Will 2008 be a Happy New Year? In the UK we learn to "mind the gap"

As we prepare to ring in the New Year our elected state officials will shortly return to Sacramento and prepare to address a major revenue shortfall to satisfy our bloated spending habits. Instead of placing our focus on the growth of the CA Budget all we hear is that we have a $14 billion shortfall. Well, that depends on how you look at it. In any event check out the following report By STEVE GEISSINGER Daily Democrat Staff Article Created: 12/23/2007 08:25:18 AM PST.

SACRAMENTO – California faces an estimated $14 billion budget deficit, but the state’s independent fiscal watchdog has an answer – trim some of the tax loopholes that total $50 billion. Simple idea. Difficult to make happen. Each and every one of the hundreds of tax breaks are important to some interest group, political analysts said, and a few of those loopholes are perceived almost as a constitutional right. Nevertheless, Legislative Analyst Elizabeth Hill’s recommendations on tax breaks, which she says mostly benefit the rich and corporations, are drawing attention. She even addressed the largest, seemingly most untouchable tax break: allowing homeowners to deduct mortgage interest off their state personal income taxes. Hill said in a report that the deduction, which exceeds $5 billion a year, no longer serves its intended purpose of encouraging home ownership. She believes there are more targeted, less costly ways to aid those who need the assistance, without subsidizing wealthy homeowners.

There are 11 tax breaks that each cost the state at least $1 billion. Here are those 11 and the estimated amount for 2007-08:

• Home mortgage interest deduction: $5.3 billion • Exclusion of employer pension contributions: $4.7 billion • Exclusion of capital gains on sale of principal residence: $3.6 billion • Exclusion of employer contributions to health plans: $3.4 billion • Basis step-up on inherited property: $3.1 billion • Exclusion of Social Security benefits: $1.7 billion • Charitable contributions deduction: $1.5 billion • Exclusion of benefits provided under cafeteria plans: $1.3 billion • Real estate deduction: $1.3 billion • Exclusion of investment income on life insurance and annuity contracts: $1.2 billion • Dependent exemption in excess of personal exemption credit: $1.1 billion Source: California Legislative Analyst’s Office

We have all heard or read that the governor pledged not to raise taxes. Let’s see what actions he takes to eliminate the deficit AND provide health care for millions of the uninsured on the backs of business and hospitals who will simply pass those increased costs to us, the consumers.

Juice readers. As to this trial balloon, and it may be closer to reality than I care to admit, which, if any, of these 11 choices are you willing to relinquish?

Being retired, where several of the above listed tax loopholes do not apply to my family, I would still oppose Ms Hill’s selection.

I am surprised that she did not include releasing 22,159 prisoners as Arnold recently proposed. My sense is that this idea was not included as it would only save us $800 million per year. As such it fails to qualify for the minimum billion dollar reduction plan.

Was that a scare tactic? Raise taxes or let criminals back on our streets!

Don’t say we weren’t warned. It was John Moorlach who in 1994 pegged the OC bankruptcy and more recently Senator Tom McClintock who sounded the alarm about our runaway spending while most legislators closed their ears and went back to bed.

About Larry Gilbert