California Public Schools Need the Millionaires Tax


Posted on 02 February 2012

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By Lisa Schiff

California voters will have the opportunity and responsibility this November to take some of the state’s financial matters into their own hands. The Republican no-tax-do-or-die-pledge strangle-hold over the state legislature that makes it literally impossible to raise revenues is being sidestepped by a handful of tax measures presented to the public on the ballot. If ever there were an example of the initiative process being a check on other branches of government, this is it.

Several measures raising taxes and putting those resources towards education will be on the ballot, the most well-known being Governor Brown’s proposal. Other leading contenders are the Courage Campaign’s “Millionaires Tax” and the “Our Children, Our Future” initiative created and financed by civil rights attorney Molly Munger. Each of these measures attempts to fill some of the financial gap the state is facing and each of them has implications for California’s public schools. The Millionaires Tax, though, stands out as by far the best of the three.

There are two key strengths to the Courage Campaign’s initiative. First, it taxes the right people – those who are accruing the greatest amount of personal wealth but are proportionately contributing the least to our shared services, and thus our shared well being. In addition it’s got no end date, meaning it establishes permanent streams of revenue.

By contrast, Governor Brown’s strategy is a short-term (5-year) combination of a sales tax and a tax on high income earners (those with incomes higher than $250,000). But a sales tax is just another way of pushing costs down the income ladder and a short-term solution isn’t much better than no solution.

The Munger initiative more explicitly (and somewhat shockingly) places the financial burden where it absolutely shouldn’t go by making the threshold of her new tax start with those making $7,316 in income per year. It is also relatively short term, with a 2024 expiration date.

Fixing our schools can’t be done at the direct expense of the poorest among us – that is simply morally wrong and in the long-run, self defeating. Schools are already trying to fill some of the gaps for struggling families, providing, for instance, free or low-cost meals. Making ends harder to meet for poor families will just increase the direct challenges students will have to overcome in the classroom. Furthermore, increasing the tax burden on low-income families will exacerbate a disturbing trend.

The California Budget Project recently issued a report on who pays taxes, showing that those with the least income are paying the greatest share of their income and that an increasing number of high-income individuals are paying no personal state income tax. This inequitable situation needs to be reversed; the price of our collective needs must be distributed more proportionately and the Millionaires Tax is a solid step forward in achieving that necessary budgetary equilibrium.

The second important strength of the Millionaires Tax is the target of the new revenues. Public education is at the top of the list, but it’s not the only thing. The Courage Campaign folks have rightfully recognized that there are other essential services that have been decimated and that they need attention too – health care services for the low-income and elderly; safety services, such as fire and rescue; and roads. These issues affect education – kids who have no health care struggle in school.

While Brown’s measure targets some of the same areas, including education and public safety, it also targets corrections, an area that needs rethinking and retraction, not expansion. Munger’s initiative is restricted just to education, which is a huge mistake.

Privileging public education needs above other essential social services is an untenable and foolish compromise. While it may give schools money on the one hand, it ultimately takes resources away by further stressing and impoverishing many public school families, whose children will arrive at school needing increased support in non-education related areas. Just as important, segregating public education is ceding power to the divide and conquer strategy. We are kidding ourselves if we fail to recognize that the drive to reduce public investment in health care, safety and transportation is the same drive that’s pushing increased impoverishment and privatization of our schools.

At a time when our voices need to be powerfully united, public education advocates are unfortunately divided in their support over these measures. The California Teachers Association backs Brown’s initiative, the California PTA backs Munger’s initiative, and the California Federation of Teachers supports the Millionares Tax.

These endorsements should not be taken at face value – voters will need to do a bit of critical analysis and compare these competing solutions for themselves. Once they do, public education supporters who are looking for real change generated in an equitable, sustainable way will have a clear and easy choice - the Courage Campaign's Millionaires Tax.

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Lisa Schiff is the parent of two children in the San Francisco Unified School District and is a member of Parents for Public Schools of San Francisco and the PTA. This article originally appeared on Beyond Chron.

California has consistently raised taxes over the last several years. It now has about the highest sales tax and income tax in the nation. This has resulted in a steady stream of taxpayers leaving the state. California is literally driving is taxbase to other states. At some point the solution to all problems cannot be to, yet again, raise taxes.

If California raises taxes, here is what will happen. A year or two down the road they will discover that not as much revenue was raised as projected. The state's deficit does not go down and we will be talking two years down the road of raising taxes, yet again. It is just a never ending suck for more money.

Same ignorant right wing talking points yet again. Of course, California is in the budget hole it is because of all the TAX CUTS it has instituted over the past couple of decades, including for corporations. The fact that we have the disastrous Prop 13 AND that we're only 1 of 3 states in the nation that require a super majority to raise taxes at all BOTH DISPROVE your "argument".

A few basic points based on numbers crunched from the California Budget Project:

The Share of Corporate Income Paid in Taxes Has Fallen by Nearly Half Since 1981

Tax Cuts Enacted Since 1993 in CA Cost $11.7 Billion in 2008-09 alone...

