2012 Election: California Ballot Measures- The Tax Props


Garen Yegparian

BY GAREN YEGPARIAN

It’s no secret that the State of California faces serious financial challenges. As a result, we’ve ended up with two measures (it was almost three, but two of them were merged), Propositions 30 and 38, on the November 6 ballot that propose taxes to improve the revenue side of the state budget after more than a decade of severe cuts.

Many might complain about why this should be done in such difficult times. That’s a fair concern, but it ignores the fact that the state is doing what we the people have asked of it. It ignores the fact that expenditures, in constant dollars, are now where they were back in the 1970s. It ignores the fact that many more people are being served— more roads, more schools, far many more prisons, etc. (the population of California has almost doubled over the last four decades).

Consequently, there’s no doubt that increasing taxes is a very reasonable and timely thing to do. It becomes absolutely foolhardy NOT to raise taxes when you remember one more bit of history. In the 1990’s the state was doing well on the revenue side, so the highest marginal tax bracket was eliminated, reducing the tax burden on the highest earners. But, when things started to get tough, the right wing anti-tax movement had taken hold. As a result, because of California’s two-thirds vote requirement to pass taxes, the simple act of restoring what had been in place a few years earlier, became impossible. That revenue, eleven years’ worth of it, had it been available, would have saved the state a lot of grief and harmful budget cuts that also further hurt an already struggling economy.

So now, it’s up to us to do what the legislature has been unable to do. Raise taxes a little bit for a few years. That’s what both of the ballot measures do, but in slightly different ways. Both also contain language that says if both pass, and one gets more votes than the other, only the provisions of the one with more votes will become law. That’s why I’m strongly recommending voting for both, so we’ll get what we need.

The details of what each one does can be confusing, especially how this new revenue is to be allocated. So I’ll provide only the basics and a link to the state legislative analyst’s descriptions if you want to delve deeper.

Prop 30 will generate approximately $6 billion per year. It will be in effect for four years. Afterwards the current tax rates will be restored. The state will receive some additional revenue because of Prop 30 for an additional three years. The taxes in this proposition will affect everyone through a ¼% increase in the sales tax (so for those living in LA County, it becomes 9 cents on the dollar instead of 8.75 cents). The income tax rates on those making over $250,000 per year will be increased by 1%, 2%, or 3%, depending on how high the earnings are. For details, go to: http://vig.cdn.sos.ca.gov/2012/general/pdf/30-title-summ-analysis.pdf.

Prop 38 will generate about $10 billion in its first year, and increase gradually after that. It will be in effect for 12 years. Afterward the current tax rates will be restored. This proposition will affect everyone’s income taxes, anywhere from 0.4% to 2.2%, depending on income. For details, go to: http://vig.cdn.sos.ca.gov/2012/general/pdf/38-title-summ-analysis.pdf.

It’s simple, we need these fund. Otherwise, we will all pay a serious long term price because education funding will automatically be slashed if Prop 30 doesn’t pass. And, if Prop 38 also doesn’t pass, then there will be no money to make up for those cuts. It’s time we recognized that we have seen enough cuts to the state budget and it’s time to start chipping in, especially those in the highest income brackets who have not contributed their fair share over the last 15 or so years.

1 Response

for “2012 Election: California Ballot Measures- The Tax Props”

  1. Shant Hagopian says:

    As I often am after I read your column, I read this and was confused, specifically with the notion that you think the top earners need to pay their “fair share” in taxes. The richest one percent in California pays more tax than the bottom 90. Does that sound fair to you? I did a little more digging, and found that the Wall Street Journal thinks the tax problem in California stems from Sacramento’s reliance on the rich tax payers to fill its coffers. (not that the rich aren’t paying enough) So when you say the richest need to pay their “fair share” I have no idea what your talking about. That in itself, sounds pretty unfair to me. I don’t blame the people who ensured that we need a 2/3 majority to raise taxes. How are these entrepreneurs and businesses supposed to employ working class employees with your tax increase? They’re already over taxed, over-burdened, over regulated enough as it is. If you worried about the schools, as you mentioned, maybe we should crack down on the unions, blackmailing school districts for more pay yet refusing to take a shred of accountability for dismal scores and even worse drop out rates. Or re-evaluate the high speed rail: an almost 78 Billion dollar venture riddled with quid-pro-quo and waste. I think there’s a lot more the state can do before we even think about tax increases.

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