This past November, disaster was imminent in California and it wasn’t going to be the result of an earthquake. After years of spending more than it was bringing in, the state was on the edge of financial collapse. The state was unable to sustain its spending on education and public services, and schools were facing a $6 billion decrease in funding that would cause massive layoffs, program cuts, increased class size, and a shortened school year. The passage of Proposition 30, a temporary change in the state’s income and sales tax, staved off a disaster that had been growing since 1978, when Proposition 13 changed California’s ability to collect revenue forever.
Proposition 13 decreased property taxes by assessing a property’s value at its 1975 level, with any increase in assessment value tied to a rate of inflation not to exceed 2 percent. That rate, of course, did not keep pace with the Consumer Price Index. As a result, Californians have paid $528 billion less in taxes than they would have paid without Proposition 13 over the course of the past 34 years.1 The bill also asserted that properties could be reassessed only if there was a change in ownership, or if new construction was completed, and it created obstacles to any future tax increases.
In early 2012, Gov. Jerry Brown warned Californians of the impending crisis in the state’s revenue. Then he put together a ballot initiative to begin to address some aspects of the crisis. At the same time, another measure was underway: A coalition of education advocates, elected officials, and community and labor groups began to work on an initiative that would raise income taxes on Californians making more than $250,000 per year. Both groups realized that it would be hard to get the public to pass two measures, so they collaborated on a modified measure. The result was Proposition 30, which mandates:
• Increasing California’s sales tax from 7.25 percent to 7.5 percent by restoring a recently expired increase, and
• Creating additional tax brackets on the top 3 percent of Californians. The rate for those making more than $250,000 increased by 1 percent; more than $300,000 by 2 percent; and more than $500,000 by 3 percent.
After months of campaigning, Proposition 30 passed with more than 55 percent of the vote; it will bring in new revenue of about $6 billion to $9 billion each year until 2019. Some campaigned strenuously against the measure, including Charles Munger, vice chairman of Berkshire Hathaway, and the California Chamber of Commerce. Proposition 30 also beat out Proposition 38, put on the ballot by Molly Munger, Munger’s sister, which would have raised income tax on all Californians — including the poor, with incomes as low as $7,400 a year. It is worth noting that the increase to the top three tiers of income tax brings the highest tier to 13.3 percent — close to the highest in the nation. In a state where the high-tech and entertainment industries have created many millionaires, Proposition 30 was still able to pass, despite the increased burden it put on the state’s wealthiest citizens.
Recognizing an opportunity to impact the ballot, the Jewish nonprofit Bend the Arc, which focuses on economic opportunities and social justice, decided to allocate resources in support of Proposition 30. Having had positive experiences organizing communities through their religious institutions, the group reached out to the San Francisco Bay Area Jewish community to work on this measure for progressive taxation (a form of taxation that takes a larger percentage from those earning higher incomes than others). A campaign committee designed curricula specifically for Jewish house meetings and set up more than 20 such meetings around the area. More than 850 people over the course of three months discussed core Jewish values that address taxation and paying one’s fair share. Conversations were built on texts such as Deuteronomy 16:18-20, “Tzedek, tzedek, tirdof” (“Justice, justice, shall you pursue”), and on the writings of Rabbi Abraham Joshua Heschel: “In a free society, few are guilty, but all are responsible.” Discussions in the house meetings focused on how to build a just society wherein all inhabitants contribute to and share in the society’s obligations.
Much needed relief has arrived in California, at least for the next seven years. The coalition that helped pass Proposition 30 continues — now strategizing about how to dismantle California’s inequitable tax structure. With partners collaborating for a common good, California may once again provide the quality education and public services its citizens deserve.
1 The Sacramento-based Howard Jarvis Tax Association cites this figure.