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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Counter-Punching On Taxes

For those of you who, like me, have been watching the endless fiscal saga in California with a growing sense that it could foreshadow the kind of gricklocked insanity we may soon see in Washington, I have some potentially promising news. By that I do not refer to the fact that Democratic legislators and Gov. Jerry Brown have managed to enact a budget without any help from Republicans. Underneath the surface, there’s a growing possibility that progressive forces in the state may have found a will and a way to convince Californians that their cherished Proposition 13 property-tax limitation law has been playing them for suckers, and needs to be changed by ballot initiative.
Brown himself alluded to this possibility in his public pleas to Republicans to go along with his efforts to put revenue extenders on the ballot.
The underlying issue, as examined in a major 2010 study of the state’s tax structure, is that loopholes in Prop 13 have produced a steady shift in the tax burden from nonresidential to residential properties over the years. That’s partly because corporations–and notably banks–have found ways to buy and sell property without triggering the reassessments that are supposed to occur upon changes of ownership.
So despite the iconography surrounding Prop 13, there’s actually a good political case to be made for a ballot initiative focused on redressing a tax-shift from corporations to the middle class, as noted by Calbuzz:

It’s a safe bet that most voters don’t truly understand, or even know about, the full extent to which corporations and other commercial property owners for three decades have systematically shifted California’s property tax burden onto residential homeowners – and away from themselves.
What regular folks do know, however, is that they don’t like the idea when they learn a little about it: while 55 percent of Californians still say Prop. 13 is a good thing, 58 percent in a 2009 PPIC poll said they would favor taxing commercial property at current market rate by using a split roll assessment system.
Just think what they’d say if they knew how outrageous the current scheme actually is.

The broader implications are that Republican anti-tax rhetoric often disguises similar tax shifts from the middle class to corporations and the wealthy. Sometimes the diguise is thin, as evidenced by the enthusiasm of many conservatives for tax systems aimed at consumption rather than wealth. Sometimes it involves a shell game, as tax cuts for corporations and high-income individuals inevitably push up public costs borne by everyone else.
In any event, in California and nationally, Democrats need not run in terror whenever taxes are discussed. Big majorities of Americans consistently support progressive taxation, and will vote for it when it can be shown that “anti-tax” initiatives are really aimed at shifting the tax burden to those who can least afford it.

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