Taxing Reason

The Golden State's (Unhealthy) Single-Issue Politics

I’m sick and tired of taxes. And this week I suspect I’m not alone.

But don’t misunderstand me. My complaint isn’t mostly about paying taxes, although I take no more pleasure in it than the next guy. No, what I can’t abide is how taxes have come to dominate the California agenda. At the state Capitol this year it’s been all about taxes, all the time–namely whether, as part of the budget, to extend the temporary tax increase enacted in 2009 (along with a permanent tax cut for the biggest corporations.) Everything else has been pushed aside.

Imagine how this moment is going to look a couple of generations from now, when historians gather on an unseasonably cool 90-degree December afternoon in the Bay Area to talk about what happened in California in 2011.

The historians may wonder why the state in 2011 gave so little attention to the 9,000 premature deaths each year from fine particle air pollution. Having been lucky enough to have survived the great earthquakes that shook both the Bay Area and Los Angeles in the second decade of the century, they may ponder why the state was left so vulnerable, despite the inevitability of the deadly temblors, and the earlier cautionary tales from Chile, Haiti, and Japan. They may puzzle over why so many Californians in 2011 seemed more agitated over a tax that added a penny to the cost of a cup of coffee at McDonald’s than over the prospect of forcing 400,000 students out of the community colleges.

Not wanting to seem unprofessional, the historians will speak publicly about the seeming “failure of leadership” in early-century California. Privately, they will shake their heads and conclude their grandparents had been, well, nuts.

And they won’t be wrong. Measured against all the risks and governing challenges California faces, the tax issue that obsesses Sacramento and has Anne Gust Brown, the governor’s wife, yelling at Republicans in negotiations–extending taxes that amount to one-half of 1 percent of the state’s economic output–is trivial. It will have far less impact, one way or the other, on the state’s economic future than any of the subjects being neglected, from education to infrastructure to disaster preparedness.

The fact of the matter is that not one Californian in a thousand can say how much she pays in state and local taxes. This week millions of us are filing last-minute income tax returns. Before shipping them off, some of us may glance at the line for “total tax.” But most of us will remember only the action item at the bottom of the page, whether “amount due” or “overpaid.” Even those alert enough to notice the bottom line on their personal income tax are unlikely to also know how much they pay for the other levies–sales, corporation, fuel, property, excise, utility, and hotel taxes–that bring in more than two-thirds of the revenue for California governments.

So it should have come as no surprise that, when polled early this year, 64 percent of voters in the state did not know they had been paying the temporary taxes now at the center of California’s budget deadlock. Once alerted by the pollster to the tax increases, 43 percent hastened to say they had been hurt by the taxes they had never noticed. (These people were presumably among the majority of voters who told pollsters last fall that President Obama had raised their taxes when in fact he had cut them.) For most of us taxes are a mystery locked in a black box wrapped in a veil of ignorance.

How then have taxes that barely matter and to which most of us were oblivious become a political obsession?

It’s not because taxes have soared. Before the passage of Proposition 13 in 1978, California was home to some of the highest taxes in the nation. Now it falls between average and high average, the rank each year varying with the strength of the stock market and the capital gains that flow to Silicon Valley. We pay just a little more today in combined state and federal taxes than we paid in federal taxes alone a decade ago.

No, taxes dominate our discussion because a significant number of our fellow citizens have convinced themselves of an intellectual humbug: that tax levels are a matter of principle.

Over and over anti-tax politicians and their followers say they oppose Gov. Jerry Brown’s budget, with its proposal to extend the 2009 taxes for five more years, “on principle.”

But what exactly is the principle? That all taxation is theft? A few on the anarcho-libertarian fringe may believe that, though not many practicing conservative politicians. Most Republican elected officials believe in having, and paying for, some amount of government, if only to conduct prayer in the schools and control how women use their bodies.

Lacking a principle of their own, the anti-taxers wrap themselves in the trappings of the Boston Tea Party to give the humbug some heft by association. But the larceny only proves the opposite. The patriot mob that, with whoop and holler, clambered aboard English ships in 1773 to steep the East India Company’s tea in Boston Harbor wasn’t angry at the level of taxes. The tea on the ships was coming in at a reduced rate, a bit of corporate welfare handed out by London to help the East India Company’s struggling monopoly compete in the American market; think of the English policy as TARP for Big Tea.

“It wasn’t the price,” Harvard historian Jill Lepore writes about the original tea partiers. The patriots were rejecting the idea that Parliament could make laws for them without their being directly represented. “No taxation without representation,” they cried, with the emphasis on representation.

Those who whoop and holler today in California over taxes care only about the price. They have taken the patriots’ motto and reduced it to “less taxation.”

But “less” is not a principle. It’s a preference, a want, a desire. And “less” is no ordinary desire. It defies quantification or compromise. At any time, in any place, at any level of taxes, “less” is always the next step down the ladder, the next town down the road, a destination that can never be reached. “Less” is a desire that can never be fully sated.

Dressed up as principle, the desire turns into obsession. And to make matters worse, in California it is an obsession armed with the leverage of the constitutional requirement for a two-thirds vote to raise any tax or fee.

Almost no one likes to pay taxes. We flinch at how some of our money is used, be it for prisons or welfare or fat pensions. And that is how it should be.

But there is a difference between begrudging and obsessing. Begrudgers appreciate that our grandparents and parents paid for the schools that educated us, the dams that protect our homes and supply our water, and the research that spawned our gadgets. We accept that we have a duty to do the same for the next generation.

California could use a thoughtful conservatism to help us make those choices. Instead our conservatives busy themselves enforcing a no-tax zone. The problem is not just that their obsession is small-minded. It’s not that, like every obsession, it’s boring. The problem is it won’t get out of the way. It’s enough to make a governor’s wife scream.

Mark Paul is co-author, with Joe Mathews, of California Crackup: How Reform Broke the Golden State and How We Can Fix It.

*Photo courtesy of rwkvisual.


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