| Back to Table of Contents | |
Back to Partisan Home |
| Previous Section | Next Section |
In Propositions 57 and 58, the governor and the legislature have forged a double-edged sword with which to bleed the California working class.
Proposition 57 creates a $15 billion bond issue to pay off debts and plug up the budget hole with "no new taxes." But all it really does is extend the debt further into the future, creating more debt service. The debt will eventually be paid, and if there are no new taxes, there will be more budget cuts. We are already seeing higher education, health care, transportation, and environmental protection being cut to shreds.
Proposition 58 promises that if the voters pass the Prop 57 bonds, the legislature will balance the budget forever after with no more debt. At least, no more long-term debt. Maybe just a little short-term debt.
The problem with Proposition 58 is that it enables Proposition 57 and allows the legislature to avoid the real issue: how do we raise the money necessary to finance the services the people of California need?
The Peace and Freedom Party usually opposes bond financing because it evades fair progressive taxation and gives taxpayer money to wealthy investors, who are the only ones who purchase state government bonds. Interest income paid to the wealthy is exempt from federal income tax. This tax benefit results in lower interest rates paid on the bonds, so that it only makes sense for those in top tax brackets, who can take full advantage of the exemption, to buy them and receive tax money taken from the pockets of California workers. The federal tax break is paid for by all workers in the U.S. through the additional federal taxes which they must pay to make up for this lost federal income.
The cost of government under the present system should be paid by a genuinely progressive system of taxation. There is plenty of room for California's progressive personal income tax to be more progressive. Even Republican governors Ronald Reagan and Pete Wilson passed temporary increases on the wealthiest taxpayers during earlier recessions.
The overall nature of California's tax system is highly regressive. In 2002, the poorest one-fifth (measured by income) of California's working-age families, with an average income of $11,100, spent an average of 11.3% of that income on state taxes. By contrast, the wealthiest one percent, with an average income of $1.6 million, spent an average of 7.2% of their income on state taxes. This is primarily due to the sales tax, which is the source of a significant portion of state revenue and which is paid proportionally to a far greater extent by low-income families, notwithstanding the exemption of non-prepared food from that tax. Likewise, low-income families pay a greater portion of their income on property tax, either directly or through their rent.
It is true that low-income workers pay a relatively small amount for the state's personal income tax. But this is more than made up for by the high amounts they pay on sales and property taxes. Further, the many tax credits and write-offs that are part of the personal income tax scheme do not benefit them because they do not have the income tax liability that the credits and write-offs might otherwise reduce. There are no comparable credits for the regressive taxes paid by the lowest income workers. Replacing the sales tax with a higher personal income tax on the rich would transfer federal money to California because of the federal tax deduction for state income taxes.
Finally, poor people do not inherit money. California has no inheritance tax, creating more tax-free unearned income for the wealthy. As the federal estate tax is phased out, we have no way to recoup California's portion of this revenue.
The Peace and Freedom Party's platform section on taxes states:
Public services and infrastructure have deteriorated as government has increasingly shifted the tax burden from corporations to workers. Our long-range goal is a socialist society without conventional taxes, with public services to be funded from the proceeds of social production. We demand:
[Bob Evans is recording secretary of the Peace & Freedom Party state central committee and an elected member of the Berkeley Rent Stabilization Board.]
| Back to Table of Contents | |
Back to Partisan Home |
| Previous Section | Next Section |