AT HOME HE’S A TOURIST: JASON PANCAKE’S GUIDE TO THE NOVEMBER 6TH ELECTION

(Jason Pancake is a Guest Contributor to TRAffIK via his column At Home He’s a Tourist. Jason is a Harvard graduate, music aficionado, and bassist who also happens to work for the government. Jason is also our “Traffik School” dj on intraffikradio – Fridays at 3pm)

Before Election Day, take a moment to read the official state voter guides at http://voterguide.sos.ca.gov/. Here’s an interesting interview w/ the guy who writes the official nonpartisan analyses in the guide. http://www.latimes.com/news/opinion/commentary/la-oe-1031-morrison-taylor-california-legislative–20121031,0,2283641.column He suggests people need 3 to 4 hrs. to study EACH measure, but knows that doesn’t really happen, haha. These have good nonpartisan info as well: http://www.ballotpedia.org/wiki/index.php/California_2012_ballot_propositions (see under November 6) or http://www.californiachoices.org/ballot-measures-2012-11. Meanwhile, the LA Times has info on who donated how much to each measure: http://elections.latimes.com/voterguide-2012/

Disclaimer: These are my personal views and only reflect myself! No one is paying me for any of these positions. Even though I work for the government, I do not work for the State of CA.

Don’t Forget to Vote on Tuesday November 6th

The Propositions:

The ballot initiative process is basically a PR campaign like our two-party election system. Propositions usually come from either deals made by politicians or the political parties to get a project/goal on the ballot because it could not be resolved by the Legislative process, or propositions come from individuals/groups with ridiculous amounts of money to spend and who can get enough people to sign their petitions to put their favorite issues on the ballot. This means that anyone (including the political parties) with enough money/signatures can get their favorite issue on a ballot. Meanwhile, for the off chance a worthy Proposition does make it to the ballot (raising cigarette taxes, marriage equality, etc.) if there is any group that opposes it, they can spend massive amounts of money to trash the proposition. This is usually easy since many are complicated and awkwardly written because Propositions need to have the necessary language to be put into State Law.

These propositions affect State Law despite the fact that a relatively, embarrassingly low number of people vote. The biggest winners with the ballot measures I’d say are lawyers and people who sell advertising. With regards to the 2012 election, remember 2010’s Prop 14 which I recommended a No on? Well 14 passed, it meant the top 2 finishers in primary elections would be going head-to-head in the general election for most State races. That was a deal cut for one Republican Assemblyman’s vote to pass Arnold’s budget that year and funded by a lot of money from Super PACs. As a result, you will notice that in almost all State races this year’s, there will be no third party candidates on the ballot! Even though the parties themselves, Dems and Reps publicly both opposed 14, the measure got enough money and PR behind it to pass. Having “less extreme” Dem/Rep candidates sounds good, but at the end of the day, the winners of crowded primary races were those with the best funded (and thus most visible) campaigns.

Prop 30 (Temporary Taxes to Fund State Programs):  30 and 38 are propositions to raise certain taxes to help fill the $6 billion budget hole that CA is in this coming year. If both 30 and 38 pass, whichever gets more votes will be go into effect. You can read the details of 30 here http://voterguide.sos.ca.gov/propositions/30/analysis.htm I found this analysis helpful too: http://www.cbp.org/pdfs/2012/120911_Proposition_30_BB.pdf Basically, 30 was proposed by Gov. Brown as part of the deal to get this year’s budget passed. It is impossible for the CA legislature to raise taxes because they need a 2/3 majority to do so. People can be optimistic about trying to promote more bipartisanship, but I’ve been to meetings and that’s not how it works. Thus it usually falls on these complicated propositions to raise taxes. The bottom line is that the budget was passed w/ the requirement that if 30 doesn’t pass, $6 billion in cuts happen automatically. Schools/colleges in the state K-12 schools and community colleges would be hit the hardest and lose $5.3 billion next year(!). Cal State and UCs would lose $250 million and be crippled as well. UCs have said that they would have to raise student fees by 20% mid-year!  In addition local cities and counties would also lose money because the State shifted public safety requirements and prisoners down to the local level. While 38 is focused almost solely on K-12 and early education, 30 is more flexible w/ the spending because it‘s general fund.

