For several years I have assumed that the next governor of California would be a Democrat… and many more after that one. Why? Because California’s Republican Party appears to be inept (and I am not making a positive statement about the Democrats). Californians tend to be moderates: Socially liberal and fiscally conservative (except when voting on ballt propositions).
Governor Schwarzeneggar was elected in a spectacle of an election that included Gary Coleman, porn stars and who remember the other 150 candidates. There was no primary. As a sitting governor, he was able to survive the Republican primary 4 years ago. I didn’t think another moderate or Republican could make it.
Bring on Meg Whitman
What makes me think that Gov. Whitman is next? The Advertising Tax. Here’s the equation:
Citizens United v. Federal Election Commission (the Supreme Court’s decision throwing out corporate election contribution limits) = Gov. Whitman
The Coalition Against the Advertising Tax in California
It started out as AB178 when it was introduced by Assm. Nancy Skinner. I was supposed to testify against it in the Revenue & Tax Committee. The hearing was canceled because there weren’t enough votes in support of it, even though Assm. Calderon, the committee chairman, was a co-sponsor.
Next it was snuck into a trailer bill to the budget. There was no public hearing. It was passed under the cover of darkness. When daylight broke, the Governator vetoed it.
Now it’s called ABX8-8. It passed the State Senate and is in 2 committees in the State Assembly.
The important thing is that there is a strong coalition in opposition being led by the California Chamber of Commerce and the Cal Taxpayers’ Association. The list of companies opposed is incredible. I am proud to have Cashbaq on a list with Google, Yahoo, ValueClick and, oh, did I mention eBay?
What’s that got to do with Meg?
Even if the Democrats get ABX8-8 through both houses of the legislature, if Governor Schwarzeneggar follows through on his commitment after he vetoed AB178 last year, he will veto the Advertising Tax again. That means that the Democrats will have pushed through the bill again with no victory. The lingering effect will be that the tech community is terrified of having the Legislature and Governor’s mansion controlled by Democrats. The smarter position would have been, assume the governor would veto it again. Wait until Jerry Brown or another Democrat is governor and then pass this bill that will be devastating to small, entrepreneurial businesses in California while having a negative impact on the state’s finances. I mean, come on, guys!
Why opposed a bill that just hurts affiliates?
The Advertising Tax doesn’t just hurt affiliates. Our businesses definitely would be devastated if ABX8-8 becomes law. Maybe these companies are opposed to the Advertising Tax because they know that it is bad for the tech sector and bad for our state’s economy.
The current form of the bill would mean that any advertising relationship establishes nexus. If that’s the case, advertising on Google AdWords and Shopzilla’s comparison shopping engine would establish nexus. So much for the Internet, especially given Drs. Foster & Smith’s recent bombshell about nexus creating a requirement to file state corporate income tax returns.
eBay is no safe harbor
eBay is concerned that if the Advertising Tax becomes law in California it will establish nexus for (are you sitting down) every eBay seller no matter where they are based. OH – MY – GAWD!!! [Cue REM]
Money can’t buy you love but it can buy you an election
Sure there have been rich folks that have run for office and lost. I had thought Meg would join their ranks. She won’t. Meg is a shoe-in now. The Democrats have guaranteed it.
Meg has enough money to pay for TV ads months before anyone else has even declared. She’s everywhere. While she doesn’t need the money from tech companies it will help both for funding and for perception. Google supports Meg Whitman. That’s 10,000+ more votes just from employees plus any Google fans out there won’t want to see politicians needlessly hurt the company. And that’s just one tech company whose employees might fear for their livelihoods. How many votes will it take to swing a close election?
Everyone knows she was CEO of eBay (if you don’t, her commercials make it clear). Now you’ll also have eBay explaining the risk to everyone in the marketplace about how the Democrats will kill eBay.
See the snowball effect yet?
Unions don’t oppose Meg
One of the strange things about the Advertising Tax is that the biggest supporters are the trade unions. My company hasn’t suggested that the State make changes that will devastate schools and firehouses. Why are the teachers’ and firefighters’ unions insisting that state legislators attack my business? They don’t seem to understand the negative impact that this will have on the state’s finances. That would be like my insisting that fire engines carry galvanized steel pipes in place of hoses. There’d be a bad impact on the state and its residents. Personally, I’ll leave it to the firefighters to figure how to use their technology best. I ask that they do the same for my business until they understand it.
Meg isn’t letting the unions attack her. She has the money to stop them. Meg has stated that if the unions attack her, she will use millions of her own money to push a ballot initiative that will require and opt-in for unions to use members’ dues for political purposes. As it stands now, individual members may opt out. This tactic will keep the unions quiet for now but there may also be backlash. November is a long way away.
Have the Dems anointed Meg?
You decide for yourself. Do you think that a Republican had a chance? Do you think that the tech sector would have coalesced behind Meg if it weren’t for the Democrats pushing the Advertising Tax?
Suggestions for the California State Legislature to help with the budget instead of ABX8-8
I wrote down a list of alternatives in my last blog post. Please refer to that if you want positive solutions that won’t hurt the State.