Four Republican candidates are vying for the Board of Equalization in California's second district, which serves Lodi and Galt.
The BOE oversees $53 billion in tax revenue that comes to the state coffers, 85 percent of which is sales tax and use tax.
Why should average citizens and taxpayers care about the Board of Equalization?
The Board of Equalization is the only elected tax appeals board in the nation, and as the Acting Board Member, I stand between you, the taxpayer, and the power of government. The BOE can do more damage to your wallet than the Legislature. It is my duty to protect and defend you from the abuse of government's power, just as I am sworn to protect and defend the Constitution. Based on my record, I am endorsed by the National Tax Limitation Committee, the California Small Business Association, the California Taxpayers Committee, former Board Member Bill Leonard, and hundreds of volunteers and patriots throughout California.
Anyone who pays property tax, income tax, sales tax or is a seller should care. The BOE is the important tax board charged with administering sales and use tax, property tax, special taxes and fees. Another important charge is as the tax court for sales tax and use tax and the appellate body for income tax appeals. State income tax issues are heard by the Franchise Tax Board. An unfavorable verdict may be appealed to the BOE. Citizens should also care about who they elect to this important tax board.
I have experience in the retail and service business, have signed payroll and sales tax checks to the state, and know what it is to be a taxpayer. I am a taxpayer advocate. If elected, I will comply with the tax laws of the state but where the law is silent I will side with the taxpayer.
Whether they know it or not, the Board of Equalization affects most Californians by virtue of collecting more than $50 billion in taxes (mostly sales) annually. Furthermore, taxpayers may go before the Board to appeal audit decisions. California voters also have the unique opportunity to vote for their tax board members — no other state offers this type of voter choice. Therefore, voters should take the opportunity to learn about the Board candidates and decide who is going to serve as the leading champion of taxpayers.
The BOE collects taxes and fees that provide approximately one-third of the general fund revenue for state government and essential funding for counties, cities and special districts. When sales tax revenue is too low or declining, deep cuts to social welfare and health programs for the needy must be made. Lack of sufficient tax revenue also causes funding cuts for education, public safety, transportation, housing and natural resource management. The state legislature will increase taxes and fees, if tax revenue is too low. Collecting the correct amount of sales tax due is critical for our economy.
What single change or reform would you propose for the board?
I work each day to affect the culture. The staff of our tax agencies must always remember that they work for you. It is your money, not theirs. One reform is a top priority for me: Our tax agencies should pay you the same interest rate on the money they owe you as they charge you when you owe them. Right now, they charge you 10 percent when you owe them, but they currently pay ZERO when they owe you. That is outrageous and it must change.
California is in the worst business climate since the Great Depression and has a huge deficit. The legislature is placing more demands on the taxpayer and agency with increasing number of burdensome tax laws.
The reform needed is in Information Technology. To handle the added amount of work placed on taxpayers and the agency, the board must incorporate innovative tech and software used in private business. Paperless transactions and increased e-filing will save cost to taxpayers and the state.
Last year, the legislature under a budget deal enacted a new law requiring entities that gross more than $100,000 to file sales and use tax forms with the BOE. Such information need to be sent to all required taxpayers in an urgent manner. An improved system would have made the work possible.
Combine the Franchise Tax Board with the Board of Equalization. These two agencies essentially perform the same tasks — the FTB, among other items, collects personal income tax and the BOE collects almost all other forms of tax. By merging these operations with the BOE, the state would realize savings and efficiency. Workforce, real property and equipment would be consolidated. The merger would also simplify the tax system for taxpayers.
About the candidates
Education: Attended University of Wisconsin, no degree.
Career: Six years in the Assembly, terming out in 1998; interim Board of Equalization member, replacing Bill Leonard after he accepted a position in Gov. Arnold Schwarzenegger's staff; owns concrete contracting company with her husband.
Family: Husband, Dennis; five grown children, 10 grandchildren.
Quote: "I'm a realist. You can't win if you're in the minority by shouting from the corner. If you're trying to advance a conservative policy and you don't have the votes, you need help. The voters want their leaders working together, and I agree with them and practice that."
Education: Medical degree at Loma Linda University, master's in health administration at Virginia Commonwealth University, bachelor's degree in chemistry at Pacific Union College.
Career: Opthamologist, co-founder of Delta Eye Clinic; Assemblyman for six years, terming out in 2008; Lodi City Councilman from 1998-2002; one year as mayor.
Family: Wife, Susan; three grown children, nine grandchildren.
Quote: "Working for the board has taught me how important information and technology are in getting the BOE's job done. We need information about taxpayers, and there needs to be communication between the BOE and other tax agencies, which have different systems."
Education: Bachelor's degree, University of Redlands; graduate certificate in business, Azusa Pacific University.