Read the analyses for specifics, but basically, 30 would raise the sales tax by ¼ cent per $1 for 4 years (to put in perspective if you buy something for $100, you would pay 25 additional cents in tax. Not a huge impact.) and raise the tax 1% on individuals making $250-300K (joint filers making $500-600K), 2% on those making $300-500K (joint filers making $600K-1 million), and 3% for those making $500K (joint filers over $1 million) and up for 7 years. Even though $250K limit doesn’t sound like a huge amount, the income tax increase would affect only about 1% of CA tax filers, though these people account for about 40% of the state income taxes collected. So why did the Gov decide to put this type of measure on the ballot? Because it would probably be the only type of tax hike that voters would approve and one needed to avoid the major cuts. I agree in principle with his argument which is that in the boom of the mid 1990s through early 2000s, the wealthier benefited much more than the poor and working class, while over the recession, it has been the poor and working class have been hit the hardest. Therefore, his argument goes even though it sucks, the wealthiest 1% of taxpayers could afford this additional small percentage more so than rest.

As a tax policy it seems risky to rely this much on taxes from a small percentage of people since the amount they pay fluctuates, and it sort of encourages shady tax avoidance processes that are popular these days. However, it is also true that the wealthy have benefited the most over the last 25 years while the impact of the recession and most of the recent State budget cuts have mainly come at the expense of lower income individuals, the “middle” class, and public school teachers.

Your opinion of 30 may depend on how you feel about taxes being part of the ballot initiative process, and 1) whether you think taxing the wealthy should help out the state in light of the ever widening gap between the rich, poor, and “middle-class“, versus 2) whether you think it is still wrong to single out the rich and that schools can absorb the massive cuts.

Although Prop 30 would have a 1 to 3% impact on the top 1% of CA earners, between 1987 and 2010, the average inflation-adjusted income of the top 1% of California taxpayers increased by 82%! Meanwhile, the income of the top 10% of Californians rose by 43.4% over that time. On the other hand, for the bottom 40% of Californians, incomes have actually decreased by about 19% (adjusted for inflation). For those in the middle fifth of Californians, over that same time, income dropped by 16.8%, or from $42,000 to $35,000.

Whether, economic inequality or “fairness” has anything to do w/ tax policy is opinion, but I do believe that much of the way the economy, political process, and tax accounting have been shaped over the last 25-30 years has been tilted towards the wealthy. http://www.cbp.org/pdfs/2011/111101_A_Generation_of_Widening_Inequality.pdf Also, since almost all top 1% earners itemize their deductions (vs. 30% overall who itemize), either State income taxes paid or State sales taxes paid can be deducted from Federal taxes. Therefore, it might cut into their amount of Fed taxes paid.

Will the wealthy people flee the state if 30 passes? Probably not. This study suggests that factors other than individual state income tax are more likely to cause movement and the 1% weren’t particularly moving at a high rate: http://www.cbpp.org/cms/?fa=view&id=3556 Overall, there is no doubt that more people are leaving CA than moving here, and those that move tend to have more money than those that move in, however, it doesn’t seem like the wealthiest (those affected by 30) who are moving. The study makes sense to me because the reason most people likely leave CA is because it is much cheaper to buy/rent a house elsewhere in places like Arizona, Texas, and Nevada. It is also why within CA, places like San Bernardino and Riverside grew so much in population. This study was also in the news :  http://latimesblogs.latimes.com/california-politics/2012/10/california-millionaires-taxes.html It was feared top earners would move after Prop 63 passed in 2004, which raised the income tax on millionaires to pay for mental health projects, but it didn‘t appear to be the case. My general instinct is also that the places that people move to will “catch up“, so to say, and also go through major state problems of their own, particularly NV and AZ (water supplies), and TX (drought, neglect in health issue, water supply). Although, I think it will always be hard for CA to compete when you can by a mansion elsewhere for the price of a tiny loft in LA or SF. As long as people desire to have a large house, yard, nice car, and big TV, people will be drawn to places where they can afford the luxury. Thus, people who can afford the luxury in CA aren’t as likely to move to follow those dreams, compared to those with less. (more…)

Nov 01, 2012 | Categories: Life | Tags: At Home He's a Tourist, Election, Election 2012, Jason Pancake, Vote | 2 Comments »