Millionaires Tax merger is a risk and opportunity

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That simple concept has now gotten a bit more complicated

My first reaction to today’s news that the popular Millionaires Tax measure was merging with Gov. Jerry Brown’s broad-based tax measure was “What the fuck!?!?” Taxing millionaires had over two-thirds support in recent polls and seemed to clearly tap the tax-the-rich zeitgeist that animated and was amplified by the Occupy movement.

Now, it’s being married to a measure that increases the regressive sales tax and brings the income taxes increases down to those making $250,000 per year, possibly turning more self-interested voters against it. This just seemed to blow a golden opportunity to do the one simple thing that most Californians agree we need to do to address the state’s perpetual and deepening fiscal crisis: tax the rich.

But then I talked to Assembly member Tom Ammiano, someone with longstanding and unwavering progressive values, and he said, “It’s the art of the deal. It’s acceptable to me, not because it’s perfect.” While he’s not a fan of sales tax increases, he explained how it improves upon the Millionaires Tax in a couple key ways, and that is finally represents some new political cooperation after years of frustrating dysfunction in Sacramento.

“This is something we can build on,” Ammiano told me. “It’s a pretty good coming together.”

Clearly, there is value in creating a functional center-left coalition to counteract the inflexible conservatism that a shrinking minority of Republicans has used to mindlessly block all revenue measures, defund education, and plunge the state into a serious fiscal crisis. And it is good strategy  to reduce the number of competing tax measures on the ballot, and to broaden the coalition of supporters.  

But beyond those tactical benefits, the new measure is worth supporting on its merits. Ammiano notes that it actually raises more money than the Millionaires Tax (about $2 billion per year more) and frees up how that money can be spent (rather than limiting it solely to education).

“We raise more money over more years and we cut back his sales tax increase,” said Steve Hopcraft, a spokesperson for the campaign, noting that Brown’s proposed half-cent sales tax increase is now a quarter-cent increase and the measure now raises $3.3 billion per year from the top 2 percent of wage earners. “It’s a progressive measure that has almost a consensus now...It’s basically what we were proposing but with a quarter percent increase in the sales tax.”

And a expiration date that the Millionaires Tax didn’t have. But while the sales tax increase sunsets in four years, the income tax increases -- which range from a 1 percent bump for $250,000 earners to 3 percent for those making more than $1 million -- last for seven years.

So Brown’s measure, which had broad institutional support, gets better. And the Millionaires Tax -- developed by the California Federation of Teachers and others and receiving strong popular support -- gets watered down just a bit. I suppose that alright, if they can still make the ballot and win over voters in November.

That’s a big “if,” perhaps bigger today than it was yesterday. And if supporters of this measure blow this important opportunity -- after all, the threshold for approving tax increases drops to a simple majority only during presidential elections, so the stakes now are high -- then we’ll all pay a heavy price for this decision.