Time for a truce on tax-hike initiatives

Capitol Journal

If the California Capitol were a classic movie, the governor would be telling his consigliere to arrange a meeting with the heads of the five families. “This war stops now.”

The consigliere? Wife Anne Gust Brown. The families are interests trying to push two rival tax proposals onto the November ballot that would conflict with Gov. Jerry Brown’s.

Brown and the family heads would sit around the big picnic table in the governor’s cabinet room, looking out on Capitol Park and a fish pond.


“There are many things my father taught me here in this room,” the second-generation governor might say. “He taught me to keep your friends close, but your enemies closer.”

“I said that I would see you because I heard that you were serious people to be treated with respect. Let’s talk business. I’ll make you an offer you can’t refuse. What I am saying is that you can have now what you have always needed: real partnership with the government. And if by some chance honest people like yourselves make enemies, they would become my enemies?

“I never ask a second favor once I’m refused the first. Understood?”

Something like that, as the old governor gazes outside and mumbles about sleeping with the fishes.

Of course, Brown is confronted by real-life classic politics, not cinema.

The governor and the competing interests -- unions and a very rich liberal -- normally are allies but currently are acting like enemies. They’re tripping over each other trying to raise taxes to provide more money for education.

Unless Brown can talk the others into backing off, there’ll be three tax-hike initiatives on the November ballot. Each would compete for the same voters who might be willing to dig deeper -- or, more likely, force others to -- in order to improve schools. That would weaken each measure. It’s just logic.

“Welcome to the circular firing squad,” says Brown’s political strategist, Steve Glazer.

“When voters are offered choices among competing measures, it depresses the support for each of them. The likely result will be all of them failing. That’s not just Steve Glazer’s theory of political life. It’s a truism.”

The other tax sponsors dispute that, but their analyses seem more like rationalization for going against the governor than rational thinking.

One outfit -- sponsoring a so-called millionaire tax -- tried to persuade reporters this week that rival tax measures had passed on the same ballots in recent years. But on closer look, it was mixing taxes with bonds and tax hikes with tax cuts. No relevance.

Brown’s plan would raise the sales tax by a half cent. And it would increase the income tax rate from 9.3% to 10.3% for individuals earning $250,000 and couples making $500,000. The rate would bump up to 11.3% for individuals at $500,000 and couples at $1 million.

There’d still be the current one-point surtax on income exceeding $1 million to pay for mental health services. So the actual top rate would be 12.3%, highest in the nation.

The roughly $5 billion to $7 billion in new revenue would go to education. But the fresh influx also would free up General Fund money to be spent on Brown’s shifting of some state responsibilities to local governments, including incarceration of low-level prisoners. The governor calls it “realignment.” And its funding would be constitutionally guaranteed under his proposal.

Brown is collecting signatures to qualify the measure for the ballot.

The millionaire tax is sponsored by the California Federation of Teachers, the California Nurses Assn. and some liberal activist groups. It would sock the very rich. An extra three-point rate would be added to incomes of $1 million; five points when they hit $2 million.

Roughly $6 billion to

$10 billion would be raised annually, with 60% going to education, the rest for other programs.

This group also is collecting signatures.

“For 99.5% of the public, our tax is a freebie,” notes Barry Barnes, the campaign manager.

That’s why it probably would have the best chance of passing, if it didn’t draw heavy opposition from wealthy interests.

The third measure is backed by wealthy civil rights attorney Molly Munger, daughter of Berkshire Hathaway Vice Chairman Charles Munger. She proposes to raise $10 billion -- all for schools -- by hiking the income tax on everyone except the poorest. The wealthier the taxpayer, the bigger the hit.

She has spent $800,000 of her own money on the venture but hasn’t begun collecting signatures.

Munger took a shot at Brown on Monday, when reporters asked whether she might defer to the governor.

“I don’t think we’d have a very good functioning democracy if we always just did what one person at the top wanted,” she replied. “That old method -- just do what the king says -- led to some very bad decisions.”

Problem is, Brown hasn’t had a personal sit-down with Munger -- as the Godfather would have, treating her with “respect.” She has met with the consigliere, but that’s not the same.

Brown did meet with the millionaire group but never asked it to step aside, participants say.

“If the governor clears the field, he’ll have a much better chance,” says longtime Democratic consultant David Townsend, who is not involved in the fight.

“He has to call up folks and offer to help support them the next time: ‘You help me, I’ll help you.’ It’s the oldest thing in politics. They used to call it log rolling. It’s no more complicated than that.”

The success of Brown’s governorship is probably at stake.

The governor needs to be making offers to avoid going to the mattresses.