From Millionaires Tax to the 1% Tax

Over the last month and a half, the Ella Baker Center for Human Rights and the Millionaires Tax Coalition tirelessly collected signatures to qualify the Millionaires Tax initiative for the November 2012 ballot. We and our partners supported this initiative because  it was the most progressive tax proposal that wouldn’t cost a single penny for anyone making less than $1 million per year. This proposition was circulating along with two other revenue-creating measures, one of which was pushed by Governor Jerry Brown.

On March 14th a negotiated agreement was reached between the Millionaires Tax Coalition, Governor Brown, Senate President Pro-tem Steinberg, Speaker Pérez, and their allies to set aside the Millionaires Tax and join forces on a new initiative. These negotiations have created a united left front under a new proposition called Temporary Taxes to Fund Education, also known as the 1% Tax.

If you’re a civically engaged Californian voter, you’re probably wondering:

  1. What happened to the Millionaires Tax?
  2. What does the 1% Tax entail?
  3. Was the compromise a victory or a loss?

While I’m still in the process of answering these questions for myself, I want to share some insights.

What happened to the Millionaires Tax?
As of last Wednesday, the Millionaires Tax Coalition decided to stop collecting signatures for the Millionaires Tax ballot initiative and, instead push forward the 1% Tax initiative.

In order to understand the compromise, it is important to contextualize the political landscape and negotiation process between Governor Jerry Brown and the Millionaires Tax Coalition. Back in November 2011, the Millionaires Tax Coalition attempted to meet with the Governor’s office when news came out that he was drafting his own revenue proposition. Unfortunately, a meeting didn’t take place until both revenue propositions were filed.

In the process, core friends and allies joined forces with Governor Brown’s initiative, creating fractions within the left. Furthermore, Chevron, Bank of America, Wells Fargo, and PG&E publically attacked the Millionaires Tax, promising to invest millions of dollars to defeat it.

While it was expected for corporations and big banks to be in strong opposition to the Millionaires Tax, there was also a high likelihood of compromise between the Millionaires Tax Coalition and Governor Jerry Brown. Without compromise, there was major potential for infighting and competition between the different revenue measures, creating a smaller window of opportunity to pass any of the ballot measures we need desperately to generate money for California November 2012.

What does the 1% Tax entail?

  • Adds ¼ cent sales tax for four years
  • 1% income tax increase for individual filers over $250,00 and joint filer income over $500,000
  • 2% income tax increase for single filers over $300,000 and joint filer income over $600,000
  • 3% tax increase for incomes over $1 million
  • Income tax increase lasts for 7 years
  • Money goes to CA general fund instead of directly going to Education Institutions and Counties

Compared to the governor's original proposition this represents:

  • A 50% decrease in the sales tax,
  • An increase in the income tax on high incomes,
  • And more money to restore cuts (around $2 billion more).

Was the compromised Tax measure a victory or a loss?
Policy is a process interwoven with politics, compromise, and power that requires strategy and flexibility. In my opinion, the 1% Tax measure cannot be understood as simply an either/or, because it is a win, a loss, and a political reality all at the same time.

In one sense, I’m disappointed because the Millionaires Tax was more progressive then the negotiated 1% tax.  The income tax increase would have been permanent, there would have been no increase in sales tax, and money would have been directly allocated for higher education. Now we are dealing with a proposition that includes sales tax, a sunset clause, and no clear allocation to higher education.

On a positive note, this compromise exemplifies the growing political significance of labor and grassroots community coalitions across California in their ability to shift the political climate. While Governor Brown and the insiders of Sacramento were initially resistant to the Millionaires Tax Coalition, last Wednesday showed the MTC is a force to be reckoned with. The 1% Tax is more progressive then the governor’s initial proposition and it creates a united front against major corporate and right wing threats.

The new 1% Tax requires 1 million signatures over the next month to even qualify as a proposition. There is still a lot of work to be done to ensure this new agreement will be on the ballot.

As we go back and forth as to why this agreement was a political victory or another example of watered down policy, I’m left to ponder our long term dreams and visions as racial and economic justice advocates. We need to remember that the California ballot initiative process privileges money over people-power. Regardless of your stance on the 1% tax, we must continue the fight against income inequality and corporate loop holes that stand on the blood, sweat and tears of low-income people and people of color.

Just as the Millionaires Tax Coalition pushed the Governor’s office farther to the left, we must continue to honor and value the role of progressive community-based organizations and grassroots organizing. From the Occupy movement to the MTC, strategic pressure from the margins is necessary to move our governmental officials towards a more progressive policy front.