Talking Taxes: fixing our future California Federation of Teachers, AFT/AFL-CIO

The Problem California has an ongoing budget crisis. Public education and other vital social services have been cut by many billions of dollars, totaling 20%, over the past two years.

Point One  These cuts are devastating public education, public safety, and public health.

Point Two  California already underfunds education and other services.

Point Three  Another way: tax fairness to preserve and improve education and other services.

Is it true? Actually, California has a revenue problem. “California has a spending problem.”

Overspend vs. underfund?  47th in the nation in K-12 per student spending, and sinking  45 th in the nation in community college per student spending  48 th in the nation in government employees per resident  47th in the nation in K-12 per student spending, and sinking  45 th in the nation in community college per student spending  48 th in the nation in government employees per resident

How are cuts affecting students? In K-12:  Larger class sizes  Fewer resources in the classroom  No full time library clerks, few nurses  Fewer classified staff, reduced busing  No elementary music or art  Pay to play sports programs In K-12:  Larger class sizes  Fewer resources in the classroom  No full time library clerks, few nurses  Fewer classified staff, reduced busing  No elementary music or art  Pay to play sports programs

How are cuts affecting students? In higher education:  Increased tuition and fees  Layoffs of faculty and staff  Fewer classes and support services  Longer time to graduate  Failure to adequately serve adult students during a recession In higher education:  Increased tuition and fees  Layoffs of faculty and staff  Fewer classes and support services  Longer time to graduate  Failure to adequately serve adult students during a recession

Obstacles to adequate funding  lower tax rates for the wealthy, corporations  State budget process  State tax rules  lower tax rates for the wealthy, corporations  State budget process  State tax rules

Obstacle 1: lower tax rates for wealthy and corporations  15 years ago: those who made at least $250,000/year paid 10%, and those who made $500,000/year paid 11%  Today: both pay 9.3%  The difference: 2.5 to 6 billion dollars less per year for education and other services  15 years ago: those who made at least $250,000/year paid 10%, and those who made $500,000/year paid 11%  Today: both pay 9.3%  The difference: 2.5 to 6 billion dollars less per year for education and other services

Growing gap between wealthy and the rest of us Richest 1% of population owns more than a third of the country’s wealth; worst wealth distribution since before the Great Depression Richest 1% averages 1.6 million dollars per year in income Richest 1% of population owns more than a third of the country’s wealth; worst wealth distribution since before the Great Depression Richest 1% averages 1.6 million dollars per year in income

U.S. Wealth Distribution, 2007

Public attitudes  Most likely state voters would choose to add fair taxes on the wealthy in order to maintain school funding [PPIC poll, 4/30/08]

Corporate loopholes  Corporate loopholes allow big companies to avoid paying fair share of taxes  One example: the oil severance tax  Corporate loopholes allow big companies to avoid paying fair share of taxes  One example: the oil severance tax

Corporate loopholes

Obstacle 2: state budget process is undemocratic and broken  Instead of simple majority, state legislature must vote by a two-thirds margin to pass budget  California is one of three states to require a 2/3 margin to pass budget  This allows for a “tyranny of the minority” to thwart the will of the majority  Instead of simple majority, state legislature must vote by a two-thirds margin to pass budget  California is one of three states to require a 2/3 margin to pass budget  This allows for a “tyranny of the minority” to thwart the will of the majority

Obstacle 3: rules for raising state taxes are undemocratic  The state Legislature needs a two-thirds margin to pass any new tax, instead of a simple majority  California is the only state in the country to require supermajority margins to pass a budget and a tax  It only takes a simple majority to reduce or eliminate an already existing tax  The state Legislature needs a two-thirds margin to pass any new tax, instead of a simple majority  California is the only state in the country to require supermajority margins to pass a budget and a tax  It only takes a simple majority to reduce or eliminate an already existing tax

“No New Taxes”? “My goal is to cut government in half in 25 years, to get it down to the size where we can drown it in a bathtub.” —Grover Norquist “My goal is to cut government in half in 25 years, to get it down to the size where we can drown it in a bathtub.” —Grover Norquist

“No New Taxes”? “Taxes are the price we pay for living in a civilized society.” —Oliver Wendell Holmes “Taxes are the price we pay for living in a civilized society.” —Oliver Wendell Holmes

Some fair tax ideas  Return the top income tax brackets to 11%  Re-assess non-residential real property  Enact severance tax on oil produced in California  Enact modest taxes on stock transactions  Reinstate the full vehicle license fee  Repeal corporate tax loopholes put in place during last dozen years’ budget deals  Return the top income tax brackets to 11%  Re-assess non-residential real property  Enact severance tax on oil produced in California  Enact modest taxes on stock transactions  Reinstate the full vehicle license fee  Repeal corporate tax loopholes put in place during last dozen years’ budget deals

What can you do to help?  Share information with co-workers, family, friends, and neighbors  Attend public board meetings, ask boards to pass resolutions and lobby to change state budget process and tax structure, and fully fund public education and other services  Demonstrate  Write to your legislators – take a brochure  Share information with co-workers, family, friends, and neighbors  Attend public board meetings, ask boards to pass resolutions and lobby to change state budget process and tax structure, and fully fund public education and other services  Demonstrate  Write to your legislators – take a brochure

For more information:  California Federation of Teachers  California Budget Project  California Tax Reform Association  California Federation of Teachers  California Budget Project  California Tax Reform Association

What do we say? “Close loopholes, not schools!!”