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This is the ninth part of a series of posts analyzing California’s propositions:


An Unfortunate Proposition...

There are two revenue-increasing propositions before the public. There is Proposition 30, the good one backed by Jerry Brown, and Proposition 38, the bad one. You should vote yes on Proposition 30 and no on Proposition 38. Unfortunately, that's probably going to confuse a lot of people.

More below.

Proposition 38 is pushed by Molly Munger, a well-meaning attorney (funny how so many of the propositions have such well-meaning intentions yet bad consequences).

Basically, it's an income tax increase. The tax increase is pretty huge; it catches even lower-income residents. Individuals with income over $7,316 and families or joint filers with income over $14,632 will have their taxes raised. The chart below, taken from the legislative analyst, explains in more detail:


Current and Proposed Personal Income Tax Rates Under Proposition 38
Single Filer’s
Taxable Incomea
Joint Filers’
Taxable Incomea
Head-of-Household
Filer’s
Taxable Incomea
Current
Marginal
Tax Rateb
Proposed
Additional
Marginal Tax Rateb
$0–$7,316

$0–$14,632

$0–$14,642

1.0%


7,316–17,346

14,632–34,692

14,642–34,692

2.0

0.4%

17,346–27,377

34,692–54,754

34,692–44,721

4.0

0.7

27,377–38,004

54,754–76,008

44,721–55,348

6.0

1.1

38,004–48,029

76,008–96,058

55,348–65,376

8.0

1.4

48,029–100,000

96,058–200,000

65,376–136,118

9.3

1.6

100,000–250,000

200,000–500,000

136,118–340,294

9.3

1.8

250,000–500,000

500,000–1,000,000

340,294–680,589

9.3

1.9

500,000–1,000,000

1,000,000–2,000,000

680,589–1,361,178

9.3

2.0

1,000,000–2,500,000

2,000,000–5,000,000

1,361,178–3,402,944

9.3

2.1

Over 2,500,000

Over 5,000,000

Over 3,402,944

9.3

2.2

a  Income brackets shown were in effect for 2011 and will be adjusted for inflation in future years. Single filers also include married individuals and registered domestic partners (RDPs) who file taxes separately. Joint filers include married and RDP couples who file jointly, as well as qualified widows or widowers with a dependent child.

b  Marginal tax rates apply to taxable income in each tax bracket listed. For example, a single tax filer with taxable income of $15,000 could have had a 2011 tax liability under current tax rates of $227: the sum of $73 (which equals 1 percent of the filer’s first $7,316 of income) and $154 (2 percent of the filer’s income over $7,316). This tax liability would be reduced—and potentially eliminated—by personal, dependent, senior, and other tax credits, among other factors. The proposed additional tax rates would take effect beginning in 2013 and end in 2024. Current tax rates listed exclude the mental health tax rate of 1 percent for taxable income in excess of $1 million.

In contrast, Proposition 30's income tax only affects individuals with income over $250,000, joint filers with income over $500,000, and head-of-household's with over $340,000.

The revenue raised goes mostly to education, with the rest to repay state debt. Proposition 38's revenues go to a new fund called the California Education Trust Fund. There are three ways the revenue is distributed: to schools, to ECE (Early Care and Education) programs, and to state debt. The amount given to each each differs per year, although schools get the majority and ECE gets the least. Of the money given to schools 70% goes to education program grants; 18% goes to low-income student grants; and 12% goes to training, technology, and teaching materials grants. Of the amount given to ECE programs, a minority goes to restoring cuts in current ECE programs and the rest goes to expanding the programs (e.g. 51% goes to subsidized preschool for children aged three to five form low-income families). The rest pays state debt. From the legislative analyst:


Allocation of Revenues Raised by Proposition 38
2013–14
and
2014–15
2015–16
and
2016–17
2017–18
Through
2023–24
Schools 60% 60% 85%
Early Care and Education (ECE) 10 10 15
State debt payments 30 30a a
Totals 100% 100% 100%
Growth limit on allocations to schools and ECE programsa No Yes Yes
a  Reflects minimum share dedicated to state debt payments. Revenues beyond growth limit also would be used to make debt payments.
It's all very long and complicated. In the California official voter information guide, the legislative analysis of Proposition 38 is the longest. Reading Proposition 38's legislative analysis made my head spin (even more than Proposition 31's legislative analysis). I don't like voting for propositions that make my head spin.

