Thursday, December 15, 2011

One for You, Nineteen for Me: Notes on Tax Plans

Recently, we wrote about the bewildering array of tax-increase plans that will likely crowd next November's ballot. With Jerry Brown, the elitist Think Long committee, public education unions, and hedge fund manager Tom Steyer all pushing independent (and, on some points, contradictory) tax initiatives, there's a decent chance voters could throw up their hands and turn down all of them, as happened in 2009. Well, apparently you can add another rifle to this circular firing squad: according to the Sacramento Bee, the California Democratic Party chairman, John Burton, is filing his own tax hike for the ballot. Basically, Burton's plan would slap an excise tax on oil production in the state, with the proceeds going to higher education and the General Fund. The plan doesn't have any apparent conflicts with the Governor's tax proposal, but Burton is kidding himself if he thinks voters will be happy to see yet another tax plan on the ballot. Of course, with AB 32 soon to be in full swing and a measure to shut down nuclear power possibly coming to the same ballot, you might want to investigate your job and housing options out of state if Burton's bill passes.

Also, we couldn't help but notice this interesting dissection of the Brown plan, from John Fensterwald at Educated Guess. We've already noted the Governor's slipperiness in describing his plan, but it looks like we were being too kind. In his "open letter to the people" and elsewhere, Brown and his supporters have characterized the $7 billion plan as essential to preserving funding for K-12 schools and public safety, and poll support for this plan is predicated on the idea that the funds will go to education. Yet, as Fensterwald explains, voters hoping for a $7 billion infusion of funds to public schools should look elsewhere. For one thing, Brown isn't proposing to increase Prop 98 funding by that amount, only to increase school funds in the course of raising taxes. Yet Prop 98 only requires that 40-50% of every tax increase go to public schools; so, realistically, you'd be looking at $3.5 million at most. What's more, Brown's plan also calls for voters to shift $5 billion out of the General Fund budget to pay for things like county realignment; this could shave more than a billion dollars off the total funds schools would see from the tax hike. The end result of all this is that voters will be asked to cough up $7 billion in taxes so that $2 billion can go to schools, with the rest presumably disappearing into the warren of cronyism in Sacramento.

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