Lowest-Income Households Pay the Largest Share of Their Income in State and Local Taxes: Bottom fifth pays 11.7%, top 1% pays 7.1%.

Tax policies and economic trends are largest contributor to the state’s budget problems:

Corporate income taxes have declined over time as a share of General Fund revenues and as a share of corporate profits. If corporations had paid the same share of their profits in corporate taxes in 2006 as they did in 1981, corporate tax collections would have been $8.4 billion higher.

Extending the Bush tax cuts (overwhelmingly for the rich) alone cost California $14 billion this year...

Add to that the recession caused by Wall Street induced housing bubble and you have the other piece of our deficit puzzle.

Its of course also a myth that those poor rich people (this would tax only what people make ABOVE $1 million a year)are leaving the state...in fact, last year alone, the number of millionaires in California increased by 27%...even as they are taxed at a lower proportional rate than the poor.

Think Mitt Romney...taxed at less than 14% on the over $20 million he "made"...by doing nothing.

As we know (not you, but as educated people know), the rich are taxed at the lowest rate in 60 years yet have a larger share of the wealth than at any time in 80 years. This, at a time we are devastating education, health services, infrastructure and public safety?

Why in the world would we not tax the super rich a tiny bit more to keep our state competitive and the economy growing?

The top 1% in this country have more wealth than bottom 90% combined (YET they pay half the tax rate on ordinary income prior to 1981)....and the 6 Walton children from Walmart have more wealth than the bottom 30% of America COMBINED....yet are taxed at about 17%.

As the California Budget Project notes, "In response to sizeable budget shortfalls, lawmakers have repeatedly cut state spending in recent years. The Legislature reduced General Fund spending from $103.0 billion in 2007-08 to $87.3 billion in 2009-10 – a drop of 15.3 percent – as policymakers responded to the dramatic decline in revenues caused by the most severe economic downturn since the 1930s. In 2010-11, General Fund spending is estimated to be lower as a share of the state’s economy than in 33 of the prior 40 years, and expenditures will fall further under the spending plan approved by the Legislature in March."

A CBP analysis of state data shows that the cumulative impact of these cuts amounts to $2.7 billion between 2008-09 and 2011-12. These cuts require Californians with Medi-Cal coverage to pay more out of pocket for health services, reduce patients’ access to health services, and require seniors and persons with disabilities to enroll in managed care plans. This has led to Reduced funding that counties use to operate the Medi-Cal Program; Eliminated state support for community clinics; Required seniors to pay Medicare premiums; Reduced payments to medical providers by 10 percent; Required Medi-Cal enrollees to pay more for health services; and Eliminated coverage for adult dental care and other benefits."

A millionaires tax is exactly what's needed if we are to make the most basic public interest investments at a time they're needed most. Or, we can continue to go the Banana Republic route...with the rich getting richer, investments in our future getting smaller (and the safety net that provides a lifeline to growing numbers of Californians), and the poor (new study shows 1 in 2 Americans qualify as poor now) increasing.

Thankfully, polls show about 70% support for this tax...and remember too, the economy never did better than when taxes on the rich were at its highest (1950's through 1970's).

So, since California's taxes are so high that obviously explains why the California economy is doing so well. And, of course, it explains why we have such a low unemployment rate. Well, lets make it better and raise those taxes higher!

As data shows, and I just explained (I realize you're not very bright though), taxes, especially on the rich, are at near all time lows...lowest in 60 years in fact (see Romney, see recent study on corporate taxes by CALPIRG...see ALL KNOWN DATA)...with their share of wealth being the highest in 80 years. The economy was booming when wealth disparity was far smaller, and taxes on the rich were far higher.

I sometimes can't tell if you knuckle dragging trollers that come to this site to spread Fox talking points are actually young children, mentally challenged, or just joking...by trying to out stupid one another. In either case, I'm sure your parents are proud.

So, Jeffson...

Why would someone of means stay in CA when he can move to, say NV side of Tahoe, and then come back & forth to CA for visits (under 180days)?

Don't kill the goose. At a certain point CA's B.S. & taxes drive flexible people away.

I'd say a huge fraction of NV-Tahoe area residents are Silicon Valley software types that tired of CA taxes on their success/acheivements. They drop into CA for visits or certain types of shopping (not covered by Amazon) and then exit.

Well, sure, many people leave California and much of the reason is for tax purposes. consider the following article:

http://www.taxabletalk.com/2011/12/06/california-has-lost-over-720000-ta...

From 1993 to 2008, California lost 720,000 taxpayers and $48 billion in AGI. This average AGI is way above average, partiuclarly if you adjust for inflation. It is the prime reason that California's per capit income is going down and has been going down for a long time. It used to be that you made more to live in California. Now, the premium is so small it doesn't even make up for the taxes, much less the cost of living.

So, just why do the Republican legislators have such strong objection to raising taxes? What are they hearing from their constituents? Who are those constituents? Something is missing in this overly simplistic discussion.