 an hour is such a professional. However, this requires a huge amount of record keeping of actual hours. A simpler approach would exempt any worker making more than $75,000 a year. (San Jose Mercury, September 2, 2008, p. 2A).

 

4) Some regulations have outlived their usefulness, some are still valid. There is no systemic way to tell them apart, however. A review of all regulations that have been on the books for more than 25 years should be undertaken, and if they are not justified, they should be repealed, or updated. Then we should move to regulations older than 10 years.

 

5) All new regulations should carry an automatic sunset within 10 years. If they are valuable, they can be re-promulgated—but based on evidence relevant to the current time, not the past.

 

6) In California, workers on “public works” projects receive what is called the “prevailing wage.” This has been defined to apply to any project receiving any state funding; with the result that volunteers can no longer be used for teaching, environmental clean up, etc., if the project receives any state money. A short-term exemption passed in 2004 must be made permanent.

 

7) All new California regulations that exceed federal standards in any particular area should be justified on a cost-benefit basis. A new Governor can effectuate this by choosing appointees to boards and commissions who will perform this kind of analysis. Sometimes, we may want to exceed federal standards; but if we do, it should be with a clear knowledge of the effect on jobs, and a determination that it’s worth doing.

 

8. If you have jobs to offer, California should welcome you with open arms. The Governor’s office should establish streamlining task forces to walk new employers through our regulatory maze, and to recommend consolidation, if not outright removal, of burdensome filing requirements between state, county, and city jurisdictions.

 

9) California used to have foreign trade offices that promoted California products to be sold overseas. As soon as the state budget permits it, we should restore those offices in our major exporting areas.

 

*****

 Educator, Economist, and Experienced Public Servant,  Tom served as a United States Congressman for five terms representing districts in the Silicon Valley. The National Taxpayers Union Foundation named Tom the most frugal member of the 102nd Congress, based on net annualized spending reductions in legislation he proposed. The California Journal named Tom the #1 overall State Senator; the State Senate’s Best Problem-Solver, and the Most Ethical State Senator.  A former Stanford professor, Tom was the Dean of the Haas School of Business at the University of California, Berkeley. Earning his  B.A. and M.A. degrees from the University of Chicago, he graduated Magna Cum Laude from Harvard Law in 1976. After law school, Tom served as law clerk to U.S. Supreme Court Justice Byron White. In 1980, Tom returned to the University of Chicago to earn a Ph.D. in economics. His faculty advisor was Milton Friedman and it was at this time that Tom developed his beliefs in the importance of fiscal responsibility in government and individual liberty. He is currently at the Chapman University School of Law in Orange County.

 

 

 

     Because California’s calamitous present — creative accounting as a rickety bridge to the next budget crisis, coming soon — might prefigure the nation’s future, next year’s gubernatorial election is portentous. An especially intriguing candidate in a colorful field is Tom Campbell. Colorful he is not. “Talk softly and carry a small calculator” could be his motto. What glitter, however, are his resume and agenda.