Brown polishing his tax plan
Gov. Jerry Brown is drafting a ballot initiative that would raise income taxes on the wealthy and hike sales taxes for everyone, insiders say.
Much political finesse is involved. Each step is delicate.
First, the governor must choose taxes that voters might agree to increase. That means, for the most part, taxes paid by someone else. He probably can sell raising taxes on the top 1% of income earners. But he probably cannot peddle income tax hikes on the middle-class and poor.
Voters also might agree to a temporary half-cent increase in the sales tax. But they’re unlikely to buy extending the sales tax to services — such as haircuts, auto repairs or legal work. That might seem too radical.
Second, Brown must cobble together a coalition of campaign bankrollers. That means mainly public employee unions. But it isn’t easy. The unions are demanding a hand in shaping the tax package because, as bankrollers, they insist on a return for their members.
Also, union resources will be spread thin next November. There’ll be other fish to fry, including beating back an anti-union initiative that would restrict labor’s ability to spend money on politics.
And while Brown is trying to weave all this together, he must keep business at bay. If not a backer, the business lobby at least must be benign as he pushes for higher taxes. So he’ll need broad-based tax hikes, not levies aimed at a specific industry, such as oil.
Moreover, voters could become confused and turned off by mixed messages from competing tax proposals.
So there are many problems. But the biggest problem is that no governor should even be going to the ballot with such routine legislation. He and the Legislature possess the power to raise taxes on their own.
That’s the way it worked under — you name it — Govs. Arnold Schwarzenegger, Pete Wilson, George Deukmejian, Ronald Reagan and Pat Brown, Jerry’s dad. They all increased taxes without asking the voters. (Actually, Schwarzenegger did ask inadvertently and voters terminated his tax hikes after two years.)
The nation’s framers designed a republican form of government in which public policy was supposed to be made by elected representatives. We’ve strayed far from that concept in California and are paying for it. Politicians pathetically punt to the voters. Political paralysis ensues.
Brown partially brought the need for tricky dancing on himself by promising during his election campaign to give voters veto power over any tax hike.
But it takes the same two-thirds legislative vote to place a tax measure on the ballot as it does to merely raise taxes straight up without any campaign rigmarole. Because Brown failed last year to secure the necessary Republican votes for a tax election, he now feels compelled to head down the initiative route.
Republican legislators — deathly afraid of taxes — won’t allow republicanism to work.
Actually, it could work, despite Republicans, if not for the gridlock-inducing two-thirds vote requirement that Californians imposed 33 years ago.
Liberal Assemblywoman Nancy Skinner (D-Berkeley) says she doesn’t blame Republican legislators. She blames the two-thirds rule. “For Republicans, taxes is the third rail,” she says. “Why should we ask anyone to go against their core value? But the two-thirds vote puts us in that position.”
Changing the popular two-thirds vote requirement, however, is currently beyond reach.
Some tax hikes may not be.
A new Times-USC poll shows that 64% of voters would be willing to pay higher taxes to increase funding for schools.
On Nov. 8, voters approved 40 of 53 local tax, fee and bond measures, many of them requiring a two-thirds vote.
Political strategists detect a softening in many voters’ anti-tax attitudes as they become aware of sharp cuts in government services. They’re now willing to at least consider raising taxes if it’s for a good purpose, such as education or public safety.
There’s new urgency for increased state revenue, based on a report last week by the nonpartisan Legislative Analyst’s Office. What the report mostly showed is the continuing folly of Sacramento’s trying to provide desired state services without raising enough money to pay for them.
Patching leaky budgets with borrowing and gimmicks has merely prolonged the agony. The latest example was in June, when Brown and the Legislature bet on the come by “balancing” the budget with a phantom $4 billion they hoped would spring from economic recovery. It didn’t. And the analyst now has projected a $3-billion deficit for the current fiscal year; $13 billion through June 2013.
The result, if the governor and Legislature adhere to contingency cuts they’ve already adopted, could mean a shorter school year, more shortchanging of universities and additional whacks at child care and services for the disabled.
The tax package Brown has been shaping wouldn’t avoid those cuts. His goal is to restore money previously siphoned from schools and establish a permanent funding stream for his “realignment” program of shifting some state responsibilities to local governments, particularly incarceration of low-level prisoners.
The plan is to “sunset” the taxes after, say, five years so they can be advertised as temporary.
A half-cent sales tax increase would raise roughly $2.5 billion annually.
To generate a few billion more, the governor would add a bracket or two to the top income tax rate of 9.3%. The first higher bracket might kick in when a couple’s earnings hit $500,000. This isn’t fully gelled. (There’s also currently an extra 1% surcharge on earnings over $1 million.)
Brown intends to unveil his proposal around Dec. 1, then begin the process of collecting signatures to place it before voters.
It’s getting so Sacramento politicians can’t sneeze without asking the voters’ permission. That’s unhealthy for California.