March Madness in California

After considerable negotiations, the number of tax measures headed to the November ballot has shrunk by one.  On March 14, Governor Brown and the California Federation of Teachers announced a compromise revenue initiative that will likely go to the voters this fall. The compromise slightly alters the Governor’s original proposal, although it preserves a combination of income and sales tax increases. Furthermore, the compromise initiative is consistent with both the Governor and the California Federation of Teachers’ approach of having the wealthiest Californians pay the majority of the tax revenues. More than three-quarters (78.8 percent ) of revenues raised by the compromise initiative would be paid by the top 1 percent of California taxpayers, a group that has experienced tremendous growth in incomes and takes home, on average, $1.7 million annually. The largely progressive tax increase of the hybrid initiative is aligned with the overall trend in income growth over the past two decades: the inflation-adjusted incomes of the top 1 percent increased by 50 percent between 1987 and 2009, while the incomes of the bottom 80 percent of Californians decreased. By limiting the impact on low-income individuals, who would see an average annual tax increase of only $24, the compromise measure relies primarily on the wealthiest Californians to provide necessary funding for our schools and other core public structures.

— Samar Lichtenstein