Harold Meyerson’s column in today’s Washington Post discusses California’s fiscal woes and how Proposition 13, passed 31 years ago, is to blame:
Amid the inflation of the late 1970s…the California model began to crumple. As incomes and property values rose, Sacramento’s tax revenue soared…frustrated Californians grumped to the polls and passed Proposition 13, which rolled back and then froze property taxes — effectively destroying the funding base of local governments and school districts…
Since 1978, state and local government in California has been funded chiefly by personal income taxes. Bank and corporation taxes have been steadily reduced. In the current recession, with state unemployment at 11 percent, tax revenue has fallen off a cliff.
But the problem with Proposition 13 wasn’t merely that it reduced revenue. It also made it very difficult to increase revenue. Raising taxes now requires a two-thirds vote of the legislature, though in 47 other states a simple majority suffices…
Harold’s got this exactly right… Proposition 13 gets it exactly wrong: we don’t need to make it harder for politicians to raise revenue. We need to make it harder for them to pass fiscally-irresponsible tax cuts. That’s why pay-go rules–and ones that apply to tax cuts as well as spending increases–make sense. Proposition 13 is like an anti-pay-go rule.
But what really fascinated me (made me wax nostalgic) in Harold’s column was the following:
The current Republican crop has refused in good times as well as bad to raise business or other taxes (increasing the tobacco tax, for instance, has failed each of the past 14 times it has come up for a vote). Abetted by little local Limbaughs who inflame Republican brains, they protest that the state already has the nation’s highest taxes. In fact, California ranks 18th among the states in percentage of personal income paid to state government…But the myth of soak-the-rich high taxation persists among Republicans — so much so that the GOP front-runner to succeed Arnold Schwarzenegger in next year’s gubernatorial election, former eBay CEO Meg Whitman, is calling for cuts in business tax rates even though the state is staring at a $21 billion deficit that it somehow has to close.
…because I think we should all be grateful that Meg Whitman is not our Secretary of the Treasury. Does anyone remember what presidential candidate McCain had suggested? (Here’s a link to the video clip, so you can wax nostalgic, too.)