Career: Assemblyman, 1996-2002; state senator, 2004-present.
Family: Wife, Sharon; son, Micah; daughter, Rebekah; three grandchildren.
Quote: "The key challenge is to help that guy who runs a deli in Redding or a laundry in Bishop to make sure that they're adequately served."
Education: Bachelor's degree in business administration and economics, Humboldt State University.
Career: Auditor at Board of Equalization since 1985; sales agent for Hughes Air West, TWA and Republic Airlines (nine years in airline industry).
Family: Wife, Heidi; sons, Devin, Justin and Derek.
Quote: "The state doesn't need to increase taxes. It just needs to collect the taxes that are due."
The BOE should now require retailers to first pass a written test before beginning to operate their businesses. From fiscal year 2004 through fiscal year 2008, the average tax assessment determined from sales and use tax audits increased from $54,000 to $77,000 per audit. That's a whopping 44-percent increase. Why is this situation occurring? Retailers either do not read the laws and regulations issued to them, or if they do read them, they don't understand how to correctly apply them. A 5 percent improvement in reporting tax on returns will yield an additional $3.5 billion in annual sales tax revenue.
How would you balance the needs of citizens who deserve efficient tax collection with taxpayers who may feel overly burdened?
This is something I do each day at the Board. One of my goals has been to bring customer service into the 21st century. We have cut the waiting time for services to 3 minutes so that taxpayers don't spend their valuable time standing in line and away from work. Most BOE services are available online now; the rest will be available very soon so that taxpayers can comply with the law at home on their computers, not standing in line. Taxpayers are over-burdened today; we pay too much for government. That's why I fight each day to protect taxpayers.
Efficient tax collections help both the taxpayer and agency. First, the taxpayer must receive information of the new tax laws and their obligations. Their accountants and tax preparers also need information and education regarding new tax law as being imposed by the legislature. The burden of last year's new tax requirement included services such as dentistry, medicine and accounting. Thousands were unsure about the law and its requirements and compliance. Much of their burdens were lifted as they received information and instructions with a tax number. Efficient tax collection entails providing information and education. Both, taxpayer and agency benefits.
Better efficiency could be brought to the BOE by bringing its operations into the 21st century — namely automating the payment process instead of the current practice, which is accomplished slowly and inefficiently by hand. I also believe the BOE should contract with private companies to gather overdue payments, not just rely on state employees.
That being said, I don't believe in excessive taxation — people lose personal freedom when they are overtaxed. But I believe we should all contribute to funding essential government services. Anyone who skips out on debts creates burdens for the rest of society.
Efficient tax collection can be achieved via well-informed retailers who are aware of the tax laws applicable to their business and industry. Collection procedures should be applied fairly and consistently from one taxpayer to the next. The laws administered by the BOE can be simplified with decision tables and flowcharts, which are quickly and easily understood. Audits should be limited in scope to reduce investigation time by the agency's auditors. Taxpayers subject to audit will be able to discuss their audit with the board member and department representatives so that areas of non-concurrence can be resolved at the lowest level.
Should the board be merged with the Franchise Tax Board?
Yes, for efficiency, cost-cutting, and simplicity, the Board of Equalization should be merged with the Franchise Tax Board. We are wasting millions of dollars on duplicative agencies that are confusing to taxpayers. The other 49 states generally have a single Department of Revenue and we know that system would work here, too. Consolidation would also assist in providing transparency and fairness for taxpayers. Even without a formal merger, I have led the effort to allow various agencies to consolidate some of their operations and share their resources efficiently, thereby saving taxpayers money.
The agency personnel should be merged but the three-member Franchise Tax Board and the five-member Board of Equalization should remain intact as tax courts.
The BOE and FTB employs approximately 8,000 workers. Each agency is run similar to the city of Lodi with an appointed administrator and department heads. They should be merged under one appointed administrator and various appointed department heads. Merging the two agencies will do away with an administrator and a number of department heads. Merging also cuts cost by doing away with duplication of services, economy of scales and improved communication.
It is best for taxpayers to keep the elected BOE as the appellate court to the FTB since the FTB tends to be an adversary to taxpayers.
The Franchise Tax Board should be merged into the BOE because the latter is staffed by board members who are elected, and therefore are accountable to the people of California. I have authored a measure that addresses this plan. Please see question No. 2.
The BOE and the FTB should be merged since they have many functional similarities, which include auditing, collection, cashiering and legal functions. Combining collection and cashiering functions could yield significant savings in the long term, and a tax court could take over the adjudicatory role of the elected board thereby eliminating the need for the BOE. But the initial cost to consolidate information technology systems for these two agencies could be significant and may take several years to complete. Until the state's financial condition improves, It is probably best to improve coordination between these two agencies.