Monday, May 13, 2013

Prop 13: Ripe for Reform

It’s almost as though its potential purchase by the Koch Empire is spurring the Los Angeles Times to provide proof of its relevance in the past month.  The paper followed up on its illuminating series of stories on the changing character of the American workplace with several stories about what political commentators are fond of calling the “third rail” of California politics—Proposition 13.

Proposition 13, passed in 1978 thanks to the machinations of the state’s corporate community, the rise of economic fundamentalism within the Republican Party, and the failure of California’s Governor, Jerry Brown, to govern.  The initiative not only raised to two-thirds the threshold for passing revenue increases in the Assembly and Senate, but also took property tax off the table as a flexible instrument for managing the state’s revenue, and forced the centralisation of much of the state’s service provision.

The initiative, which amounts to what Tom Paine called “government from the grave” wrote specific tax details into California’s famously overburdened state constitution, enshrined a system of minority rule which continues to empower the state’s fundamentalist minority, and has been responsible for the decline in many of our state’s once-fine institutions.

In subsequent decades, California’s corporate titans have with their Republican allies spent a lot of money preying on the fears of voters and trying to convince them that any amount of tinkering with this undemocratic and ill-advised initiative amounts to nothing less than an assault on Californians’ liberties.  These economic and political interests have managed to play voters for suckers and elide the interests of the fabulously wealthy with those of middle- and working-class Californians who would actually benefit from reinvestment in the state’s institutions instead of their continued evisceration.

The Times reported how over the years, the extraordinarily wealthy have used Prop 13 to circumvent their tax obligations to their community.  That they do so legally makes their actions no less reprehensible, nor does it lessen the damaging effects of their dodge.  At the same time, the Times reported, homeowners have paid a rising percentage of property tax, while businesses continue to evade their taxes.   

The Times highlighted the case of Michael Dell, who “has saved more than a million dollars a year in taxes on a landmark Santa Monica hotel by exploiting a gaping legal loophole in the rules that govern how Proposition 13 is applied”.  It has been widely recognised in recent years that the gap between the wealthy and those who are struggling has been growing at an untenable rate, and this fact bears out what the Times describes as John Paul Stevens’ dissenting opinion when Prop 13 was tested in court: namely, that Prop 13’s “formula created a medieval situation favouring land-owning ‘squires’ who ‘voted themselves a tremendous windfall’”. 

Perhaps most disturbingly, the wealth gap in California and elsewhere maps along generational lines, and Prop 13 is just one example of the generational war that is being waged by those who would like to preserve things like social security for the elderly whilst changing the program for those currently paying into it, and who benefited from their parents’ generous investment in the social service and safety net (think free or extraordinarily cheap UC tuition, well-funded schools, infrastructure growing commensurate with social needs) but are now breaking the social contract by indulging in a fit of selfishness and starving the same programs and institutions.

Interestingly, the Times also reported how “two prominent defenders of Proposition 13 spoke out...against ‘gimmicks’ used by some companies to avoid paying additional property taxes when buying real estate in California”.  What this tells me is that the Howard Jarvis Taxpayers Association and the Small Business Action Committee—two regressive, anti-social, fundamentalist organisations—have read the writing on the wall and realise that Prop 13 is fast becoming untenable in California’s moral economy.

By critiquing what are supposed aberrations of their pet initiative, they are opening the door to cosmetic reform which will leave the basic “gimmicks” of the initiative intact: most egregiously its undemocratic supermajority requirement and the undifferentiated property tax which protects some generations at the expense of others.  The leadership of these two bodies are trying to pretend that disproportionate corporate benefits from Prop 13 are something new, a claim they know to be disingenuous. 

In the past, these groups have been unconditional in their defence of Prop 13 and all of its abuses, and that they are now moderating their stance suggests that they are afraid that voters are on the verge of calling them out on their decades-long demolition of California’s public sphere.  They will undoubtedly begin doing their best to head off serious reform by proposing minor measures to take the pressure off what is an explosive situation given the crisis of K-12 education, the evaporation of early childhood education, and the decline of higher education in the state, to say nothing of an ever-more splintered public welfare system. 

California could use a reform-minded coalition to push for an overhaul not just of Prop 13, but of the whole rotting edifice that is our political structure.  Thirty-five years ago, Governor Jerry Brown had the opportunity to avert a long-term crisis by tackling the ills that made Prop 13 so popular.  He failed, and was overtaken by events.  Today, once again under his stewardship, the state faces a similar crossroads.  This time it is one at which it is easier to imagine a happier outcome for California.  The Governor had better learn from his earlier tenure and demonstrate the reforming leadership that our state so much needs.  Otherwise he will, once again, find himself standing idly on the roadside.  Only this time there will be no follow-up act.

1 comment:

  1. Nice use of the word elide.
    Yes, K-12 education is in a state of crisis, especially for LA Unified and Oakland.
    "A December poll by the Public Policy Institute of California found that 58% of likely voters favor a so-called split roll, in which commercial properties would be reassessed periodically regardless of their ownership." --LA Times