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The Elephant in the Room

California's fiscal mess continues to worsen thanks to the anti-tax, anti-government policies of the GOP.

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And the consequences of eliminating these types of investments, as the Right has slowly and successfully done, promise to be severe. "The opportunity to make California a national leader in green technologies will be lost without renewed investments in higher education," Block warned. "If we keep listening to the right-wing's anti-tax ideology, the state will experience a long, fast, downward slide."

Former Sacramento Bee editor Peter Schrag has given this downward slide ­— which the state has already endured for several decades — a name: "Mississippification."


If spending isn't out of control, what about taxes? According to Ross' organization, the nonpartisan California Budget Project, California is a "moderate" tax state. A recent comparison conducted by the project explained that "in 2009-10, California ranked 15th among the 50 states with respect to state taxes as a percentage of personal income," and that California "also ranked 11th with respect to ... the broadest measure of state and local revenues raised by state and local governments in 2007-08."

When one compares California's taxes to other nations, prosperous ones like Germany and the Netherlands, even accounting for federal taxes, the situation is quite simply that corporations and the wealthy here pay far smaller shares. "A lot of people say California's government is 'broken,' but it's not broken for everyone," Lustig noted. "The wealthy and corporations are making windfall profits through the current system."

Block pointed to a failure of progressive politicians to speak the truth and expose the current tax and budget inequities. "No public leader has really explained that California's great economic success was rooted in high levels of public investment in education, infrastructure, and urban amenities. While Democratic politicians occasionally resist right-wing demands for across-the-board cuts, they have failed over the years to challenge directly the anti-tax obsessions of the Right. If we want a society that takes care of the ill, the elderly, and the poor, and that also invests in the future, we are going to have to raise more money through the tax system at both the federal and the state level."

But when tax increases have appeared on the ballot, it's usually only after bone-deep cuts. In addition, the tax proposals usually lack the progressive tint of years past. Case in point: Brown's plan to extend some higher tax rates relied in part on sales taxes and a higher vehicle licensing fee — regressive measures that unfairly harm low- and middle-income workers.

Public polling, meanwhile, reveals a wide disconnect between Sacramento politicians and the public. Polls have repeatedly shown that Brown's regressive tax proposals stand no better than a fifty-fifty chance of winning. At the same time, polls consistently have revealed that a proposal that Brown has not dared to make — a tax increase on the wealthy — has a good shot at passing. Earlier this year, 62 percent of likely voters in a Public Policy Institute of California poll supported raising the top rate of the state income tax paid by the wealthiest to maintain K–12 education funding. This same type of proposal has consistently been supported by about two-thirds of likely voters since at least 2005. In 2004, a supermajority of voters approved Proposition 63, the Mental Health Services Act, which added a 1 percent surcharge to incomes in excess of $1 million, raising hundreds of millions in revenues, hugely increasing mental health services through capital investments and staff. Other signs abound that most Californians support progressive tax increases when revenues plummet.

So why aren't Democrats pushing for progressive taxes, too? Lustig said he thinks the governor is "acting responsibly" by trying to squarely raise the issue of taxes, "but he's doing so on narrow ground, ground he himself helped narrow by abdicating on Prop 13 years ago."

Proposition 13 was, in fact, the beginning of a profound narrowing of lawmakers' abilities to respond to revenue shortfalls with progressive measures.


Proposition 13 and other anti-tax measures that the Right has successfully written into what policy scholars call the "fiscal constitution" of California have forced local and state officials to seek funds from mostly regressive sources during hard economic times. A plethora of fees has overtaken us in everything from automobile registration to university attendance. And this jury-rigging of the system in favor of regressive taxes has had the insidious effect of further undermining public support for government.

"It's well understood that California's fiscal constitution includes numerous restraints on the legislature's and governor's power to engage in tax and spending decisions," noted David Gamage, a law professor at UC Berkeley. "Proposition 13 is the most notable example of voters using initiatives to shape California's fiscal constitution."

When they set about to pass Prop 13 in 1978, the right-wing activists behind the measure had learned from previous unsuccessful attempts to gut the state's progressive tax system. Rather than trying to rewrite broad sections of the entire tax code (as was attempted in 1973 with Proposition 1, a confusing anti-tax measure drafted by conservative economist Milton Freidman and a John Bircher named Lewis Uhler that was nearly as long as this article), Prop 13's language was kept short and sweet. It simply capped property tax at 1 percent of assessed value and prevented increases of more than 2 percent per year until a property was sold. Its second basic rule, also sold to the voters as a simple, common-sense reform, was to require that all future tax increases be approved by a two-thirds vote of the legislature, and local taxes approved by two-thirds of voters.

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