The Working Families Tax Increase

Tony Quinn
Editor, California Target Book

So Gov. Jerry Brown has bought into the Working Families Tax Increase. That’s the name that ought to be given to the extension of the 2009 tax increase that Brown is making part of his 2011 budget solution. His problem is that voters have already given it a good look, and said “no.”

In May 2009, then Gov. Schwarzenegger and legislature asked the voters to save a tax increase just passed as part of a February budget deal by extending $8 billion in new taxes to 2013. Republicans demanded a sweetener for putting the tax on the ballot; a complex “rainy day” fund that would limit future state spending.

Although both parties bought off on this ballot measure, Proposition 1A on the May 19, 2009 special election ballot, the voters did not. It lost by 30 points and failed to carry a single county. So now the tax increase expires this June, and that is what Brown wants to restore.

So why call it a Working Families Tax Increase? Look at what it does; the measure increases the state’s car tax from .65 percent of a vehicle’s value to 1.15 percent. It raises the state’s sale tax by one cent, to an average of about nine percent statewide. And it raises each personal income tax bracket by .25 percent. These tax increases are highly regressive; they are not based on ability to pay, especially the sales tax hike, and they fall hardest on working families.

That’s the little secret the Democrats, who never see a tax increase they don’t like, would rather people did not know who this tax hits hardest. They went along with increased taxes on working families in 2009 in order to get Republicans on board, knowing there was no chance for the tax increases the Democrats really would like, on oil companies and on the wealthy.

A problem Brown will have selling this tax extension is the growing dissatisfaction with where the additional revenues go. Republicans may be in the pocket of oil companies but Democrats are in the pockets of public employee unions; without them in 2010 Democrat Brown might well not have been elected governor. Since Brown signed the public employee collective bargaining act during his first term as governor, it has seemed more and more that the primary purpose of government is to take care of its own, with vastly more benefits for public employees than ordinary working families enjoy.

Consider the case of Scott Plotkin, a long time Sacramento education bureaucrat who recently retired as executive director of the California School Boards Association, a taxpayer funded schools lobbyist. In 2006-7, Plotkin was paid $352,636, according to newspaper reports. But that was not enough, so he got a $175,000 bonus in 2007-08, bringing his salary to $540,395 for that year. But even that was not enough; a Sacramento television station reported that Plotkin was using his official association credit card to cover his casino gambling debts. Now Plotkin is retired, but don’t ask how much his pension is, he won’t say.

Brown apparently wants some of the revenues from his Working Families Tax Increase to go to local government officials, most of whom in California’s large cities are elected by public employee unions. This will no doubt be music to ears of the recently retired Santa Clara County fire chief, who is now taking home not only his former salary of $236,691 as a consultant, but also a $200,000 annual state pension, according to the San Jose Mercury News.

Voters are coming to realize that these fat taxpayer funded salaries and pensions are a right guaranteed by years of clever maneuvering by the unions and their legislative allies to assure their members rich benefits. Much outrage erupted last week when 36 of the highest paid UC executives demanded that the UC regents lift a cap of $245,000 on how much salary can be considered when calculating a pension. This means a retired UC executive could get a $300,000 pension on a salary of $400,000, not just $184,000 as allowed under the cap.

State Sen. Leland Yee is quoted as accusing the UC executives of “truly living in an ivory tower. They don’t care to know that there are people suffering in the rest of the state and losing their homes.” Well, Senator, you voted for all this stuff so what do you expect?

He and Gov. Brown might ask working families what they think of paying higher taxes so UC executives can makes $300,000 in annual pensions, especially Latino working families – the hardest workers in California who heavily supported Brown in the election.

Republican legislative leaders say they will not support putting the 2009 tax extension on the ballot for a special election later this spring, but they will probably come around in exchange for some goodies they want on the ballot. Democrats, of course, can be expected to back keeping the higher taxes; it means more money for the unions who are already the loudest chorus in favor of extending the taxes.

So the big losers in the Working Families Tax Increase will be same people who have been paying the higher taxes since 2009, California’s working families. Gov. Brown should not be surprised if they do to his tax increase what they did to Schwarzenegger’s tax increase in 2009, vote it down.

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