With a rained-out Halloween and a daughter in need of companionship while working on her high school history project, I applied myself to the examination of Proposition 30 and the reasons for it. They boil down to this: California needs to raise money now, and 30 is the most reasonable way to do it.
Over the last 25 years, money has concentrated to the top 5 percent income earners in California. The point is not to say it’s bad to make more money, but it’s also not bad to tax high-income earners a little more when they will still be way ahead. The rest of us in the 95 percent have lost purchasing power, wealth and income over the last 20 years and the top 5 percent have made gains in all three. So a temporary tax on top income is fair and even desired by many who include themselves in the top 5 percent.
In California, Proposition 13 provides the wealthy over 65 percent of the benefit of this famous property tax shelter. Income property and corporate property owners have left schools and towns $3 to 5 billion short every year for the last 20 years because their property assessments are stuck in 1978.
Proposition 13 cut school budgets in half and continues to squeeze, but problems exist on the spend side too. Many state and local pension programs, as they exist, are unsupportable. Governor Brown, who sponsors Proposition 30, recently signed much sought-after pension reform. It’s a step in the right direction, but the most inflated pension and benefits of the police, firefighters, prison guards and school administrators will take more than one governor to cap reasonably.
There have been other cuts, but very little balance in terms of keeping some revenue for the state. Prior to Brown, Governor Schwarzenegger repealed the car tax, taking $4 billion a year away from California coffers and lowered business taxes by billion annually [sic]. To “balance the budget,” Schwarzenegger increased the state’s debt obligations by $42.8 billion. Debt payments on California’s obligations amounted to $5.5 billion in 2011.
The windfall of the wealthiest is well represented this Nov. 6. Twenty-eight million dollars of the Small Business Action Committee’s (SBAC’s) No on 30 funding came from Charles T. Munger, the brother of the sponsor of Proposition 38. Not to be outdone, Molly Munger has contributed over $44 million to promote her Proposition 38. Mr. Munger’s $28.9 million was joined by $11 million in out-of-state money from the Americans for Responsible Leadership (ARL) to support SBAC’s No on 30 campaign. The ARL is being sued over its refusal to disclose its source of funds.
Which brings us back to small businesses. According to the California Budget Project, over 75 percent of small business owners make less than $200,000 a year. Most small business state income tax won’t change with Proposition 30. So much for the claims made by the full-page, cardstock, four-color glossy SBAC flyers. I have received four in the mail so far.
Proposition 30 is not perfect, but it’s a better choice, and yet we older voters are split. College students and young professionals have been identified as the great tiebreakers for Proposition 30. In 2008, 53 percent of the voting population between 18 and 29 voted — usually it’s closer to 25 percent. Let’s hope they show up in higher numbers.
Our public college tuitions have pressed families to the brink. Our state has been ravaged by the lack of fair exchange between cuts and revenue generation, and by the public pension problem. Progress has been made to reduce future pension obligations. Now progress must be made to generate revenue.
We must end the starving of public education. If Proposition 30 does not pass, inequity increases, opportunity decreases and 100 percent of us will be the worse for it. It’s your call, younger voters.
