Do Tax Initiatives Ask for Too Little?

Molly Munger
Molly Munger

Do the three tax-hike initiatives ask for enough in taxes?

In all the conversation about whether the Democrats behind each measure could compromise and support just one of the initiatives, this question has been ignored.

But it's a fundamental question, for policy and political reasons.

On policy, after years of cutbacks, the state's needs dwarf the relatively small amounts produced by the three proposed tax increases. In infrastructure alone, the state has more than a quarter trillion dollars in deferred maintenance needs. In general fund programs, the state is now spending less per capita than it was 40 years ago -- before Prop 13 and other changes to the governing system gave the state responsibility for education and the funding of many other programs that once were the province of local government.

On politics, these initiative backers may be missing an opportunity. Public support for a tax increase to prevent cuts and support popular programs like education has never been higher. In this environment, asking for relatively small tax increases -- temporary tax increases in the case of Gov. Brown's initiative and the measure sponsored by wealthy civil rights lawyer Molly Munger -- makes little sense. When the moment is right, isn't it better to ask for what you need?

The answer to that objection is to point to political difficulties of raising taxes. But how much of a difference is there in public support between a $20 billion tax hike and the $5 to $10 billion tax hikes contemplated by these measures?

We don't know. What we do know is that none of the initiative sponsors can achieve their stated goals.

Gov. Brown says he wants to fix the budget for good, but his tax increases are temporary -- they last only five years -- and produce billions less in revenues than the state's current budget shortfall. You can't balance the budget his way.

Backers of the other two measures -- a tax on millionaire's from the California Federation of Teachers and Munger's measure to increase personal income taxes and send the money directly to school districts -- say they want to restore California schools and their reputation. But neither measure produces enough money even to put California schools back to the national average in per-pupil funding.

To their credit, backers of the millionaires' tax acknowledge this repeatedly: "The millionaires' tax will not solve all the state's problems with one magic wave of the fiscal wand. California now suffers an annual state budget deficit around twice the size the state will receive from our ballot measure."

None of the measures answers the basic question of what schools need to provide the education that is necessary for success. And without engaging that question, it's hard to say how much money you need. What we do know is that the amount of money required is certainly greater than the amount in these initiatives.

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