Consolidating tax agencies makes sense

Not only are there too many taxes on Californians, but too many arms of government collecting the taxes. A rough count finds there have been at least 20 unsuccessful attempts in 20 years to consolidate the agencies collecting everything from income taxes to underground storage tank maintenance fees.

Gov. Arnold Schwarzenegger has proposed consolidation once again. It’s worth considering.

In his proposal to the Legislature last week, the duties of the existing Board of Equalization, Franchise Tax Board and the taxing responsibilities of the Employment Development Department would be merged into a new Department of Revenue. Savings and efficiencies are yet to be calculated, but there ought to be enough to make the change worthwhile.

Previous proposals died in the Legislature, where public employee unions hold sway. But this year a $24-billion budget shortfall is prompting closer-than-usual scrutiny to identify government fat. Obviously, three agencies aren’t needed to collect taxes.

The Board of Equalization, established in 1879 by constitutional amendment, oversees state sales and use taxes and administers fuel, alcohol, tobacco and other taxes. The board also hears business and personal income-tax appeals.

The Franchise Tax Board, created by law in 1929 to collect so-called “franchise” taxes from banks and corporations, oversees the state income tax imposed in the 1930s.

The Employment Development Department, created in 1936 to run state unemployment programs, collects payroll taxes.

Together the agencies employ more than 18,000 workers at an annual cost of $2 billion, and collect upward of $106.5 billion a year in taxes. The governor’s plan would transfer all their tax responsibilities into a new Department of Revenue, run by an appointed secretary answerable to the governor.

Assemblyman Chuck DeVore, R-Irvine, who in 2005 authored an unsuccessful constitutional amendment for a similar consolidation, told us he probably will try again, this time incorporating the governor’s ideas, but adding an elected board to run the new agency.

Mr. Schwarzenegger says the merger would “ensure centralized, effective, efficient and impartial tax revenue collection, administration and enforcement,” which would be good.