Court Rejects Lawsuit Against Californian Tax Hikes

by Glen Shapiro, LawAndTax-News.com, New York

09 January 2009

A taxpayer pressure group has failed in its legal bid to overturn legislation approved by the Californian legislature, which calls for a number of tax increases to help pay down the state's escalating budget deficit.

The state's 3rd District Court of Appeal in Sacramento threw out the law suit on Wednesday after Governor Arnold Schwarzenegger vetoed the bill just hours before the hearing. The court argued that it could not rule on the matter because the legislation had not been signed into law.

"Absent the Legislature's passage and the governor's signing of such legislation, adjudications of its constitutionality and the other matters raised by the petition are not yet ripe for judicial review," the court said in its judgment.

The lawsuit was filed by the Howard Jarvis Taxpayers Association, which argued that new tax legislation supported by Democrats in the state legislature, was illegally pushed through by a simple majority.

Under a legal provision known as Proposition 13, tax legislation can only be signed into law when it is approved by at least two-thirds of the members of the state legislature.

According to the California Taxpayers' Association, the legislation forced through by the Democrats would have increased taxes by USD9.3bn through an income tax 'surcharge,' an oil severance tax and a 'fee' on gasoline. The Democrats argued that only a simple majority was necessary because the tax proposals were revenue neutral and because 'fees' cannot be defined as 'taxes.'

The Howard Jarvis Taxpayers Association, which was backed by most state Republican lawmakers, intends to pursue its legal fight to the state supreme court, and could muster a challenge in the federal courts, citing a violation of the minority members' constitutional rights.

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