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Beyond Chron
November 13, 2012

Copyright © 2012 by Marc Norton

The passage of Proposition 30 is sweet revenge for those who fought for a
not-dissimilar state initiative way back
in 1996 – Proposition 217.

Prop 217 was a “tax the rich” initiative back in the days when such rhetoric was not thrown around so freely as today.  Prop 217 was modest compared to Prop 30.  It aimed only to stop a tax cut for the wealthiest 1% of California taxpayers, amounting to $800 million per year.  The battle cry for the campaign was “Stop the Tax Cut for the Rich.

Prop 217, unfortunately, went down to defeat by less than 150,000 votes (50.8% to 49.2%).

The defeat of Prop 217 was secured by a last-minute $1.75 million campaign contribution from the likes of the California Chamber of Commerce, Chevron and Hewlett Packard.  This pot of money was what switched Prop 217 out of the victory column.

Compare that $1.75 million wallop to the controversial $11 million dollars aimed at defeating Prop 30, laundered by a shadowy, Arizona-based outfit with the humorous name of Americans for Responsible Leadership. What did the trick in 1996 was an expensive, abysmal failure in 2012.

Prop 217 would have preserved the two top state income tax brackets that had been signed into law by none other than Governor Ronald Reagan.  Those tax brackets required single taxpayers with income over $110,000 to pay 10%, and single taxpayers with income over $220,000 to pay 11%.  These tax brackets were due to expire in 1996 and drop back to 9.3%. In the wake of Prop 217’s defeat, that is exactly what they did.

Multiply that lost $800 million in annual revenue by 16 years since 1996, and our rich friends saved themselves a cool $12.8 billion – and cost schools and other public services dearly.

In 2012, 9.3% was still the top tax bracket.  Prop 30 rights that damage, pushing the rate up 1% for single taxpayers making over $250,000, up 2% for those making over $300,000, and 3% for those making over $500,000.

The top tax bracket thus is now 12.3%.  That is even more than the 11% top bracket that Prop 217 would have mandated.

Tough luck, richsters.


Fred Glass wrote an informative Labor Notes article about the Prop 30 campaign.