“The new taxes in this measure are temporary.” Section 2, Paragraph (f), of Proposition 30, passed by California voters on November 6, 2012.
Of course, Proposition 30 was never meant to be a temporary tax by some of its proponents. A little more than a year after it passed supporters were talking about extending it or making it permanent. Neither is the extension of the Prop 30 income tax piece now offered up by the California Teachers Association (CTA) meant to be temporary. The newly filed initiative pushes the deadline of the “temporary” tax from 2019 to 2031. What do you think will happen then?
You get the feeling this tax will mimic the history of Pennsylvania’s Johnstown Flood emergency tax levied in 1936 to deal with that disaster and designed to expire in 1937. It is still on the books and at a higher tax rate today.
Proposition 30 was titled by the Attorney General: Temporary Taxes to Fund Education. Guaranteed Local Public Safety Funding. (Italics are mine.)
But there were hints even before Proposition 30 passed that supporters were playing fast and loose with the effort to raise taxes. Remember the legislature changed the rules to make sure that the tax increase measure would be the first one voters saw in the list of ballot propositions? And, extremely rare was the provision to start the income tax portion of Proposition 30 retroactively to the beginning of that calendar year.
Still, it is hardly a surprise that the CTA filed this initiative.
In my occasional updates of possible tax measures on the 2016 ballot, I continually stated that a Prop 30 extension was the most likely scenario, noting one month ago that “many supporters of a tax increase believe this type of measure may be the easiest one to pass.” The reason: the tax is already being collected and only hits the well-heeled. Taxing the rich theme still holds strong. Witness Donald Trump’s call for taxing hedge fund managers and capital gains as the leading Republican presidential candidate.
How easy to pass a “temporary” tax that goes on and on is unclear. In a May survey by the Public Policy Institute of California 47-percent of the respondents said they would oppose extending the tax. A UC Berkeley Institute of Government Studies poll also showed mixed results.
Yet, for those supporting tax increases choosing to extend a tax that hits only a small portion of the population and dedicate the money to schools seemed a strategic no-brainer when faced with probable stiff opposition on other tax measures.
Of course, relying so heavily on the upper-end taxpayers could cause new problems for state budget writers during a recession. We’ll hear more about that when Sen. Bob Hertzberg attempts to advance his tax on services.
The big question for now is where will Governor Jerry Brown stand if the Proposition 30 extension makes the ballot. He campaigned on Proposition 30 being temporary. In January, in answering a reporter’s question about Prop 30, he said, “I said that’s a temporary tax.”
Furthermore, the May budget revision from Brown’s Department of Finance noted that the California budget would survive the end of Prop 30.
Will the governor change his mind now that the Prop 30 extension debate has become a reality?