Beyond Budget Cuts

16 Feb Beyond Budget Cuts

Revenue Options, Including Taxing Millionaires, Move Forward

By Satish Kunisi

(Budget cuts protest 2009). Californians have taken deep cuts to schools and services the past few years due to state budget crises. This November voters may ask wealthy Californians to pay their fair share in taxes.

California’s $9 billion shortfall means another battle in which lawmakers scramble to balance the budget. For many years, the state’s budget solutions have focused only on cutting services, such as for schools, parks, CalWorks and seniors.

“For years, lawmakers have been stuck in a box, relying only on cuts and right-wing options to balance the state budget to the detriment of California’s hardest hit families,” said Joshua Pechthalt, president of the California Federation of Teachers. This year though the biggest budget battle may be over which way to generate revenues, with voters being given three options in the November election.

Revenue Roadblocks
As a result of Proposition 13, which was passed in 1978 and stipulated a two-thirds vote of both houses of the state Legislature to raise taxes, the only viable method of doing so has been through ballot initiatives. California is one of only three states with this two-thirds requirement. Minority Republican legislators who have taken hard-line anti-tax pledges have blocked tax increases in the past, regardless of the state of the economy.

Proposition 13 has benefited corporations at the expense of California’s families, said Lenny Goldberg, a leading California tax policy expert. “In virtually every county in California commercial property owners are paying a much smaller percentage of total property taxes since Proposition 13, increasing the burden on homeowners.”

Voters’ Options
This November, voters will consider three ballot initiatives to raise taxes and thus generate revenue to help reduce the state’s budget deficit. Polls show majority support for all of the options.

The first is Gov. Jerry Brown’s package, which includes a temporary half-cent increase in the state’s sales tax along with a rise in the income tax rate for individuals making more than $250,000 a year. Some of the backers include the Service Employees International Union State Council and billionaire Eli Broad. The revenues would go to schools, public safety, services and corrections.

A second option, proposed by civil rights attorney Molly Munger, would raise taxes on all Californians based on a sliding scale with the highest earners paying the most. The proposal would raise an estimated $10 billion a year, with all the money dedicated to K-12 education and early childhood programs.

A third initiative, “The Millionaires Tax,” would raise the tax rate of people making more than $1 million a year and would generate $6 billion to $9 billion per year. Part of the money would go to K-12 education and the rest to restore funding for public safety, infrastructure and services. The Californian Federation of Teachers and California Calls, a statewide alliance of organizations such as Community Coalition and Strategic Concepts in Organizing and Policy Education (SCOPE), are behind it.

“We think the middle class, working class and poor are already hurting and can’t afford to pay more,” explained Anthony Thigpenn, chair of California Calls.

A January 2012 poll by the Think Long Committee for California found that all of the initiatives had majority support. The Millionaires Tax led with 70% of respondents supporting it. Brown’s proposal received 62% and Munger’s 51%.

For advocates of tax reform and fairness, 2012 could be an exciting year when California taxpayers finally get the education and services they deserve.

Satish Kunisi is a strategic communications specialist at SCOPE.

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