Prop 30 — Delphic Oracle Pronouncement
When he ran for governor of California in 2010, Jerry Brown traded on cryptic pledges — most notably, “no new taxes without voter approval” — that, like pronouncements by the oracle at Delphi, could mean whatever listeners wanted to hear. Most insiders figured that Brown wanted to raise taxes but was too cagey to tell voters, who had rejected a tax-increasing ballot measure by a 2-1 ratio in 2009. It is because Brown was so darn clever that Californians now are stuck with a Hobson’s choice — vote for his Proposition 30 and raise taxes that could kill jobs in a state with the nation’s third-highest unemployment rate or vote “no” and cut education funding by $6 billion.
As predicted, a week after he was sworn in to office, Dao Governor announced that, indeed, he did want to raise taxes — but only if voters approved. Then Brown faced what somehow was an unexpected hurdle. The Democrat who, as a candidate, would not say he wanted to raise taxes could not scrape together four GOP votes to put his tax increase on the ballot.
Californians never will know what would have happened had Brown been honest when he ran for governor. It could be that Brown never could have mustered two GOP Assembly members and two GOP senators to put him over the two-thirds threshold needed to pass a tax hike. Or it could be that with a clear mandate and the threat that he might place an outrageous soak-the-rich measure before voters, Brown would have been in a strong position to negotiate a budget deal with needed spending reforms and a tax increase.
We do know that Brown’s pledge to raise taxes only through the ballot undermined his ability to govern well. Rather than work with the right to get to the center, he found himself negotiating leftward in an attempt to tease two rival tax-increasing measures off the ballot. He only half-succeeded. Multimillionaire Molly Munger refused to pull Proposition 38, her tax measure to increase taxes on most working Californians.
In March, Brown announced that he had persuaded the California Federation of Teachers to pull its “millionaires tax” by agreeing to reconfigure his own tax plan. As a result, Brown’s Prop 30 would raise the sales tax by 0.25 percent from 2013 through 2016 and income taxes on top earners, from 9.3 percent to 12.3 percent through 2018. (Californians who earn more than $1 million annually also pay 1 percent toward mental health services.)
I won’t have to pay those steeply higher taxes, but that doesn’t mean they do not come with a price. As Stanford economists Michael Boskin and John Cogan noted in The Wall Street Journal, the top 1 percent of earners often pay as much as half of the state’s income taxes: “This extreme progressivity leads to boom-bust cycles of rapidly rising revenue followed by complete collapse.” In other words: Plan Brown offers more of the suicide pact approach to taxation that put this gun to the heads of California voters.
Worst of all, it gives the super-rich one more reason to leave California and take with them the 10.3 percent they already are sending to Sacramento.
Joel Fox, editor of the conservative blog “Fox&Hounds,” supported Prop 1A in 2009 because, even with its tax increases, it also included reforms, such as a spending cap. Early in the year, Fox notes, he, like others in the business community, was open, if warily so, to Brown’s plan to raise taxes. But you could hear an audible gasp from business leaders when Brown cut a deal with the teachers union.
That deal produced a huge tax hike with no reforms. Prop 30 instead offers a $6.6 billion hike in K-14 spending, already approved by the Legislature, followed by the threat that $5.4 billion will be yanked if voters do not give them what they want. Kind of like blackmail.
Email Debra J. Saunders at [email protected]
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