You couldn’t come up with a better time than right now if
you wanted to remake the California tax system.
It won’t be
easy, but many of the stars are aligned. And no one has more incentive to make
such a change happen now than Gov. Jerry Brown.
Brown has a
number of needs that could be met by a big push for comprehensive tax reform.
First, he needs more revenues for the budget if he wants to avoid making more
cuts to important public services. Second, he needs to find a way to talk about
jobs and the economy, and taxes are an obvious way there. Third, he needs to
breathe some life into his stale governorship by taking on game-changing
reform; if he doesn’t go on offense, and show himself to be a force for fixing
a broken system, the California public is likely to turn on him.
Perhaps
most important, Brown, if he wants to control the agenda next year, needs to
head off a massive war over taxes on next year’s ballot. The governor should
worry both about his allies – unions that want to push for all kinds of new
taxes that are likely to add to California’s reputation as hostile to business
– and about those on the right who may take counter-steps to limit revenues or
make the budget deficit even worse. Brown has said he wants to avoid a war of
all against all. And he should, since he’d lose control of the agenda in a big
initiative fight. One way to pre-empt such a battle would be to draw people
into finding a comprehensive solution on a subject such as taxes.
Taxation is
a difficult and divisive subject, but the governor may find it easier than he
thinks. Cooler heads on left and right know that a multi-initiative war is
likely to lead to defeat for all sides – which means only the political
consultants who run the campaigns will have a good 2012. Voices on the left –
including Lt. Gov Gavin Newsom and Los Angeles Mayor Antonio Villaraigosa –
have been signaling an interest in broader tax reform, in the interest of not
only fairness but also economic competitiveness. And Brown already has forged
ties to the business community, through the budget process. So he has good will
that should allow him to bring labor and business to the table together to talk
about tax reform.
And
yes, the anti-tax right will oppose any changes, though Brown, as a longtime
advocate of flatter taxation, would at least get a hearing. But that opposition
shouldn’t stop him. Brown’s governorship right now is going nowhere. So he has
little to lose by tackling a big issue, such as taxes.