Assume Nothing in California’s Tax Battles

Tuesday, March 12, 2013

Page 6

IN MY OPINION (Column)

Assume Nothing in California’s Tax Battles

By JON COUPAL

The rejection of a sales tax on the Los Angeles city ballot has pundits and government insiders returning to their crystal balls in an effort to divine the mood of the electorate and how voters will behave in the future.

When Proposition 30 passed last November, increasing income and sales taxes, those who worship at the altar of ever greater government spending ecstatically proclaimed that a new day had dawned, that any vestige of the Tax Revolt of 1978 that passed Proposition 13, had been laid to rest, and Californians had shown themselves prepared to embrace new and higher taxes. So extravagant was some of the rhetoric, that Jerry Brown, the principal backer of Proposition 30, felt compelled to caution the Legislature against overreaching.

More objective analysis of the Proposition 30 success, pointed to backers outspending opponents by almost two to one, promoters emphasis that the income tax hike would be on the prosperous—while making little mention of the sales tax that would be paid by everyone—and Jerry Brown’s willingness to put his prestige on the line by guaranteeing that most of the new income would go to support education, the most popular government program with Californians.

Los Angeles, hardly a bastion of fiscally conservative thought, has just rejected Proposition A, a new sales tax, by a margin greater than then the one that provided Proposition 30’s victory, a flip of about 10 points. However, those who advocate fiscally responsible tax policy would be wise not to repeat the mistake made by so many on the left and assume that a single victory represents a long-term trend.

Backers of the sales tax outspent opponents by nearly several million dollars to almost zero – big checks were provided by the government worker unions and developers. It had the support of the mayor and police chief – the chief was featured in ads claiming that without higher taxes, the city would be compelled to lay off 500 officers. It was said sidewalks could no longer be repaired unless voters agreed to take on another regressive sales tax hike. (Ironically, the sidewalks are not being repaired now, but the mayor and Council have approved pay raises for city employees for next fiscal year that will total $167 million annually, three-quarters of the amount that was anticipated from the tax increase.) A week out, the Los Angeles Times published a poll showing the measure leading 53 percent to 41 percent among likely voters, and promoters of the tax began to rub their hands together – surely their expensive campaign would nail down a victory.

But it didn’t. Over 55 percent of Angelinos said “No.”

Tax backers rushed to the barricades to explain the outcome. Surely it was due to low voter turnout and the people really did want to pay one of the highest sales taxes in the state. Councilman Herb Wesson, the tax measure’s author, complained that too many moderates and conservatives voted.

There has been speculation that the Government-Developer-Public Employee Union Industrial Complex that runs the city has lost clout, but certainly these interests were able to motivate their base – those who count on a taxpayer provided paycheck, or a government contract that will guarantee their employment, are motivated to turn out in high percentages.

The balance of power was in the hands of voters who had no ideological or great personal financial interest at stake. These were likely influenced by two factors. One, unlike Proposition 30, it was clear that everyday folks would be paying the higher tax. Second, they are suffering crisis fatigue. Had this measure been on the ballot several years ago, it might have passed; after all, in 2008 Los Angeles County voters approved a sales tax increase for transportation with a two-thirds vote. But since then, they have endured a drumbeat of the “sky is falling, we must have new taxes” rhetoric from Washington, Sacramento and now from city officials. To the public, the idea of making cuts to the police force may not seem so devastating. After all, the “sequester”—mandatory spending cuts—took effect in Washington last week and the sun still rose in the East the next morning.

Perhaps the folks have just plain had enough right now, and with due respect to Councilman Wesson, a higher turnout could very well have resulted in an even more resounding rejection of his sales tax increase.

As for the future, it is important to recognize that each election represents the public’s thinking during a brief period of time.

Those of us who are painfully aware that California now ranks at the top in per capita tax burden must keep in mind that the politicians and their government union supporters can never get enough money. It is important we never take anything for granted, that we always respect the voters and arm them with straightforward and truthful facts as to the consequences of these continuing assaults by government.