Brown Vs. Munger: A Tale Of Two Tax Plans
Originally, there were three different proposals on the table: one supported by Gov. Jerry Brown and the California Teacher’s Association, another backed by the California Federation of Teachers (CFT) and a third supported by civil rights attorney Molly Munger.
Brown was able to reach a compromise with CFT that allowed them to bundle their initiatives. CFT’s proposal, sometimes referred to as the “millionaires' tax,” aimed to increase taxes on the rich. The merger initiative bumped Brown’s proposed 1.5 percent tax raise to two percent for joint filers earning $600,000, and raised the tax on millionaires by 3 percentage points, a boost from Brown’s original 2 percent.
The compromise also lowered Brown’s proposal to increase sales tax by half of a percent. Under the new initiative, the sales tax will only be raised a quarter percentage point.
Thomas D. Griffith, a USC law professor and tax expert, said Brown’s plan would tax people across the board without placing too much strain on the rich.
“Increasing sales taxes affects everybody but probably hurt the poor more than the rich,” he said by phone Monday. “He hit the rich a little extra but he also hit everybody. The teachers just wanted to hit the rich.”
Munger's initiative, on the other hand, takes a slightly different approach, taxing everyone with an annual income over $7,316. The plan would use a sliding scale, taxing the lowest bracket just 0.4 percent and gradually increasing up to 2.2 percent for individuals earning more than $2.5 million.
Another notable difference is where the money would go. Under the Brown/CFT initiative, the government would be able to use the money more freely, based on need—although a portion would still be used for education funding. The Munger initiative devotes the resources almost entirely to education, from preschool to K-12. It would dedicate about a third of the revenue from the first four years to repaying state debt, but after that, money would be used solely for education.
“Those restrictions, according to most experts, are bad things because they reduce the flexibility of the government to spend money where it’s most needed,” Griffith said. “There are lots and lots of good things that the government does but what Gov. Brown thinks, and what I think as well, is that if the initiative says that you have to spend it on one particular good thing, that can restrict the government from making the most sensible plan."
For now, it seems that both initiatives will fight it out until the vote. Munger has been financing her initiative entirely on her own and has already invested $3.4 million, according to The Sacramento Bee. By funding the proposal herself, Munger has more freedom and less motive to compromise. But Brown could try to work on including the Munger proposal into one larger plan.
“Gov. Brown wants there to be only one initiative because hebelieves that it is very important to have some initiative passed to raise additional tax revenue,” said Griffith. “And he believes that if there were three initiatives on the ballot, that it makes it less likely to pass any of them.”
Justin Grimmer, assistant professor of political science at Stanford University, agreed that putting too many initiatives in front of voters in November could reduce chances of success.
“It’s hard for voters to make sense of these initiatives,” he said in a phone interview. “Voters have lots of trouble parsing out what’s the best tax initiative.”
It remains to be seen whether another collaboration will arise, or if funders will throw support behind Munger or Brown's plan. But for now, neither side shows signs of giving in.
INFOGRAPHIC: See below for a breakdown of the proposals.