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Californians proved last week that voters will approve of tax increases if they have assurances that elected leaders will put the additional revenues to good purposes. In an outcome that surprised many, on Tuesday Golden State voters approved the Proposition 30 ballot measure requiring a tax increase that will raise about $6 billion a year.
Gov. Jerry Brown proposed the initiative as a way of finding funding for California's public schools and university system. For years California has been cutting spending to its public schools, leading to large classroom sizes, teacher layoffs, a lack of materials, and continued use of outdated schools. It has hindered efforts at education reform. Meanwhile the state's university system, once well-regarded for being affordable to in-state students, has seen a steady rise in tuition costs and fewer admissions. Community colleges will now increase the staffing necessary to add 20,000 new students, thanks to the added revenues.
The approval of the ballot initiative increases the California state sales tax by one-quarter of 1 percent and calls for graduated state income tax increases on those making $250,000 or more.
While it may surprise some that voters anywhere would vote to impose tax increases on themselves, it seems all the more remarkable in California. Remember, this is the land of Proposition 13. Passed in 1978 it placed an arbitrary limit on increases in property taxes and required a two-thirds vote of both houses of the California legislature to pass any tax increases.
The measure produced many unintended consequences. It has retarded home sales, placed California in a state of seemingly permanent fiscal crisis and led to a hodge-podge of special taxes and fees at the local level to try to get around its revenue-restricting measures.
In another interesting development, voters there also gave Democrats two-thirds control of both houses of the California legislature, providing that party the ability to raise taxes without Republican votes. But Gov. Brown said he would block any efforts to use the supermajority for a spending spree or to boost taxes to support it, mindful that such a move could be seen as an affront to voters who just approved the Proposition 30 tax measure.
The larger context, however, is that the California vote challenges the notion that voters never, ever want to see taxes increased. In reality, a majority of voters recognize that taxes sometimes have to go up. It is a lesson that should guide the debate soon to come in Washington about how to slow the growth of the federal deficit and begin to get the U.S. budget in balance. Both pre-election and exit polls showed a majority of voters support President Obama's call to allow the income tax rate on wealthier individuals to return to a pre-Bush level.
While not as dramatic as the California vote, we noted last week that Connecticut Republicans, in an effort to win seats in the state House and Senate, had campaigned against the tax increases approved under Gov. Dannel P. Malloy's administration to address this state's fiscal crisis. The strategy produced no net gain for Republicans in a Connecticut General Assembly still controlled by the Democratic Party.
At any level of government a balanced approached is best when it comes to tax and spending policies. How best to achieve that balance, however, is where political ideologies clash. California voters have mandated that more revenues are necessary to provide better balance there. Now it is time for Republicans in Washington to recognize, in the wake of the president's victory, that when it comes to tax policy they have to give a little too.