Time to reform outdated California Board of Equalization

Once again, Californians are being reminded about a festering problem with financial implications.

In a five-part series, the Daily Tax Report has detailed how elected members of the Board of Equalization have a pattern of deciding complex cases in favor of certain campaign contributors.

The board was established in 1879 to equalize taxes among counties. That task was completed long ago.

As we have advocated in the past, California needs to scrap this anachronistic vestige of the 19th century.

Causation and correlation are not the same. But the Daily Tax Report analyzed 70 complex cases, and found that taxpayers won 88 percent of the time when donations were $50,000 to $137,000. Taxpayers prevailed a mere 30 percent of the time when donations were $250 or less.

Former U.S. Sen. John Tunney, who had a tax case before the board, is quoted in the series as saying he gave contributions because "the advice to me was, 'You have to get their attention.' " He also gave donations after he had won his case.

Former board member Bill Leonard, a former state senator who now is Gov. Schwarzenegger's consumer affairs secretary, was quoted as saying that after he cast votes for taxpayers, "I'd get cookies; I'd get flowers; I'd get campaign checks." The board's defenders say 70 cases represent a fraction of the overall number of tax disputes that come before the board. However, these 70 are cases in which stakes were particularly high for taxpayers and for state coffers, averaging $2.2 million.

The Board of Equalization is composed of the state controller and four members elected solely to be board members, each with an annual salary of $130,490, and a staff of 12. Few members have any particular expertise in tax law or policy.

The board has become a cushy home for termed-out legislators who cannot envision life off the public payroll, with only a few exceptions, such as Chairwoman Betty Yee.

Lawmakers have taken stabs at overhauling this board. Some have suggested a tax court composed of disinterested judges, and merging the board's functions with the Franchise Tax Board.

The next governor and Legislature will need to focus on this agency and its staff of 4,000 by dusting off ideas that have failed in the face of tough lobbying efforts in the past and, finally, eliminating an institution that long ago outlived its usefulness.