Politics

The Left's Populist Tax Agenda

Direct ballot initiatives are democracy at its best, but also at its worst.

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Copying the right's success, the left is taking its tax agenda directly to the people.

California's Proposition 13 property tax cut and cap, passed in 1978, and followed by the similar Massachusetts Proposition 2 ½ property tax limit passed in 1980, set the stage for President Reagan's tax cutting at the federal level. Bypassing state legislatures, governors, and local politicians, the popular tax rebellions in California and Massachusetts turned tax questions into ballot initiatives to be decided by voters.

This November, voters will again have the chance to decide on taxes. But in a number of cases, the questions they will be voting on are not aimed at limiting taxes or at cutting them, but, instead, at increasing them. On the ballot:

  • In Berkeley, Calif., voters will consider Measure D, which would impose a one cent a fluid-ounce tax on distributors of soda, energy drinks, and sweetened teas.
  • In San Francisco, Calif., voters will consider Measure E, which would impose a two-cent an ounce tax on sugar-sweetened beverages.
  • In Nevada, voters will consider Question 3, which would impose a two percent "margin tax" on Nevada businesses with revenues of more than $1 million a year. The proceeds of the tax would be dedicated to fund the state's public schools.
  • In Illinois, voters will consider a "millionaire tax increase for education" question, which tests support for an additional 3 percent tax on those with income of more than $1 million a year. As in the Nevada proposal, the tax revenues would be earmarked for public education.

The measures aimed at limiting taxes seem more modest, mostly aimed at preserving or restoring the status quo.

  • In Georgia, voters will consider Amendment A, which would change the state constitution to prevent lawmakers from increasing the state's income tax above the six percent rate now in effect.
  • In Tennessee, voters will consider Amendment 3, which would change the state's constitution to prevent lawmakers from imposing a tax on wage income.
  • In North Dakota, voters will consider Measure 2, which would prevent the state or local governments from imposing mortgage taxes or any sales or transfer taxes on real estate.
  • In Massachusetts, voters will consider Question 1, which would eliminate the requirement that the state's gas tax be adjusted annually for inflation. As Steven Aylward of the Committee to Tank Automatic Gas Tax Hikes put it in the state-distributed information for voters booklet, "That's taxation without representation. If the Legislature wants to increase taxes they should have to vote for it. No tax should automatically increase."

The tax-increase ballot measures, in particular, are a sign of how the higher-tax crowd has become more sophisticated in the decades since the passage of Proposition 13. Their poll-driven playbook seems to be to tailor tax increases to target unpopular minorities—millionaires, big businesses, individuals with the poor taste to drink Gatorade or Coca-Cola instead of latte, Perrier, or Cabernet—and then to claim that the tax revenues will be spent on worthy causes such as schools or obesity reduction. Never mind that the education tax measures are heavily backed by teachers' unions, or that millionaires and many big businesses already pay plenty of taxes, or that studies have shown no connection between school spending and educational outcomes.

Direct ballot initiatives are democracy at its best, but also at its worst. At their best, they engage ordinary citizens at the grassroots and let taxpayers make their views known to politicians who too often prefer to tax and spend. At their worst, they are ways for well funded interest groups, such as teacher unions, to gang up on unpopular minorities, such as millionaire earners.

The citizen activists who spawned the tax rebellion of the late 1970s and early 1980s—Howard Jarvis of the Howard Jarvis Taxpayers Association and Barbara Anderson of Massachusetts Citizens for Limited Taxation—were geniuses. So it's no wonder that the left would try to mimic their tactics. But the genius of the tax rebellion-ballot initiative wasn't merely the idea of taking tax issues directly to the voters. It was the insight that, given a choice, most voters will choose to lower, or at least to limit, their own taxes. That's one concept that the left will have a harder time copying.