Monday, August 27, 2012

Brown's Tax Coalition

There’s perhaps nothing surprising about it, but Anthony York’s article in the Los Angeles Times about the coalition that California Governor Jerry Brown is assembling behind his push for a much-needed tax increase is a good illustration of how policymaking works when state government is as dysfunctional and incapacitated as here in California.

Rather than devising or backing a revenue plan on its merits, or based on what voters would like to see, it seems that Brown has come up with one designed to meet the approval of special interests.  It’s not unlike blackmail.  Both sides are doing it.  Specific business interests are prepared to support the governor provided he doesn’t ask them to behave in a socially responsible way.  And the governor threatened to hit interests with taxes if they didn’t come out to support getting his tax measure on the ballot.

None of this is a recipe for sensible policy.  It would make both moral and economic sense to tax oil extraction in the state—like they do in Texas and Alaska, those two well-known bastions of socialism.  But not in California.  Republican Party legislators, taking their orders from their party’s ideological enforcers, have foresworn the use of their mental or legislative powers by pledging never to vote for tax increases—no matter the inequity of the current tax burden, and no matter what economic circumstances face our state.

In most states, the government would have an additional significant stream of revenue from property taxes, and could approach such taxes in a differential manner: keeping taxes for homeowners at one level and taxes for businesses of various sizes at other levels.  But not in California.  Prop 13 makes sure of that.

In most states, the Governor and the legislature could have a reasonable discussion about revenue and then make a decision about the state’s revenue needs along majoritarian lines.  Not in California.  Prop 13 makes sure of that.

If the story behind the construction of tax policy is a sordid one, it’s telling on the other hand that interests that normally balk at a tax increase are cautiously lining up behind Brown.  The serial economic uncertainty and real political dysfunctionality which are the twin legacies of Prop 13 are hurting business interests.  Those interests, at the end of the day, are more interested in stability than in taking anti-tax oaths or pledges.   

The sad thing is that however necessary Brown’s tax measure might be in the short term, it’s a predictably pathetic effort at solving California’s crisis of governance from the man who spent two terms in the ‘70s and ‘80s fiddling while the state burned.  Even if Brown’s measure passes—and I for one have my doubts—we’ll be jumping through all the same hoops in a few years when his short-term fix expires.


  1. Yes, I saw that article this morning. I certainly agree that it would be better to tax oil extraction than to implement a measure that includes a regressive sales tax increase. I've heard that there might be ways to close Prop 13 loopholes for commercial properties (e.g., there would be a transfer of ownership and the need for property tax reassessment even if the sale of a property is split more than three ways). In any case, I am glad Jerry Brown is still supporting high-speed rail construction, which would act as a backbone for transit-oriented development in this state. --Ben

    1. Yeah, I don't think that modifying Prop 13 would be all that difficult. Unfortunately, nobody who matters seems to want to discuss it.
      I really hope the high speed rail goes through. It baffles me that Brown, who usually doesn't support anything that's remotely politically controversial, is so steadfast behind it, but I'm not complaining.