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California Dream…Fading…

August 5, 2011

Robert Cruickshank has a thought-provoking article out in the Huffington Post titled: California’s New Tax Revolt.  In the very first sentence Cruickshank explains that the California Dream is turning into a nightmare.

The California Dream is turning into the California nightmare. That dream was made possible by the public services that provided people the economic security and opportunity to live out their dreams in one of the most beautiful places on earth. Fifty years ago, college was free, and so were the state parks. The state built infrastructure to ensure affordable transportation, and its public schools and libraries were the envy of the nation. All of those services freed Californians to pursue their hopes, their ideas, their plans. It made California a leading innovator, with the 8th largest economy in the world.

Let me be upfront: I Love California!  I was born and raised in New Jersey, I have lived in Maryland, Washington D.C., Texas, Connecticut, Hawaii, and Washington State, but I find California, with all of its troubles to be a beautiful and fantastic state that I am proud of.  I remember being in high school and a good friend of mine named Carl told me that he was moving out to live with his aunt in Cali., I asked him why and he told me that the colleges were like “almost free dude.”  Being a skeptical Jersey-ite, I didn’t believe him but I found out later that he was telling the truth.

It saddens me to read Cruickshank’s article and it makes me wonder just how great Cali must have been 20, 30, 40 or even 50 years ago.  Cruickshank makes the case that the root of the trouble has to do with Proposition 13:

The collapse of the California Dream is the product of the tax revolt that began in the 1970s. When voters approved Proposition 13 in 1978, most thought they were just helping retired families afford to stay in their homes at a time when inflation sent property tax bills soaring. But conservatives sneaked provisions into Proposition 13 that gave tax loopholes to big corporations and included a rule requiring a 2/3 vote of the Legislature to raise taxes. Republicans haven’t had a majority in the Legislature since 1970, but they have always held more than 1/3 of the seats. The 2/3 rule effectively gives Republicans a veto over state budgets, and they have used that veto to ensure that the 1970s tax revolt continues in the form of low taxes, despite the costs.

That tax revolt went national, and is now the dogma of the Republican Party. In California, however, a new tax revolt is brewing. Just as in the 1970s, the middle class is being squeezed out by rising costs. They’re watching the California Dream fade out of reach as the building blocks of prosperity — good schools, affordable colleges, and the quality of life that comes from libraries, parks, and public safety — are eviscerated.

The 2/3 rule is simply ludicrous in this day and age.  A simple majority should be enough to pass tax legislation in Sacramento.  If a majority rule law was in place the GOP in Sacramento would not be able to hold up budget after budget because of their agenda.  I was amazed to read that: “Republicans haven’t had a majority in the Legislature since 1970.”  But, the GOP in California has managed to use the 2/3 rule to block any tax raises, hopefully that will change in the future.

This time, the problem isn’t that taxes are too high. Californians are revolting at the fact they are too low. As Californians realize that public services save them money and give them opportunities to get new jobs, build new businesses, and innovate new products, they are turning against the anti-tax mania that dominated state politics for three decades.

The new tax revolt is popping up all over the state. Since 1978 politicians were afraid of the old tax revolt, never daring to suggest new taxes were a good idea. But those inhibitions are fading fast. Last month Governor Jerry Brown hinted he was open to revising the tax loophole in Proposition 13 that gave commercial land owners like Chevron the same property tax protections as homeowners. Last week Los Angeles Mayor Antonio Villaraigosa pointed out that “the number of people who benefit from Prop 13 is shrinking, and shrinking, and shrinking,” echoing Governor Brown’s suggestion to reexamine the corporate tax loophole.

These politicians are not swimming against public opinion. They’re following it. Recent polls show large majorities in support of higher taxes on the rich to prevent cuts to schools and other core public services. Progressives have gained traction with a plan to raise income taxes by 1% on the top 1% of earners. Even the media is supportive, with pundits questioning why “ludicrously low car taxes” are seen as a birthright instead of “affordable higher education.”

Nobody should expect fairness to be restored to California’s tax system immediately. Of course, the 1970s tax revolt didn’t occur overnight either. After signing into law the largest tax increase in state history in 1967, Governor Ronald Reagan spent the next seven years trying to get voters to approve tax cuts. Voters kept saying no, until inflation sent property taxes so high that they finally said yes to Prop 13 in 1978.

Tax revolts happen when the public realizes that their dreams of economic security, a beautiful place to live, and a better life for their children are going to be lost unless changes are made to the revenue system. As Californians watch their public services collapse, taking with it the prosperity those services made possible, they are ready to lead a new tax revolt. It will transform the state just as it did in 1978. And this time, it will rebuild the California Dream, rather than destroy it.

We do need changes to how this state gathers revenue, and we must confront those who want to keep the current system in place.  One way would be to vote out even the 1/3 of GOP members currently in Sacramento, another way is to educate people about what Mr. Cruickshank is saying.  I will be keeping an eye on this.

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