EVP NOTES — VOODOO ECONOMICS

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Thirty-five years ago, George H.W. Bush coined the phrase "Voodoo Economics," referring to Presidential rival, Ronald Reagan. The term survived and, in fact, haunted Reagan for years to come. Bush, of course, became his vice president.

The California Legislature is riddled with examples of Voodoo economics: logic and fact challenging assertions about economic effects...usually tied to a legislator’s pet project. A couple of examples immediately spring to mind: the backers of Governor Brown’s two pet public works projects: twin water tunnels and a north south bullet train, make extravagant and logic-free claims. The same could be said about the claims made by the backers of decarbonizing the California economy: that it would have hugely positive benefits while discounting the effects on consumers.

Anyway, you see my point in all of this. The same is going on regarding a very important issue to PCOC that will affect small business in the state significantly: namely, imposing a sales tax on services. In the 1930s, with property tax revenue declining because of the Great Depression, states began taxing the sales of items. Eight of the 45 states that collect sales tax impose that sales tax on around twenty service categories. The supporters of a sales tax on services point to a huge revenue increase to the state that can be used for civic minded projects such as education and health insurance. The problem that this kind of argument ignores, and why it can be classified as voodoo economics, is the huge offsetting negative effects that such a tax change would have on economic growth, both from a business and a consumer standpoint.

Yes, voodoo economics is alive and well in California. It is up to organizations, such as PCOC, to keep elected officials honest when they pontificate on things they know nothing about.           

Pest Control Operators of California
www.pcoc.org

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