Governor Jerry Brown is taking knocks for not yet clearing competing tax proposals proposed for the November ballot to the point where Scott Lay in his Nooner report asked the question whether Brown would be the one to dump his measure and back another.
Joe Mathews in his weekly rankings of the ballot measures on Fox & Hounds labels the Brown measure: “The Mitt Romney of initiatives– it’s the frontrunner, it feels inevitable, but no one likes it.”
You might say the day after Valentine’s Day, Brown’s tax plan is looking for love.
The coalition behind the millionaires’ tax says that public passion is in their corner for the income tax increase of up to an additional 5% tax rate on millionaires. They point to the enthusiasm for their measure at the recent state Democratic convention, and more importantly, at the polls that indicate the millionaires’ tax has the best chance to pass.
President Obama thinks the same, calling for tax increases on the rich in his newly released budget. If Obama is successful pushing his proposal, California millionaires will consider a new state tax on top of an increased federal income tax a reason to re-think where they call home. But, that’s a discussion for another time.
Looking at the three major tax measures competing for the voters’ attention, all claim they will benefit schools. Civil Rights attorney Molly Munger filed two initiatives. The one likely to move forward would put about 30% of the revenues into the General Fund for a few years, the rest to education.
The initiative sponsored by the California Federation of Teachers and others dedicates 60% of its revenues to schools. The Brown initiative benefit to the schools has been questioned by advocates who charge schools would not get increased spending, just money owed to schools.
While schools rhetorically become the major raison d’entre for all three tax measures, what may be spurring the push from tax increase supporters for the millionaires’ tax — beside the obvious pitch to the average voter that it is a tax on someone else — is that the millionaires’ tax increase is permanent tax change. The Brown tax increase is scheduled for five years (for the income tax piece). The Munger initiative has a 12-year lifespan, which could be extended by a vote of the people.
Advocates hungry for tax revenue don’t want to go back to the voters. They want to do it one time and figure once the tax is passed, voters will have little inclination to reduce the tax on millionaires. If the initiative passes, another vote of the people would be required to make any changes.
What ripple effect a tax on millionaires has on the economy, especially if a federal tax hits the same taxpayers hard, will not be a subject of concern to the measures proponents – but it should be.
Brown’s hoping his plan will capture the hearts of voters who will accept taxes to get through a rough economic period for the state as the fiscal picture recovers.
All the tax proponents will try to romance the voters through the November election – no easy task.