Who Needs Taxes?
April 25, 2019
By Bruce Lebedoff Anders
Special to the Observer
Oliver Wendell Holmes once said, "I hate paying taxes. But I love the civilization they give me". After reading the Howard Jarvis Taxpayers Association president, Jon Coupal's Guest Commentary in the Observer (4/11/'19) a reader might come away with the view that contrary to Holmes' common sense, taxes have no positive function and that in California taxes are out-of-control. According to Coupal, Proposition 13 is the California taxpayer's refuge. But Prop 13 has a dark side, not often acknowledged.
Prop 13 (1978) decreased property taxes for businesses and individual owners by about 57% and froze rates at the 1976 levels, capping any increases to no more than 2% per annum, keyed to inflation. This law resulted in dramatic cuts in education funding and a corresponding tailspin in the quality of public school conditions and achievement. This situation ultimately resulted in the passage of Prop 98 by voters in 1998. However, because Prop 98 is tied to the cyclical nature of the state's economy, funding for education is at best a guessing game and at worst, perennially inadequate.
Prop 13 also required that any new taxes, state or local, be approved by a 67% "super majority" - a term that hides in plain sight the fact that a majority is 50% plus one. A two-thirds vote on any issue is not exactly democratic and allows a minority to over-rule the majority's will. We see the consequences of this slight-of-hand which privileges the minority over the majority in the "election" of US presidential candidates who lose the popular vote. We see it too in California tax politicking beyond Prop 13 in the state legislature, where the army of corporate lobbyists persuade legislators to create tax breaks for their corporate clients - loopholes- which require only a simple majority. So, a simple majority of lawmakers to create a gifted tax rate for a corporation, but a "super majority" for you and I to enact a tax on ourselves to support our schools.
Resistance to increasing taxes to pay for improving or maintaining the quality of public schools often congeals around the mistaken notion that the California public school teachers' defined benefit pension plan is driving school districts into bankruptcy. Yet, according to the non-profit, non-partisan Economic Policy Institute, the average teacher suffers from a "teacher pay penalty" in total compensation, including pension and other benefits of 11% as compared to the identical professional demographic in the private sector. Researchers at the respected, conservative-leaning Hoover Institution estimate this pay gap at 22%, twice the size.
The naked truth is that public school education has been under-funded since the passage of Prop 13. Consider just one major issue, the funding (or lack thereof) for children with special needs, the blind, the hard of hearing, the autistic, the intellectually challenged, etc. These students may require reading specialists, one-on-one aids, occupational therapists, etc. Special education costs on average are twice those for other students. Despite the fact that state and federal laws guarantee a public school education to these students, neither the federal government nor the state of California provides enough money to educate them. In fact, the state does not earmark funding for these students, and as a result, most school districts' general funds, which have to pay approximately 60% of these costs, are very stressed.
Let's stipulate that no one likes paying taxes. But blindly slashing taxes leads to enormous suffering. Take the now notorious example of the state of Kansas in 2012. The governor, Sam Brownback, convinced his legislature to enact a large cut to income taxes, arguing that the result would spur economic growth. In fact, the economy did not keep up with the neighboring states' economies, and worse, funding to education, Medicaid, and infrastructure plummeted, and Kansas' bond ratings took a deep dive. The state had to reverse itself to recover from a $900 million deficit. Similarly, the recent federal tax cuts, which basically favor the rich and corporate interests, have already exploded the deficit. The Congressional Budget Office predicts a $1 trillion deficit by next year.
President Eisenhower reminded us, as he left office, "As we peer into society's future, we- you and I and our government- must avoid the impulse to live only for today, plundering for our own ease and convenience the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow".
We in the US tend to believe that we are over-taxed; yet our tax rates, even here in "high tax" California, are among the lowest as a percent of GDP of the 36 members of the Organization for Economic Cooperation and Development, that is, the 36 most developed world economies. Most of these countries seem to realize that taxes are a necessary, if painful, tool to fund government services providing for the education, health, welfare, and protection of their citizens. This does not mean that every tax proposed is worth voter support. But it also does not mean that we must knee jerk every time a new tax or a tax increase is proposed. The good citizen in Culver City and elsewhere will weigh the pros and cons and vote accordingly.