...Which Might Actually End Up Cutting Education!

Somewhat amazingly, Proposition 38 might not prevent huge education cuts next year. This is because the legislature passed a series of spending reduction called "trigger cuts" that would take effect if Proposition 30 was not approved. These include $5.354 billion from schools and community colleges, as well as $250 million each from the University of California and California State University systems. Tuition would certainly be raised at California state universities under these trigger cuts.

If Proposition 38 is approved and gets more votes than Proposition 30, then those education trigger cuts will still take place.

That means that under Proposition 38, college students at California state universities will still have their tuition raised (as well as their taxes). There will be both huge tax increases and huge spending cuts for education this year. Then next year there will be huge spending increases for education. That's a terribly unstable situation.

Remember: Proposition 30 is the good proposition, Proposition 38 the bad one. Vote yes on Proposition 30 and no on Proposition 38.

--inoljt

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Comment Preferences

  •  I'm not convinced that Munger (4+ / 0-)

    is well-meaning.  She's been running ads trashing Prop 30.

  •  I know Molly Munger is a Dem, but the cynic in me. (3+ / 0-)

    ....makes me believe that she launched her proposition to confuse the voters and have them defeat both proposals.

    Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. www.hamiltonproject.org

    by PatriciaVa on Fri Nov 02, 2012 at 08:44:41 PM PDT

  •  Furthermore, it is another (7+ / 0-)

    initiative funded by a wealthy individual seeking to influence public policy.  Mollie Munger ought to run for office if she wants to make laws.

    Good diary.

    It's the Supreme Court, stupid!

    by Radiowalla on Fri Nov 02, 2012 at 08:45:27 PM PDT

    •  it is the new 1%er accessory for 2012 (4+ / 0-)

         You have to have your own ballot measure.  Molly's brother Charles has 32. That Mercury Insurance owner has 33. The Facebook attorney, Chris Kelly (who ran a spectacularly bad race for CA Attorney General in 2010) has 35. The only one I support is 39, which was bankrolled by a hedge fund dude whose name escapes me.

          The only good thing I can say about Molly Munger is that she has a cool sounding name. Didn't Jimi Hendrix write a song about her? No, that was Dolly Dagger...

          On a more substantive note, the biggest problem I have with 38 is that it only funds K-12 and early childhood education while leaving the community colleges and universities to suffer from extreme budget cuts and tuition and fee increases. The crisis in CA higher education is at least as bad as the crisis of the public schools.

          To summarize: Molly Munger should go f@#K herself...

         

      Diehard Swingnut, disgruntled Democrat, age 54, new CA-30

      by Zack from the SFV on Fri Nov 02, 2012 at 09:09:08 PM PDT

      [ Parent ]

  •  i agree with you totally on this one - the idea (2+ / 0-)
    Recommended by:
    Inoljt, Dave in Northridge

    that people who make half the poverty level will have a tax increase is abominable!  had the floor started much higher, i would have supported it - but starting a tax increase on people making $7,316 a year?!?!?  give me a f*cking break!

    0.7 per cent of $7,316 is HUGE to the people with this low an income while 2.2 per cent on the $2,500,000 is f*cking nothing! (*oh, well, there goes that extra YACHT i wanted!).

    sure, it is only $51 or so on those good for nothing spendthrifts making $7k a year (like a friggin' tank of gas that can't be bought or a medication skipped).  it is damned insidious that this travesty is put out there - ANY tax increase on people so far below the poverty level that they have to climb a latter to see the basement is abhorant.

    vote NO! on 38 !!!

    (oh, and i voted today and i voted YES on 30 and NO on 38)
    (AND, of course, i voted for BARACK OBAMA!!! WOOT!!!)

    •  Those numbers are after all deductions are taken (0+ / 0-)

      so that first bracket is not getting anyone under the poverty line.

