This is the final installment in our four-part series on California’s State Board of Equalization (BOE). The board is made up of four members, each representing a district of approximately 8 million people, and the state controller. The four districts are divided so that there are two Republicans and two Democrats. The State Controller is the deciding vote as to whether the board will be controlled by Democrats or Republicans.
For the first time in decades Republicans have a chance to direct the state’s tax policy. Although the states leans toward Democrats, Republican nominee for State Controller, Tony Strickland, has a good shot at winning the office in November in what is expected to be a Republican year.
California’s State Board of Equalization is the only tax board in the United States where members are elected by a vote of the people. With its ability to shut down businesses, garnish assets, and destroy lives, it is also one of the most powerful arms of state government.
The fact that the members of the BOE are elected, combined with California’s campaign finance laws,a somewhat disturbing scenario is created. First, the board members can and do accept campaign donations from the very individuals whose tax appeals they will hear. Second, they can and do have ex parte communication with those same “constituents” prior to hearing their appeals. This has raised questions about the use of contributions to gain favorable rulings.
The BOE has come under fire recently for the disparity in decisions that appears to be based on taxpayers’ or their representatives’ previous campaign contributions or lack thereof. In an investigative report by The Bureau of National Affairs, the BNA reported:
BNA found more than $1 million in contributions to board members from taxpayers or their representatives who argued those cases before the board. All of the contributions were legal, and contributors who spoke to BNA denied any causality between their contributions and success before the board.
However, a correlation appears to exist between contribution levels and success before the board, based on BNA’s original research. BNA found that 20 of the 70 cases examined had less than $250 tied to them, and those taxpayers won their cases 30 percent of the time.
Success rates rose with higher contribution rates. Dividing the remaining cases in equal groups, BNA found another 17 cases had between $250 and $16,000 in contributions tied to them, and those taxpayers won 53 percent of the time. The next group of 16 cases had $16,000 to $50,000 tied to them, and those taxpayers won 75 percent of the time. The last group of 16 cases had $50,000 to $137,000 tied to them, and those taxpayers won 88 percent of the time.
When this report hit the media in August, calls for overhaul or elimination of the BOE began to be heard. In an editorial in the Merced Sun Star, the newspaper not only suggested that the BOE had outlived its necessity, but had this uncomplimentary comment to make about its members:
The board has become a sinecure for termed-out legislators who cannot envision life off the public payroll, with few exceptions, such as Chairwoman Betty Yee.
In a few short weeks we will know if control of tax policy shifts from the Democrats to the Republicans for the first time in over 30 years. This would be a significant change for many reasons including the fact that the BNA study found that Republican members rule in favor of the taxpayer more often than Democratic members. This will also give San Bernardino County more clout because it is represented already by the two Republican members, who are currently the minority. A Republican majority will be a significant advantage to California’s largest county.
Here are links to the first three articles in his series: Part One, Part Two, Part Three
Good idea for a website. I would strongly recommend, however, that you lose the white type on black background. It’s very hard on the eyes, and therefore very hard to read. I won’t stay long for that very reason. I don’t think that’s the result you’re looking for.