Howard Jarvis kills Brown tax plan
The most powerful person in the state Capitol last week was not the governor or a legislative leader, at least on taxes. It was Jon Coupal.
Jon Coupal? He’s a disciple of the legendary anti-tax crusader Howard Jarvis.
Gov. Jerry Brown recognizes Coupal’s clout. That’s why he invited the outspoken president of the Howard Jarvis Taxpayers Assn. into his office in a last-ditch effort to generate support for his ill-fated tax plan.
Brown and his advisors kept hearing from Republican senators that they sort of liked the governor’s proposal — thought it basically good policy — but wouldn’t sign on unless Coupal did.
“If Jarvis gives us a pass, we’ll be there,” is how one Brown intimate described the Republican feedback. “Coupal was the entryway.”
So Brown called in Coupal, who’s amiable, articulate and adamantly anti-tax. They met at length, sharing personal stories about Jarvis, author of the property tax-limiting Proposition 13.
Brown recalled trekking to Jarvis’ Los Angeles home a few times back in 1978, when he was governor the first time. The voters passed Prop. 13 over Brown’s strong objection that year. Then the governor flipped and smoothed the way for 13’s implementation, becoming known as “Jerry Jarvis.”
Coupal and Brown talked twice Friday. Some laughs, but no deal.
“Jerry reached out to us a little bit too late,” Coupal told me. “Our problem was that we couldn’t do this in the last 48 hours of a legislative session. Before we jump on board such significant tax policy, we need to scrub it pretty carefully.
“Also, there was no relief for our taxpayers, the homeowners who itemize their deductions.”
Brown, latching onto the national issue du jour, called his proposal the “California Jobs First Plan.” The governor wanted to end a corporate tax break that rewards companies for not building facilities and creating jobs in California. “A toxic tax loophole,” he calls it.
There was nothing new about that proposal. Brown began pushing it in January. What was new was the latest version of how the $1 billion-plus in new revenue would be spent. Brown proposed providing tax breaks for small businesses, manufacturers’ equipment purchases and income-tax payers who don’t itemize.
He contended the plan would be “revenue neutral.” The government wouldn’t profit. All the money would be redistributed to taxpayers.
The proposal picked up the support of two bold Assembly Republicans who bucked their party to vote for a Democratic tax bill — a bill that scared the timid GOP even if it didn’t call for a net tax increase. The pair — Assemblymen Nathan Fletcher of San Diego and Cameron Smyth of Santa Clarita — negotiated with the governor and Democrats over the revenue distribution.
“Sometimes we have to be willing to step out of our comfort zone just a little bit to do the right thing,” Fletcher declared during the Assembly debate. California needs a tax policy that tells corporations “You have to employ our people,” he continued. “We need to say that California not only is open for business, we’re going to reward people who come here and make it their home.”
Fletcher and Smyth provided the Republican votes needed to pass the bill by the required two-thirds margin.
In the Senate, Brown lobbied half a dozen Republicans but kept getting essentially the same response. They needed Coupal’s blessing.
Coupal says he has an open mind but needs more time to think.
“It’s a plan worthy of discussion,” he said. “The tax code is not written in stone. We haven’t closed the door on good tax reform.”
Fletcher said he was disappointed that no Senate Republican would budge. Brown’s plan died on the Senate floor just before the session adjourned. “The governor did his job,” the assemblyman told me.
Of course, Fletcher, 34, a former Marine sergeant who fought in Iraq, is running for San Diego mayor. It helps him to wear a bipartisan hat.
Still, he’s the type of young lawmaker who in a previous era — when politics wasn’t so polarized and term limits didn’t stunt political growth — would have probably become a pragmatic producer of major legislation, even as a member of the minority party.
“I worry about the bifurcation of the economy in California,” he said. “I worry about ending up with some really wealthy people and a lot of low-wage jobs, and the middle class shrinking.”
Under Brown’s proposal, the assemblyman added, “The people who stood to benefit were the working poor and small businesses, and they don’t have a powerful lobby. We were taking on some very powerful interests.”
In the end, the most powerful interest was the tobacco lobby. Cigarette companies prosper greatly from the current loophole. Their lobbyists swarmed all over legislators during the session’s final two days.
“It’s unbelievable,” Brown said in a Friday night statement, “that so many politicians in Sacramento would choose to protect cigarette makers and out-of-state corporations to the detriment of California jobs.”
Many Republicans urged Brown to immediately call a special legislative session on job creation and tax reform. “Trying to jam through a proposal on the last day … without transparency or input from the public … is irresponsible,” asserted Senate GOP leader Bob Dutton of Rancho Cucamonga.
Brown will call back the legislators only if he believes Senate Republicans are really ready to deal. And there has been little evidence of it. Anyway, he doesn’t need a special session to negotiate with Coupal, to trek over to his Sacramento home.
As for Coupal, he says that “once legislators are out of town, I feel a lot safer.”
The stories shaping California
Get up to speed with our Essential California newsletter, sent six days a week.
You may occasionally receive promotional content from the Los Angeles Times.