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Restoring California: Tax The Rich to Fund Public Education And Services

January 18, 2012

I know that people will read this blog post’s title, specifically this part: “Tax the Rich to Fund Public Education…” and they will get angry.

I would argue that the mere fact that they are angry by reading this title is because they have been conditioned by right-wing media outlets, which have inevitably leaked into the mainstream press, to believe that the rich are over-taxed…the true fact is that the rich are NOT over-taxed.

We even have billionaires asking to be taxed more: The Buffet Rule, which is based on Warren Buffet‘s request to be taxed more because he realizes that it is the fair and correct thing to do is a stark example that some people comprehend how deeply unfair the current system is for the wealthy.

After that preamble I want to present this article released by the California Federation of Teachers on their web site.  It is written by Joshua Pechthalt and is presented in its entirety below:

The California Federation of Teachers and its coalition partners Courage Campaign and California Calls have a simple proposal for the state’s voters:  restore tax rates on people with incomes over one million dollars per year so that the rich pay their fair share to rebuild our schools and services.  In November 2012 voters will have the opportunity to decide if this is a good idea.  If current polling numbers hold up, chances are “The Millionaires Tax to Restore Funding for Education and Essential Services Act of 2012,” or simply “The Millionaires’ Tax,” will pass.

For thirty years teachers, students and their families, and other members of the school community have watched in dismay as our public education system has been defunded.  Before the passage of Proposition 13 in 1978, California’s schools were the envy of the nation.  People moved from all over the country to the golden state because they knew that they could acquire a quality education and better future for themselves and their families.

How amazingly true!  As a kid growing up in New Jersey I remember people talking about moving to California to go to college because they had relatives out there.  At the time they told me that it was great because local community colleges were practically free to residents and the state colleges were inexpensive relative to schools in NJ.  I have read articles that stated the K-12 public school system was also held in very high regard.  Prop 13 was a blight on public schools as some have so accurately pointed out.

No more.  The $20 billion in cuts since the start of the Great Recession to public education are horrendous, but they come on top of declining funding that has pushed California schools from the top ten in funding in the 1970s to the bottom ten today.  The systems of higher education, formerly free, now impose higher fee burdens nearly every year on their students, who leave our public universities with debts that take years or even decades to repay.  Our local K-12 schools are forced to depend on parcel taxes and bake sales to make up for merely part of the funding lost to budget cuts.

How has this happened?  Some say it’s because the state has a “spending problem.”  Nothing could be further from the truth.  Three years ago the state budget was $102 billion, and with the largest population of any state, this was inadequate for its tasks.  Today the budget has been slashed to $87 billion, and more cuts are coming.

The truth of the matter is that over the past twenty years the state’s richest one percent has seen its share of the state’s overall income double, from 12% to nearly a quarter.  At the same time, its tax rates have been lowered.  This is one piece of the puzzle, which also includes corporate tax loopholes, the state’s undemocratic 2/3 vote rule in the state legislature to pass any taxes, and the post-Prop 13 loss of billions of dollars due to failure to assess commercial property at market rates.

Read that paragraph, and then read it again.  Save it the next time someone tells you that the rich don’t get a fair shake.

One thing at a time. The Millionaires Tax will ask people who make over a million dollars per year to pay 3% more, and people who make 2 million dollars per year to pay 5% more, so that we can begin to reverse the decline of the state we love.  This would raise an estimated $6 billion per year for schools, senior and child services, public safety, and rebuilding roads and bridges.

Some people believe that this is “unfair” to millionaires, who are the “job creators” and would be “punished” by having to pay higher tax rates.  Look around.  Where are these jobs?  California has the third highest unemployment rate in the country.  The rich are sitting on mountains of cash that they refuse to invest.  And as one of the country’s richest men, Warren Buffett, pointed out last summer, his secretary pays a higher percentage of her income in taxes than he does.  If the rich are afraid to invest their money in profit seeking enterprises, let them invest their money in the meantime in our common future:  schools, parks, safe streets and homes, strong infrastructure.

Some people say that all the rich people will move out of California if we tax them at a higher rate.  They should listen to Bill Gates, who said recently, “I just can’t imagine these millionaires and billionaires going down and barricading the streets because they’re going to have to pay four or five percent more in taxes.”  Or Ask.com founder and Oakland venture capitalist Garrett Gruener:  “The kind of investing I’ve done for the last 25 years isn’t based on how a few points of the income tax rates change.

Let’s put it bluntly: California is beautiful, stunningly beautiful!  We have incredible beaches, incredible weather, incredible amounts of things to do and it is great to live here, and the wealthy know it.  If you are rich living in CA and your taxes go up 3% or 5%, do you think these people are really going to move?  I seriously doubt it.

The Millionaires Tax will not solve all the state’s problems with one magic wave of the fiscal wand.  California now suffers an annual state budget deficit around twice the size the state will receive from our ballot measure.  But it’s an important start, and key to its success is that it gets the money from the people who have it and can easily afford to pay their fair share.

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