SACRAMENTO (AP) – Desperate for revenues, California’s top officials and interest groups are engaged in a high-stakes, behind-the-scenes battle over competing, yet-to-be-released plans to tax psychic income, the Associated Press has learned.
Such income has not been taxed by an American state, but Gov. Jerry Brown put the notion in play for policymakers after he said, in response to cuts in the pay of elected officials, that his compensation as governor includes “a lot of psychic income.”
Within minutes, legislative staffers, department of finance drones, union leaders and ballot initiative consultants began drafting proposals.
But differences quickly emerged. One battle was over the structure of the tax. Union leaders and some legislative Democrats put forward a proposal for highly progressive psychic income tax. “Have you ever been around a really, really happy person?” said one union political strategist rhetorically. “It’s really annoying, and sucks the life out of everyone else. Those who are satisfied with their jobs should pay their fair share.”
But Gov. Brown and his team, along with some friendly business leaders, were said to be concerned about the volatility of tax numbers, particularly in the light of the historic growth in the availability and use of anti-depressants. They proposed a flatter structure, accompanied by what is being called a Dark, Gloomy, Your-Dog-Got-Run-Over Day Fund. Two sources also described a bitter, behind-the-scenes battle between gubernatorial staffers and the California Teachers Assn over how the new psychic tax revenues would be counted in the Prop 98 educational funding guarantee.
What was clear to all was that big money could be on the table. A veteran budget numbers cruncher at the Legislative Analyst’s Office said that modeling of psychic income suggested that the numbers could outpace the state’s annual gross domestic product of $1.9 trillion.
“I was just running the numbers,” the analyst said, “and we think Cameron’s psychic goes north of $1 trillion if we can get him right after the first weekend of Avatar 2 grosses.” He added that the psychic income Facebook’s leadership team derives from its control of the world’s largest cache of private information could approach the Cameron figure, despite the company’s falling stock price.
But the fight over the structure of the tax promised to be simple compared to the battle over how to spend the new money.
While the Assembly leadership was pushing to use the money for scholarships for the middle-class, the Senate leaders were seeking the money to restore cuts to health and human services. Wealthy civil rights lawyer Molly Munger was said to be drafting an initiative that says the money should not pass through Sacramento but go directly to the schools. Brown’s aides said he prefers to reserve the money for realignment.
The high-speed rail authority was fighting bitterly to let the psychic income provide the funding for Phase 1 of the project. The authority’s argument was that psychic income should belong to high-speed rail, because the benefits of a project linking Merced and Burbank couldn’t be fully expressed by traditional measures like economic impact and ridership.
“People want high speed rail because it makes them feel good,” said one authority official. “And if we’re going to tax people’s good feelings, high-speed rail is the natural home for those revenues.”
But the authority was steeling itself for a challenge from Bay Area billionaires, who are threatening a ballot initiative if additional taxes on psychic income don’t go to renewable energy projects.
The matter may be decided on the ballot—because opposition in the legislature appeared certain. Republican lawmakers conveyed to their Democratic counterparts that they did not believe that psychic income actually existed. They also said they would oppose any attempt to tax it.
California Forward, the foundation-funded reform group, expressed concern about what this might mean for the budget and has privately circulated an array of new happiness metrics upon which psychic income might be calculated. Cal Forward’s package of reforms includes a proposal that Californians be required to calculate their psychic income over three years, rather than fleetingly thinking about how they feel from moment to moment.