Schwarzenegger’s Homeowners Insurance Tax- A Dumb Idea

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Jan 11, 2007 – 01:10 AM

Schwarzenegger’s Homeowners Insurance Tax – Dumb Idea

by Doug Heller

I first heard about Schwarzenegger’s plan to tax homeowners on their
insurance policies as a way to fill some of his massive budget hole, I
assumed I was being told about a terrible idea that never got anywhere,
"but boy Doug you’ll think it’s funny they even considered this." But
no, in fact this one was salvaged from the really dumb idea file and
written up as an actual plan that the Governor is pitching. When radio
host Patt Morrison had me and Republican Assemblyman Anthony Adams on
her radio show today (listen here) to criticize the plan, the Governor’s office did not accept the invitation to join the show defend their plan.

We lay out how bad it is in this press release. But let me count a few of the ways right here:

1. Schwarzenegger wants insurance customers to pay the tax, and insurance companies don’t pick up any of the costs

2. Insurance companies stand to gain the most from the tax, a portion
of which will be used for fighting (costly, but relatively limited in
terms of the number of affected homes) wildfires, which means that they
will have reduced claim payments

3. Insurance companies have donated more than $3.8 million to Schwarzenegger

4. It appears to have been the brainchild of Schwarzenegger’s Deputy
Chief of Staff, Dan Dunmoyer, whose last job in the private sector was
as the insurance industry’s top lobbyist in California for more than a

5. You pay a higher tax if you have a higher premium, which means that
a family with the same income and the same amount of insurance coverage
as their neighbor could pay as much as 400% more tax than the neighbor,
just because the neighbor got a better deal on insurance (by my quick
comparisons at the Department of Insurance premium comparison page)

6. You pay a double tax if you happen to be one of the too-few
Californians who also buy earthquake insurance (of course we ought to
double dip on those suckers)

I could go on, and will as this develops…

Consumer Watchdog
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