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Beyond Chron
January 26, 2009

Copyright © 2009
by Marc Norton

Sometimes, I like to be wrong. Last June, I predicted that two progressive revenue measures that then-Board of Supervisors President Aaron Peskin was promoting for the November ballot would go down to defeat. I was wrong, wrong, wrong. Peskin's two measures became Propositions N and Q. They both won big -- Prop N with almost 69% of the vote, and Prop Q with 74%.

To be fair to my happily-bruised ego, both of these measures went through a considerable transformation subsequent to my weighing in on the matter.

Originally Prop N, was a proposal to increase the real estate property transfer tax for properties selling for $2 million or more. I pointed out that a very similar proposal -- to raise the transfer tax for properties selling for $1 million or more -- had failed in 2002. I predicted that the Big Bad Rich Guys would jump all over the new version of this proposal, front some Little Old Ladies bemoaning that the Big Bad Government was try to steal money from them when they sell their duplexes, and walk all over us.

But two things happened. First, as I suggested, the trip wire for the new, higher rate was raised to $5 million, making it nearly impossible for the opposition to claim that any working stiff's home or duplex was going to be effected. Second, the Big Bad Rich Guys decided not to run a full-tilt opposition campaign. Presto chango, a smashing victory.

Prop Q was a proposal to plug the loophole that allowed partnerships -- mostly fancy-schmancy lawyers, doctors and dentists and the like --
to avoid paying the payroll tax. This same proposal had been spiked by the voters in 2004.

But again, Peskin's proposal changed, ending up being bundled with an elimination of the payroll tax for small businesses with an annual payroll of $250,000 or less. This defanged any argument that removing the partnership loophole was a tax increase on small businesses. And, again, voila, the partnership firms sat on their considerable bundle of moola, ran no opposition campaign (not even one argument in the voters' handbook), and another overwhelming victory for the good guys.

I don't know how these changes to what became Props N and Q came to be. But, as important as the revisions to these proposals proved to be, even more important is the amazing fact that this was the first time in memory that real progressive revenue measures ended up on the ballot without significant opposition from the Downtown Crowd. Clearly, some hardball politics were played out. That's very cool, resulting in a very cool $40 million more per year for the city, according to the City Controller.


There are lessons to be learned here. First and foremost, San Francisco voters love to tax the rich -- that is, when big business and downtown shut up, and a lid is put on their usual smokescreen of lies and propaganda. Victories of 69% and 74% prove that fact.

And San Francisco voters are not alone. Also in November, across the Bay in Richmond, voters approved an increased business tax that is estimated to bring in over $26 million per year, primarily from Chevron's refinery operations. And that vote was in spite of the very vocal opposition of Chevron, the Richmond Chamber of Commerce and the California Taxpayers Association.

Second, to win, we have to get a jump on the rich. Nobody knows how Prop N and Q would have fared if the real estate lobby, the Committee on Jobs, PG&E, and/or that Republican man-about-town Donald Fisher had come out swinging. That crowd had other axes to grind in November, and that's where they put their money -- trying, and thankfully failing, to defeat progressive supervisorial candidates John Avalos, David Chiu and Eric Mar; pumping up the pro-JROTC Prop V as a wedge issue; defeating the Prop B affordable housing initiative, and sinking the Prop H clean energy campaign.

The configuration of forces from one election to another can be very different. Victory is never assured, and nobody should assume that downtown will sit on its hands again, at least not without a whole hell-of-a-lot of arm twisting.

As sweet a victory as Props N and Q were, the third lesson is that it wasn't nearly enough. No sooner was the election over, than we started hearing about massive budget cuts and unprecedented projected budget deficits northwards of $500 million. Despite the wailing from the pampered elite, our city government has been under-funded for years, even decades. And now, finding ourselves in the midst of the First Great Depression of the 21st Century, our financial problems are magnified to the nth degree.


To his credit, Peskin, in one of his last acts as President of the Board of Supervisors, proposed conducting a special election in June on several possible tax increases designed to at least plug some of the bleeding. The wailing from the usual quarters commenced immediately. Our new Board of Supes is scheduled to consider this matter on Tuesday, January 27. It looks to be a rocky ride.

The range of proposals that have been floated are a decidedly mixed bag. They range from a right-on proposal to reestablish the gross receipts tax on big business, to thoroughly regressive proposals such as a sales tax increase or a new parcel tax that would hit poor and working people the hardest. There is too much here to try to sort out in an article of this length, and in any event there are clearly some behind-the-scenes moves in play that will lay the ground for this upcoming battle.


But here are some facts for consideration by the players-that-be. As dire as the economy is, some of our local rich guys are doing quite well still, thank you.

For example, our very own Wells Fargo Bank has been the recipient of over $25 billion in federal bailout money. That's $25 billion. That's 50 times the amount of our piddling little $500 million deficit. Wells Fargo took that money and plunked down $12.7 billion to buy out Wachovia Bank, moving Wells Fargo into the top tier of US banks, with over $1.4 trillion in assets.

And what did Wells Fargo do with the rest of its $25 billion? Nobody knows, and nobody is saying. Just how crude can theft get? The term "bank robber" takes on a whole new meaning.

And I'm not done with Wells Fargo yet. I'll bet you didn't know that in September, the Bush regime (remember those guys?) handed large banks a new loophole on tax shelters that
Citizens for Tax Justice says is worth a "breath-taking $140 billion." The Bush maneuver has been dubbed, get this, the "Wells Fargo ruling," after its largest beneficiary. By one estimate, the bank will get a $19 billion tax cut from its purchase of Wachovia. Wow. Get a free $25 billion, use it to buy a bank for $12.7 billion, get a $19 billion tax cut. These guys are on a roll. Who says a depression is bad for business?

"The financial meltdown has made it impossible to ignore the blatant irrationality of global capitalism..." wrote a certain Professor with the enticing name of Slavoj Zizek. "Saving endangered species, saving the planet from global warming, finding a cure for AIDS, saving the starving children... All that can wait a bit, but ‘Save the Banks!' is an unconditional imperative which demands and gets immediate action." Thank the San Francisco Gray Panthers for bring Zizek's incisive comment to our attention.

I have to stop talking about Wells Fargo now, or I'll wear us all out. And I haven't even started with all the rest of our downtown corporateers.


Tim Redmond, the editor over at the Bay Guardian, got it right in a recent post:

"We can't mess around with half steps," wrote Tim. "We need big money, right now -- and the best, most fair and progressive way to get that is with an income tax."

Check out Tim's article, linked above. The basic idea is to tax income earned within the city above $100,000 per year. There are some legal issues here, and Tim deals with them quite clearly and correctly, so I won't repeat them.

"We tax the rich," says Tim, "or we close libraries, and eliminate Muni lines, and take cops off the streets, and close fire stations, and let sick people die because they can't see doctors -- and watch the local economy fall even deeper into recession as city spending plummets... These are the choices."

I beg your pardon, but here are some more numbers,
from our friends at Monthly Review:

"Over the years 1950 to 1970, for each additional dollar made by those in the bottom 90% of income earners, those in the top 0.001% received an additional $162...

"In contrast, from 1990 to 2002, for each added dollar made by those in the bottom 90%, those in the uppermost 0.001% made an additional $18,000."

Yes, the rich get richer, and richer, and richer and richer... through thick and thin, recession and depression, war and peace (mostly war)...

San Francisco, what are we going to do about it? Surprise me again, please.