I Found $3.5 Billion for the People: We Need a Permanent Alliance to Get It
By Mark McDermott
For years, I have been arguing that our state’s progressive movements need to create a permanent alliance to move forward decisively. Equally important is learning from movements in other states. Our consistent failures on tax reform make this point.
In January, California’s tax system was ranked 2nd best while our state was ranked 50th in terms of fairness to working people and the poor This is not new. Our poorest 20% of families, average income $11,900, pay 16.8% of their income in state and local taxes. Our richest 1%, average income $1.52 million, pay 2.4%. Do you know anyone who thinks this is fair, just or healthy for our state? I don’t. Unfortunately 30 years of Democratic governors, combined with many years of Democratic control of the Legislature, has failed to bring tax fairness.
In 2010, progressives pushed Initiative 1098 calling for a modest state income tax on individuals earning more than $200,000 and couples earning more than $400,000. It was crushed 64% to 36%. We can’t claim our opponents bought the election. It is one thing to be attacked and lose badly. It is much worse to pick a big fight and get stomped. In 2012, California voters approved Proposition 30, 55% to 45%.
It raised the state income tax rate to 12.3% on incomes over $500,000 and a 13.3% rate on incomes over $1 million. Our counterparts in California picked a big fight and won big.
Over many years, our counterparts in California have built more public support for fair taxes, passed a fair income tax, and have the power to elect a governor who actively fought to raise the income tax on the wealthy.
They correctly understood their voters. We did not. We did not do the needed multi-year statewide grassroots educational work on this issue. We also lack a permanent statewide alliance that brings together our many progressive movements to shift our political culture needed to win big on taxes and other key issues. This is a decades-long problem.
In January, hundreds of organizations working for economic, social, racial and environmental justice began lobbying in Olympia for increased funding. I support many of them with both money and time. I want us to win big. At the end of the session, I fear too many will return home again disappointed and largely empty handed. This is both predictable and a longstanding tradition. The result will be continued underfunding of programs which address the legitimate needs of working people, students, educators, environmentalists, people of color, women, immigrants, people with disabilities, the elderly, the mentally ill, and others.
Let’s compare California and our state. They have 111 billionaires, 1st in the country. We rank 7th with 12. Clearly the super-wealthy in California are doing quite well.
In California, the poorest 20% of families, average income $13,900, pay 10.5% in state and local taxes. The richest 1%, average income $1.97 million, pay 8.7% after using federal tax breaks to write off their state taxes.
Let’s have our richest 1% pay the same rate of taxation as California’s richest 1%. Their rate rises from 2.4% to 8.7%. Paying 2.4% nets $36,000 in taxes. Paying 8.7% nets $132,000. A tax increase of $96,000 per year per family. WOW!!! This simple change will raise at least $3.5 billion for the two year budget. I bet everyone I know can think of great ways to spend the money. We have a problem. Corporate Washington and their allies will oppose it. Convincing the people of our state will also be a challenge unless we do our work well.
This is only one of several great ways to raise billions to meet the needs of the people. Getting there is the problem. Without a permanent statewide alliance that brings all of us together to win big on many key issues, the story I have told is all too likely to continue. I hope I am wrong, but I fear I’m right. We have a choice on how we organize ourselves for this long-term fight for tax reform and our much broader agenda for a just, equitable, sustainable and thriving state. Failing to make the right choice will help continue the many injustices in our state. If you disagree with the need for a permanent multimovement alliance to win big, what is your alternative approach?
Mark McDermott is the chair of PSARA’s Education Committee.