      Fry, don't be a hero! It's not covered by our health plan!

      by elfling on Sat Nov 03, 2012 at 05:32:47 PM PDT

      [ Parent ]

      •  elfing, i am in that category - my income is (1+ / 0-)
        Recommended by:
        Inoljt

        only 11,364.

        every month i have to borrow money to make it through to the next social security check.  i have lost my housing and must move because my rent was 1200 a month prior ot my unemployent running out.  i don't have it.

        my expenses aren't "deductibles" - i'm on food stamps and medicare - my only expenses are keeping my old car running and on safe tires and livig the commitment i made to my now 25 yr old horse who has been diagnosed with cushings and insulin resistance and laminitis.

        i refuse to kill him because i have fallen onto hard times.  i will emerge, just don't know when - a year or longer it may take.

        this doesn't take into consideration rent, utilities, phone, car expenses that many like myself face.  we are living, no - teetering - on the edge!

        putting an unfair disproportional tax on the lowest categories of income is as cynical as what romney/ryan want to do.  taxing anyperson who is below the poverty level while putting a pittance on the very weatlhy while refusing to raise property taxes on these megamilliondollar homes is just obscene.

        take from the poorest but don't take the fair property tax tht would render that proposition unnecessary.

        i votes a resounding NO! on that proposition... not just because of my own sitution (which WILL change), but for the folks living soley on social security.

        this was wrong when the gopers proposed it in the house and it is wrong for the locals to do the same!

  •  Many of your recommendations are wackoo (2+ / 0-)
    Recommended by:
    MrPlow, Dave in Northridge

    The CA DNC recommends YES on 35, 36,37, & is neutral on 39.
    I wasted my time reading your "analysis" on 36--what an embarrassment. If the rest on your work is comparable, you should probably find another way to spent your time.

    Warren is neither a Clintonesque triangulator nor an Obamaesque conciliator. She is a throwback to a more combative progressive tradition, and her candidacy is a test of whether that approach can still appeal to voters.-J. Toobin "New Yorker"

    by chuck utzman on Fri Nov 02, 2012 at 10:28:48 PM PDT

  •  Amazing (0+ / 0-)

    You go after 38 for being too regressive and don't even mention 30's sales tax component (which if anything hits the poor harder)?  That's just dishonest.

    And just FYI, 38 was nearly finished with signature gathering by the time Jerry floated 30.  Rather than negotiate something with Munger, he decided to just strong-arm her into dropping hers.  It's a full-court press, just as with the Delta tunnels and the train.  I can't say that I care much for the approach.  

    I'm not sure about 38, but since 30 doesn't even solve the state's long-term budget problem (it fails to raise enough money, and leaves Republican-sponsored tax restrictions like Prop. 13 intact), I'm voting against it.  Yes, things will suck even more for a while after it loses, but I think we'll then see a more comprehensive fix put forward.

    •  The sales tax (0+ / 0-)

      has been higher in the past; it's not a large increase.

      Please consider voting yes on 30. The idea that the failure of both initiatives will somehow cause the legislature to "get their house in (some unspecified) order" defies history and common sense. The reality is that the California state budget is down in actual cash by around 15% and the need has only gone up.

      Schools will face a $457 cut per student on top of the cuts we have already endured. This year, we get ~79% of what we're supposed to get ... and on top of that, the state is actually only going to send 60% of what they are promising in cash this year. Schools have been protecting programs and staff by spending down reserves; most don't have any reserves left. Some districts will cut their school year to 160 days from 180, as the legislature allows, if this measure fails.

      Fry, don't be a hero! It's not covered by our health plan!

      by elfling on Sat Nov 03, 2012 at 08:43:56 AM PDT

      [ Parent ]

    •  Well that sucks. (0+ / 0-)

      Especially since recent polling shows 30 doing badly. 30 needs all the votes that it can get.

      An approach that raised taxes by more (e.g. 38) and that got rid of the two-thirds tax rule would probably not gain the support of the majority of Californians. Even 30, which you say isn't doing enough, might very well fail this year.

      The perfect shouldn't be the enemy of the good, imo.

      http://mypolitikal.com/

      by Inoljt on Sat Nov 03, 2012 at 12:01:24 PM PDT

      [ Parent ]

  •  I am voting yes on both 30 and 38 (0+ / 0-)

    I prefer 30 because the money goes into the school general fund and is not restricted; schools need general fund money.

    It's unlikely 38 will pass. If I thought both had a chance of passing I might rethink my plan, but schools will be better off if one or both pass than if both fail.

    As for the taxes starting at $7,316, keep in mind this is after all your deductions are taken, which means that for most people they'll be making a middle income wage, not poverty wages.

    Fry, don't be a hero! It's not covered by our health plan!

    by elfling on Sat Nov 03, 2012 at 08:40:14 AM PDT

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