Prop. 167 Is Ill-Timed and Misconceived : Throwing cold water on an icy economy

Sometimes the cost of good intentions is too much to bear. Such is the case with the well-intentioned but impossibly drafted California State Proposition 167--the Economic Recovery and Tax Relief Act of 1992. This initiative statute asks a lot of voters--far too much, in fact.

No one can be entirely sure what would happen if this initiative passed; it simply tries to address too many disparate tax issues, and it would be risky to try to implement the measure in a frightening recession.

The initiative seeks to redress many of the perceived flaws of the state tax code. And in fact California’s tax code--like tax codes everywhere, like tax codes from the dawn of time--is not without its problems. But the supporters of this measure--by and large consisting of deeply committed and sincere organizations--have strung together an initiative statute that is many thousands of words long and hundreds of clauses convoluted. Perhaps your accountant could make sense of the text of Proposition 167--but don’t bet on it.

The intention is good--to reform the tax code--but the delivery system is flawed. Too complex, too inflexible--a paper monstrosity.

TIMING IS WRONG: It is ill-timed, too. The initiative’s aim is to increase state revenues by taxing the business sector more and the private citizen less. On one level this is as appealing as proverbial motherhood and apple pie--and it’s very defensible as a general philosophy of taxation. But even if the initiative was impeccably drafted, its timing is abominable. This state’s economy is in a deep freeze, and this measure would propose to warm it up by throwing ice cubes everywhere. Hiking taxes on the business sector at a time when companies are cutting expenses by trimming payrolls and laying off more and more people simply flies in the face of logic. That such an effort would even be launched in the middle of the worst recession here since the Great Depression is profoundly puzzling.

Perhaps the best explanation of the pro-167 effort is in the deep frustration that many feel about the general direction of this state. The initiative has the particular support, for instance, of teacher groups--and their concerns are very understandable. No doubt a silver-bullet solution to their desperation--a single ballot-box measure that would raise more money by appealing to certain income groups by lowering their taxes and to the numerous renters’ groups by extending the renter’s tax credit--is attractive temptation indeed. But the measure, even if passed, would not solve their problem.

SCOPE IS WRONG: Like most large-bore initiatives that try to cover too many issues and problems in one fell swoop, 167, if passed, will be subject to a multitude of interpretations. After all the tax lawyers and accounting experts deal with it as it winds its way through the courts, it will remind people of the infamous Proposition 103--the auto-insurance reform measure passed in 1988 that to date has largely been unimplemented.

It’s true that people are frustrated with the Legislature and the governor and, desperate, turn to the initiative process to get things done. But that process is just as full of its frustrations--and is no surer route to effectiveness.

On the contrary, certain kinds of public policies benefit best from the give and take--the hammering and sawing and sanding--of the legislative process. No tax code is ever even close to perfect, but the legislative process, with its hearings and expert testimony and legal review, offers a better shaping mechanism than a take-it-or-leave-it initiative.

Like Proposition 128--Big Green, the 1990 environmental initiative that was defeated by famously pro-environmental California voters--Proposition 167 asks too much of the initiative process and too much of the voters. It deserves to be turned down.