Propositions 41 and 42 raise questions about taxation in California that are worthy of discussion and debate: Should wealth be taxed along with income? Should any new taxes be exempt from the state’s 1979 constitutional spending limit?
But these measures don’t just raise those questions, they close the door on them altogether – while trying to evade any kind of serious public discussion. That’s because the intent behind both appears to be stopping a third measure on the Nov. 3 statewide ballot: Proposition 40, the billionaire tax.
Why do I believe these two propositions are red herrings? Consider their origins: Both were put on the ballot by the same group of billionaires, led by Google co-founder Sergey Brin, that is in a pitched battle against Proposition 40. For obvious reasons they don’t want the state to impose a tax on their wealth.
Smart money vs. dark money: Support Golden State’s reporting and analysis on all 14 propositions on the Nov. 3 ballot by making a tax-deductible gift. It’s the smartest donation you can make this election cycle.
Also consider the measures’ content: Both have provisions that conflict with Proposition 40. When voters pass conflicting propositions, state law says the one with the most votes prevails.
Polls suggest this may doom Proposition 40 even if it gets more than 50% of the vote. According to a survey by the Public Policy Institute of California released last week, 52% of voters support Proposition 40, but 54% support Proposition 42, a constitutional amendment that would prohibit new taxes on financial assets and personal property and retroactive taxes.
That isn't surprising considering the proponents are pretending that Proposition 42 is about stopping the state from taxing savings accounts on working people and public pensions of firefighters and police officers, even though no one has seriously suggested doing so. (While there have been a few bills proposing wealth taxes filed in the state Legislature in recent years, they all stalled before getting a single vote.) However, proponents know that voters have much more sympathy for public safety workers than tech titans and venture capitalists.
Proposition 41 is similarly opaque. Ostensibly, the proposition is intended to stop government waste by requiring the state auditor to examine any new special tax measures before the election and conduct regular audits of existing special taxes. (A “special” tax is one that is intended to raise revenue for a specific purpose, such as backfilling federal Medicaid cuts, as Proposition 40 would do.)
Golden State staff
While it’s not a bad idea to regularly audit special taxes and provide voters some additional expert analysis as they consider a new tax, it’s the second provision that is the most consequential – and least talked about by the campaign.
Specifically, Proposition 41 prohibits any new special tax from being exempt from the state’s constitutional spending cap known as the Gann Limit, which is intended to keep spending in line with economic and population growth so a hole isn’t blown in the budget down the road. This affects Proposition 40, because it would exempt the estimated $100 billion it raises over five years from state spending limits.
Should California apply the provisions of a 47-year-old spending limit to laws addressing today’s economic realities? Maybe. But that’s a debate that ought to be conducted outside a hasty ballot measure campaign.
Paul Thornton
Furthermore, the measure's backers barely mention this significant provision in their argument in the state’s voter information guide, which may be the only thing voters read before making a decision.
The final nail in the coffin, as far as I am concerned, is that neither of these propositions existed until February, shortly after it became clear that Proposition 40 was headed for the November ballot. At that point the counterattack was launched by “Building a Better California,” a political action committee whose funders list reads like a who’s who of California billionaires. The group has spent tens of millions on these measures so far, including the cost of sending petitions directly to voters’ mailboxes. It’s also the group that is among the main funders of the No on Proposition 40 campaign.
Whatever you think about Proposition 40 (and I’m still working through that one myself), the way to fight it is with honest discussion and debate, not sneaky side attacks that misuse California’s direct democracy system.
What do you think? Golden State Report is a public forum. Send your responses for possible publication to forum@golden-state.org. And sign up for free to make sure you don’t miss anything.
