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Ready to blaze a trail for tax hike

Molly Munger says her plan to raise $10 billion a year through income taxes is better than the 'tiny Band-Aid' proposed by Gov. Jerry Brown. She's prepared to fight for children and schools.

May 16, 2012|Steve Lopez
  • Molly Munger talks about her tax proposal earlier this year.
Molly Munger talks about her tax proposal earlier this year. (Rich Pedroncelli / Associated…)

In March, when I wrote that the tax increase proposals by Gov. Jerry Brown and civil rights attorney Molly Munger were unimaginative if not doomed, I got an email from Munger.

She did not agree, at least with regard to her initiative.

"Unimaginative?" she wrote, inviting me to meet with her.

This week, I decided to take her up on her offer after watching Brown admit that the financial mess he told us about in January was nothing compared to the mess we're in now. Frankly, I don't know how the January estimates were so far off the mark, with a $9-billion hole turning into a $16-billion hole in less time than it takes to grow tomatoes. Why should we trust the next set of numbers Brown throws at us?


FOR THE RECORD:
Tax plan: The headline on Steve Lopez’s column in the May 16 Section A incorrectly said that Molly Munger referred to her tax initiative, which would generate $10 billion, as a Band-Aid for California’s problems. Munger actually was describing a rival tax plan proposed by Gov. Jerry Brown.


The governor's latest proposal is for $11 billion in cuts, and they would come with a warning that if we don't pass his temporary sales and income tax hike in November — which would raise as much as $6 billion — the suffering will intensify and public schools will be hit even harder.

Look, I know this mess isn't Brown's fault, but I'm getting tired of his threats and his shortsighted "fixes." It's like having the foundation of your house flooded by a broken water main, and the plumber suggests you spend $75 to fix the leaky bathtub faucet.

And as Munger points out, even if the public backs Brown's plan, schools are still going to be in big, big trouble.

"We're bleeding, and it's a tiny Band-Aid," she said when we met Monday afternoon at Buster's in South Pasadena, not far from where she lives.

Her plan would raise $10 billion a year by increasing income taxes on a sliding scale, all of it to retire school bonds and support education.

Brown on the other hand would temporarily raise income taxes on the wealthy and sales taxes on everyone, but only some of it would go to schools and the rest to various other services.

Does either have a chance?

I'm not terribly optimistic, but for all the parrots out there who do nothing but chirp about how California has a spending rather than a revenue problem, the fact is that Brown's proposed $91-billion general fund budget would be roughly 10% smaller than the budget just five years ago. And as my colleague George Skelton has pointed out, general fund spending per $100 of income is lower today than it was in Ronald Reagan's last year as governor.

So it's at least possible that Californians would be willing to bite the bullet and raise taxes on themselves if they thought schools would benefit. But which bullet? It's hard to believe that having two proposals on the ballot won't lower the odds of either one passing.

Munger told me she and Brown have chatted, and the governor "talked about how campaigns can get very tough."

Whoa! Was the governor threatening her to back off and clear the way for him or he'd wage a nasty campaign against her?

Munger keeps her cards close. She wouldn't answer me directly, but said rather than one of them backing off, or waging a kickboxing competition, she'd rather see a scenario in which she supports the governor's proposal and he supports hers. Even though if his got more votes, hers would be null and void.

And?

"He was noncommital, in a cordial way," Munger said.

I'm going to go way out on a limb here and bet my house, my car and two or three of my children that Californians will not support two proposals calling for new taxes unless everyone is either drugged or taken to a polling place at gunpoint.

And, as I told Munger, I've got problems with both her proposal and the governor's. Namely, the state's financial problems have much to do with the fact that since Proposition 13 in 1978, we rely less on property taxes and more on sales and income taxes that are subject to dips and dives.

So why not an oil excise tax, or a service tax, or a property tax adjustment that addresses the windfall that businesses got from Proposition 13?

Munger said she considered all those ideas before concluding that her income tax proposal is the quickest and least regressive way to rescue schools in a state that ranks 47th in the nation in per-pupil spending, with less being spent here (when adjusted for income) than in Alabama, Mississippi and Louisiana. And she's encouraged by polls suggesting that a majority of people say they would be willing to pay more taxes to benefit education.

Munger, by the way, is the daughter of Charlie Munger, vice chairman of Warren Buffett's Berkshire Hathaway. She has already spent $6 million on her campaign, and she sounded to me as if she's only just begun.

So what would her plan mean to you?

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