Ace in hole: Tax Bush-era breaks

Writer and occasional TOP-Ed contributor Peter Schrag reported this intriguing figure in a column in the California Progress Report this week: Continuing the Bush-era tax cuts for the top 5 percent of California earners will save those 888,000 taxpayers about $20.5 billion this year ($14 billion for the 1 percent earning an average $1.775 million and $6.5 billion for the 4 percent earning an average of $310,000). That, Schrag noted, equals about three-quarters of the $28 billion deficit the state will face over the next 18 months, or the entire deficit for 2011-12.

Schrag doesn’t suggest hitting up the rich for the full amount, but he suggests – and Gov. Jerry Brown should consider – grabbing a piece of it for the next year or two.

Instead, at this point, Brown reportedly will be asking voters this spring to continue the $8 billion in temporary taxes due to expire this year: 0.5 percent extra on  the car tax, 1 percent additional sales tax, and a 25 percent increase in the income tax rate – and offer a harrowing scenario of cuts to services if they are rejected.

Brown will be asking Californians to share the pain – a theme a raised at his inauguration. “The year ahead will demand courage and sacrifice,” he said. You know, like his great-grandfather, August Schuckman, who made the dangerous trek from Missouri to California in the 19th century, we’re all on the same wagon train and have to pull together for survival.

But, as Tony Quinn wrote in another column Monday, California voters have already rejected extending those taxes and he doubts they’ll change their minds.  Quinn christens the taxes the Working Families Tax Increase because they’re supposedly regressive (except for the sales tax increase, they’re really not). And he fans resentment over new taxes by citing a few cases of pension abuse. Expect more of that argument if Brown doesn’t deal with pension reform, as he has promised.

Taxing a portion of the tax cuts on the richest 5 percent could make asking everyone else to continue their temporary taxes more palatable. The Obama-GOP deal on the Bush tax cuts will add enormously to the federal deficit. Taxing some of that $20 billion at least would reduce California’s deficit. That’s a fair request.

Author: John Fensterwald - Educated Guess

John Fensterwald, a journalist at the Silicon Valley Education Foundation, edits and co-writes "Thoughts on Public Education in California" (, one of the leading sources of California education policy reporting and opinion, which he founded in 2009. For 11 years before that, John wrote editorials for the Mercury News in San Jose, with a focus on education. He worked as a reporter, news editor and opinion editor for three newspapers in New Hampshire for two decades before receiving a Knight Fellowship at Stanford University in 1997 and heading West shortly thereafter. His wife is an elementary school teacher and his daughter attends the University California at Davis.

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