One Thing’s Sure: Reiner’s Preschool Initiative Raises Questions

Let’s clear up one thing: Filmmaker Rob Reiner’s preschool ballot initiative would not raise taxes on the wealthy by 1.7%. It would hike them a whole lot more than that.

The increase gets contorted -- by sponsors, by journalists -- to 1.7% because the top income tax rate would be bumped up from 9.3% to 11% for most individuals making more than $400,000 and couples over $800,000.

Do the math. That’s an 18% rate hike.

But because only taxable income over $400,000 -- or $800,000 -- would be taxed at the highest rate, the actual dollar increase would be less than 18%. For a single person making $700,000, according to the legislative analyst’s office, the extra bite would be $5,100 -- roughly 8%.

That’s still a hefty hike, but one very few of us ever would have to worry about. The legislative analyst says people in this stratospheric bracket represent less than 1% of personal income taxpayers, although they send Sacramento about one-third of its $45-billion annual income tax revenue.

Do the math again: Reiner estimates his Proposition 82 would raise $2.4 billion annually. That’s an average 16% hit on these taxpayers.

One other thing not to forget: Voters two years ago imposed an additional 1% tax rate on incomes above $1 million to pay for mental health services. So these people’s rates, under Prop. 82, would rise from 10.3% to 12% -- the highest state income tax in the nation.

The super-rich don’t get a lot of sympathy, of course. And that’s why the latest Field Poll shows 55% of likely voters supporting Prop. 82, with only 34% opposed.

But the point is, some Californians would be socked hard. We’d be tapping a coveted tax source and generating billions. And is voluntary preschool for every 4-year-old how we’d prefer to use that money, especially with the state still spending billions more than it’s taking in each year?

Let’s stipulate that preschool is good. It would be a desirable new government program. No argument here.

As Reiner noted to the Sacramento Press Club on Tuesday, “it’s hard to debate” the merits of preschool. He pointed out that half of fourth-graders fail basic reading, and “quality” preschool has “a profound effect on how children function.”

And to Reiner’s credit, he has proposed a way to pay for his proposal -- unlike then-actor Arnold Schwarzenegger with his after-school initiative in 2002, which merely raided the treasury and robbed other programs. Gov. Schwarzenegger intends to inaugurate his program next fall.

“If you’re going to do something, do it and fund it,” Reiner told the Press Club. “I don’t think it’s a healthy way to do things to strap the Legislature with burdens at a time when they may be having difficulty with budgetary concerns.”

But that again raises the question: Shouldn’t these higher taxes be used for balancing the state books? Or for existing K-12 school programs?

The anti-82 campaign has been firing off daily missives detailing what the $2.4 billion could buy: 69,000 full-time teachers, $8,400 worth of textbooks and supplies for each classroom, 3,300 new classrooms....

But this Stop the Reiner Initiative outfit is being disingenuous. Funded by business and anti-tax interests, it wouldn’t favor raising taxes on the rich regardless of the cause.

Indeed, it issued a report Wednesday by former Legislative Analyst William Hamm, now a private consultant, asserting that higher taxes on the rich actually would cost the state money because these flexible folks merely would shelter more of their income.

I’d like to test that thesis -- but maybe not for preschool, and probably not through more runaway ballot-box budgeting.

Reiner’s Proposition 10 in 1998 -- a cigarette tax increase for early childhood development -- was illustrative of how a well-meaning initiative can result in little public accountability and abuse of tax money.

The Reiner-headed commission that Prop. 10 created spent $23 million of public money for TV ads promoting Reiner’s current cause: preschool. The ads ran while Reiner was launching Prop. 82.

“Serious questions were raised that go right to the heart of public trust,” says Sen. Chuck Poochigian (R-Fresno), an attorney general candidate who has prompted an investigation by the Sacramento district attorney.

Reiner could credibly argue that there are safeguards in Prop. 82 to prevent a repeat of Prop. 10’s misuse. But first he’d have to admit there was misuse. And he refuses.

Asked if TV ads pushing preschool were a proper use of public money, Reiner replied: “Absolutely. Because it is mandated in [Prop. 10] that we use 6% of our money on public education.”

He rationalized that the Prop. 10 commission had pumped $1 billion into preschool programs, and was merely educating parents about them.

“If I’m opening a business -- in my business, it’s a movie [and] you don’t tell anybody there’s a movie out there, you’d be an idiot,” he said.

But that doesn’t wash.

For one thing, the ads were targeted at swing voters without small kids, clearly with the goal of peddling the initiative.

Moreover, Prop. 10 contained only a one-word mention, in passing, about preschool. It wasn’t included in any voter guide argument. There definitely was no voter mandate to promote a future preschool ballot measure.

So here comes a Reiner sequel, and it’s a very expensive ticket. The producer needs to persuade us it’s not just another “Groundhog Day.”

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George Skelton writes Monday and Thursday.