Hope for a Better Conversation on Taxes

By Elaine Mejia, Senior Program Associate

Big TaxIn 1978 Californians ushered in the modern anti-tax era with the passage of Proposition 13, the landmark measure that capped property taxes. California’s fiscal house has been in a state of disorder ever since.

But the movement didn’t stay in California. It swept across the country, and for more than 30 years talking about the need for adequate public revenues has, by and large, been a political liability.

But on Election Day, Californians turned a page in their fiscal chapter with the passage of Proposition 30, a measure that will increase income and sales taxes and direct the resulting revenues to education and public safety. Perhaps in the same way that Proposition 13 foretold the beginning of an anti-tax era, Proposition 30 could signal the start of a new, more pragmatic conversation about taxes in America.

It wasn’t only Californians who made a fresh statement about taxes in the November elections. Voters in several states rejected proposals that would have crippled the ability of lawmakers to raise revenues. Voters in Florida defeated a constitutional amendment that would have put in place a strict formula limiting revenue growth. In Michigan, voters rejected an amendment that would have required a two-thirds supermajority in the legislature to enact future tax increases. And voters in New Hampshire voted down a measure that would have prevented the state legislature from enacting a state income tax in the future.

Voters in other states and cities also chose to increase revenues. Arkansas voters passed a cigarette tax increase, and Oregon voters decided to reform the corporate income tax, raising revenues for education. (To be clear, tax-cut proposals also succeeded, with five states—Louisiana, Kansas, Arizona, Florida and Oklahoma—rolling back or capping various property taxes.)

These pro-revenue votes may signal shift in public thinking about spending and taxes. A Gallup poll taken since the election found, “Forty-five percent of Americans now say they favor reducing the federal budget deficit with an equal balance of tax increases and spending cuts, up from 32% last year. At the same time, the percentage favoring an emphasis on spending cuts is now 40%, down from 50% last year, while the percentage in favor of reducing the deficit primarily through tax increases is unchanged at 11%.”

But let’s not kid ourselves. Fostering a more reasonable, pragmatic understanding and conversation about taxes isn’t going to be easy. Again, we can look to the Golden State for direction. Despite the impressive work of advocates for Proposition 30 in California, including Governor Jerry Brown, support for the initiative fell significantly in the waning weeks of the election season, and the measure passed by a narrow margin. The common themes of the attacks against the proposal were familiar ones. Opponents repeatedly warned that the initiative would just put more money into the hands of supposedly wasteful and corrupt politicians in Sacramento. Opponents cited recent high-profile examples of poor decisions made by state lawmakers. These attacks reflect what we already know from our research—people tend to think that government is nothing but politics and view it as a largely wasteful endeavor.

We already know some of the best responses to these types of attacks. First and foremost, we must be vigilant in connecting taxes to their purposes. We cannot allow tax conversations to be limited to who pays and how much or which “side” is in favor and which is against. We must keep the focus on where the money will go AND how those expenditures benefit communities, families, the economy, etc.

Much like eating right and exercising for health, taxes are never going to be wildly popular in and of themselves. But we can’t sustain our democracy and our quality of life without the things that taxes make possible. At least now, for the first time in a long time, a better public conversation seems within reach.

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