Brown’s Millionaire’s Tax, A Gift to Private Charter Schools

89% of Gov. Jerry Brown’s “Millionaire’s” tax is slated to go to K-12 education, should the bill be approved by California voters in November. However, according to journalist Danny Weil, the legislation allows this money to go to private charter schools or to the private contractors hired by nonprofit charters. (You can see Weil discussing this on YouTube by clicking here.)

Citizen’s United Leads to Bumper Crop of Lobbying by Corporations and Unions

Washington Lobbyist (Image from Flickr, by DonkeyHotey)

Over the past year, corporations and unions spent a record $286.6 million to influence politics in California, according to the L.A. Times—a 6.8% increase over the previous year. (You can see the Top 10 spenders on state lobbying here).

The Times, like other media and pundits, has tried to equate union lobbying with that of corporations, suggesting, for example, that campaign contributions won California teachers an important victory with a bill restricting the issuance of pink slips. Yet the California Teachers Association (CTA), which spent $6.5 million, has so far failed to win (or even ask for) anything that would increases revenues sufficiently so that schools could afford to retain teachers and hire enough to lower class sizes, (e.g., end high stakes exams and Common Core Standards, increase taxes on the wealthy and corporations, end the 3 Strikes law, increase taxes on oil and marijuana).

California has slashed over $20 billion from K-12 education over the past three years. Under such conditions, it is inevitable that jobs will be lost, services and programs cut, class sizes increased, and pay and benefits reduced. CTA is supporting the Governor’s tax increase initiative on the November ballot, but this will be a bandage at best. It will not repay the $20 billion that has already been slashed, nor increase revenue to a level necessary to bring California up from the bottom five states in per pupil spending. Furthermore, it will provide almost nothing to higher education or services to the poor and disabled, while unfairly taxing the poor through a regressive sales tax increase.

While the CTA’s spending was paltry compared with what the corporations spent, it was monstrous compared with what it spent on organizing and mobilizing its members to take job actions, such as strikes, that would more effectively achieve its goals. Instead, it spent its members’ dues retaining a team of seven lobbyists and wining and dining politicians and their staffs.

It is true, as the Times points out, that they also paid the travel expenses for its members to visit Sacramento during the State of Emergency (SOE) protests last year. However, they actively discouraged members from engaging in civil disobedience, occupations or other confrontational tactics, instead encouraging them to meet with legislators and discuss their scripted talking points.

Predictably, the SOE protests and “citizen” lobbying yielded nothing meaningful for teachers or their students.

Which Side Are You On—Ruling Elite Turns On Itself

My Super PAC Can Beat Up Your Super PAC (Image by Mike Licht, NotionCapital.com)

Mitt Romney has recently come under fire by his opponents for the Republican presidential nomination for his record at Bain Capital, where he led the restructuring of numerous companies resulting in hundreds of job losses. His rivals have accused him of being a “job killer,” an epithet they hope will bamboozle the millions of still-unemployed and desperate Americans into voting for them. However, according to Democracy Now, Newt Gingrich claims he’s being pressured by “extraordinarily wealth institutions” to stop his criticism of Romney and to “shut up.”

Image by DonkeyHotey

Apparently, Wall Street is concerned that the attacks on Romney’s record of corporate raiding will only aid and abet the Occupy Movement and encourage American antagonism toward the wealthy. Their fear is not completely unfounded. A recent survey by the Pew Research Center found that about two-thirds of the public (66%) believes there are “very strong” or “strong” conflicts between the rich and the poor. This is up 19% since 2009 and there have been increases in this sentiment among most ethnic groups.

As much as the media might like to give the OWS movement credit for this trend, the greed and antagonism of the wealthy toward the rest of us has been readily apparent by their actions and public statements, including recent attacks on public sector workers and collective bargaining, making it quite obvious that there is a class conflict being instigated by the ruling elite. Furthermore, with continued high unemployment and personal wealth still a fraction of what it was four years ago for most Americans, combined with the continued increases in wealth for the top 10%, it is surprising that only 66% believe there is a strong class conflict.

