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Broad: Tax Reform Would Follow Defeat of Brown's Initiative

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Opinion: Eli Broad v the Brown Taxes

NewsConference: Billionaire & Philanthropist Eli Broad, Part 2

Eli Broad is off the reservation.

The billionaire philanthropist told NBC LA's Conan Nolan this weekend that he opposes Gov. Jerry Brown's temporary tax initiative. Normally, a rich guy opposing a tax on the rich wouldn't be a problem, but this isn't any ordinary rich guy. And the argument he made against the initiative is a powerful one that could peel Democratic voters sympathetic to Brown and tax increases.

Broad, it should be noted, is a major donor to Democrats. He's exactly the sort of person a Democratic governor needs in his camp if he's going to win a difficult ballot measure campaign that his entire governorship is riding on. In the interview, Broad also said he's sympathetic to Brown's stated goals -- public schools need more funding, and rich people, including himself, can and should pay more taxes.

Despite all this, Broad opposes Brown's measure -- and civil rights attorney Molly Munger's temporary-tax-increase to fund schools measure as well. Why? He argues that there are better alternatives to an even more progressive income tax and an extension of the sales tax on goods. Specifically, Broad touted a tax proposal by the Think Long Committee for California, upon which he served, that would cut income tax rates while eliminating some deductions, establishing a new deduction for people who make $45,000 a year or less, and extending the sales tax to services. The result, at least according to modeling done by former Republican and Democratic staffers working for Think Long, would be lower, more competitive rates -- while preserving the same progressivity that the system has today.

Nolan asked Broad whether he was worried about the consequences of the defeat of Brown's measure. The governor has warned of devastating cuts to schools and the like. Perhaps most damaging to the governor's case, Broad treated this as a bluff, casting off the possibility of those kinds of consequences.

Of the Brown and Munger measures, he said: "I think what happens if they don't pass is that they'll come up with something that makes more sense for the state of California."

There are many objections to make to Broad's argument about tax policy; he seems overly concerned with the volatility of the current tax system -- which would be an advantage, not a problem, if extra money in good years is saved to cover budget deficits in bad years. But what's clear is that a pillar of the Democratic establishment simply doesn't buy Brown's mine-is-the-only-way approach.

The governor's narrow strategy depends on there being a narrow debate, and narrow choice for voters: either pass my taxes, or watch me cut the schools. Brown has lashed out at those who think there should be a broader debate about the right way forward for the tax system, the budget system, the governance system. But Brown is going to get that big debate anyway.

Lead Prop Zero blogger Joe Mathews is California editor at Zocalo Public Square, a fellow at Arizona State University’s Center for Social Cohesion, and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (University of California, 2010).

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