Of course we’d all like Gingrich to shut up, about everything. However, increasing awareness of class conflict does not mean that antagonism toward the rich is also growing. Indeed, according to the Pew survey, 43% of Americans say they believe the wealthy gained their wealth through their own hard work, which is almost the same as in 2008, whereas 46% believed that the wealthy gained their wealth primarily through their familial and social connections.

While it is curious that the two most popular responses were “wealth gained through hard work” versus “through connections,” neither response is particularly critical of the rich. Why didn’t more people say they got wealthy by exploiting their workers, paying them a fraction of the value of their labor—which is the primary way the capitalists make their profits and wealth—or through exploitation of tax loopholes, deregulation, downsizing and outsourcing, illegal business practices and union busting?  Of course if these choices weren’t available on the survey, the results would be heavily biased toward the naïve and favorable belief that the rich are simply hard workers or the slightly less naïve and nominally critical belief that they exploit social connections unavailable to the rest of us. In either case, it seems like Americans are still are long way away from rising up against the rich.

California’s 1% Goes On The Offensive

We've Saved the Schools! (Image from Flickr, Mike Licht, NotionsCapital.com)

Three of California’s billionaires have committed over $20 million of their own money to launch and win a ballot initiative that would help close California’s perennial budget hole, according to the Los Angeles Times. However, their plan would only increase tax revenue by $10 billion, not even enough to close next year’s budget gap, which is already projected to exceed $13 billion. It will do nothing to restore the $21 billion that has been slashed from K-12 education over the past three years, or the billions cut from higher education and services for the poor, elderly and disabled. But worst of all, it relies on regressive sales tax hikes and a restructuring of the income tax code that leave the 1% unscathed, placing the burden of closing the budget gap on the rest of us.

The Think Long Committee is headed by investor Nicolas Berggruen, philanthropist Eli Broad and Google Chairman Eric Schmidt. The group also includes former governors Gray Davis and Arnold Schwarzenegger, according to the Times.

On the surface, their plan seems like a well-intentioned attempt to help bolster California’s crumbling infrastructure. After all, it promises to increase K-12 funding by $5 billion per year plus add several billion more for higher education. In reality it is an attempt to take the wind out of the Occupy Wall Street movement, which has been criticizing the skyrocketing cost of higher education and the defunding of both K-12 and higher education. The Think Long millionaires and billionaires are hoping the promise of increased education funding will convince the protestors to go home and give up their desire to make “the rich pay.”

This is unlikely, as their plan calls for a regressive 2% sales tax hike that disproportionately impacts lower income peoples, and an income tax restructuring that places the burden of closing the budget gap on middle income people.

The new tax code would leave those making less than $45,000 without any income tax liability, while those in the $45,000-95,000 range would be taxed a modest 2%. However, there would only be one more bracket, $95,000 and above, which would be taxed at 7%. This means that lower middle class families would be taxed at the exact same rate as millionaires and billionaires. In reality, though, those making millions would be paying a much smaller percentage of their income in taxes, since they tend to have more deductions and exemptions and bring in the bulk of their wealth through capital gains, which would be unaffected by their plan.

The California Teachers Association plans to float a countermeasure that would increase taxes on the state’s wealthiest residents. However, even their plan doesn’t go far enough, aiming only to close the state’s existing deficit and doing little to repay schools for the huge cuts they’ve suffered over the past few years, let alone raise revenue to a level that might bring California back among the top five states in per pupil spending.

What the state needs is a revenue increase in the $50-100 billion range, something that it is fully capable of achieving if income taxes on the wealthiest residents are sufficiently increased, along with business taxes and capital gains taxes. If we go back to the pre-Reagan era, the highest tax bracket paid from 50-90% in federal income tax on all income above a certain threshold. There is no reason the state of California can’t do likewise, for example, raising tax rates on all income over $500,000 to 20% or even 50%.

If we consider just the state’s 80 billionaires, this could bring in more than $10 billion. However, if we include each of the state’s roughly 600,000 millionaires, such a tax ought to create a budget surplus.

Of course this is exactly the kind of scenario the Think Long group is trying to avoid with their preemptive strike.