Why the Millionaires Tax Was Worth Fighting
For; Another Reason for All Educators to Back the CFT
by Mark Brenner of Labor Notes | Tue,
03/27/2012
The tax compromise made by the California
Federation of Teachers resulted in major improvements to the ballot initiative
that could be in front of voters in November. But backers of the millionaires
tax should have bucked the governor's deal and continued their struggle to
reverse endless austerity. Photo: Steve Rhodes.
We’ve gotten quite a bit of feedback about
the decision by leaders of the California Federation of Teachers and their
community allies to withdraw the “millionaires tax” ballot initiative. The CFT
did so after striking
a compromise March 14 with Governor Jerry Brown.
There is no question that the deal made
major improvements to Brown’s initial proposal and catapulted the CFT and its
partners into a major role in California politics, a good thing for the labor
movement and the rest of working class California. Within the labor movement,
the fight over the millionaires tax undoubtedly tilted politics in a more
progressive direction, too.
Despite all this, there are still compelling
reasons why proponents of the millionaires tax should have rebuffed the
governor and pushed the tax ahead to the November election. The decision to
pull back is a setback in the struggle to reverse the endless austerity
provoked by the 2008 financial meltdown.
As Good as It Gets?
Many observers of California politics argue
that the CFT and its allies pulled off a major coup. They stuck to their guns
when the governor pressed for a deal in November. And by plowing forward with
their own ballot measure, they injected the wildly popular idea of a
millionaires tax into the debate over how to plug California’s budget deficit,
and they also extracted important concessions from Brown.
The compromise initiative will bring in more
money for the state than either the original Brown proposal or the CFT’s
millionaires tax. (See a side-by-side comparison of how
the original proposals stacked up.)
The compromise boosts the tax rate even more
for individuals earning over $250,000, and the new measure cuts the regressive
feature—a half percent sales tax—down to a quarter percent. Under the
compromise, 85 percent of new revenue will come from tax hikes on top earners,
with only 15 percent from the sales tax.
The deal is even more striking given that
the CFT was actively opposed, or left twisting in the wind, by labor’s much
larger players in California state politics. The Service Employees state
council and the California Teachers Association carried Brown’s water to battle
the CFT and its allies.
In November appointees from SEIU
International pushed through a statewide binding endorsement of Brown’s
original ballot initiative, tying the hands of public sector locals that wanted
to back the millionaires tax. And in February they stepped up their attacks.
SEIU state director Dave Kieffer called Brown the “adult
in the room” when it came to finding revenue solutions, dismissing out of
hand any attempt to address tax questions outside of the narrow confines of
acceptable Sacramento politics.
Millionaires tax supporters hoped to at
least get an endorsement from the California Teachers Association (the National
Education Association state body), especially after CTA’s largest local
affiliate, United Teachers Los Angeles, backed the tax. But in the weeks
leading up to the compromise, the CTA began telling its members the
millionaires tax was fatally flawed, taking a similarly hard
line in the press.
The CFT, a smaller California Educators Union, was also getting pressure from
above, with American Federation of Teachers President Randi Weingarten
reportedly pushing for a compromise in order to avoid a showdown with the
state’s Democratic establishment. At the same time, Democratic legislators were
threatening to punish the CFT when budgets are crafted later this year,
targeting the CFT’s base in schools and universities for even more budgetary blood letting.
Missing the Moment
Leaving the CFT and its allies scrambling to evaluate whether to forge ahead with their fight mostly alone. Besides the brass-knuckles opposition from
Democratic lawmakers and their allies inside SEIU and CTA, other unions stood
by with their fingers in the wind. While several endorsed the millionaires tax,
most notably the Nurses (CNA) and the Longshore workers in Northern California
(ILWU), none put real money behind it. Reports vary, but millionaires tax
supporters appear to have collected a third of the required signatures to
qualify for the ballot, and it’s unclear whether they had the financial or
logistical resources to secure the required signature numbers by the end of
April without additional commitments.
Many supporters of the millionaires tax
hoped the Occupy movement would boost their organizing, but Occupiers didn’t
muster the interest or discipline necessary to mount the tightly coordinated,
unglamorous work of signature gathering. Their real potential would have been truly effective during this campaign season, turning glitter bombs, mic checks, and all
manner of creative disruption loose on the state’s millionaires, in the same
way that California nurses hounded Arnold Schwarzenegger and Meg Whitman during
past election campaigns.
If there was no real possibility that the
millionaires tax was going to make it onto the ballot, then by compromising
the CFT made the most out of a bad situation.
But if CFT and its allies had secured
sufficient resources to get the millionaires tax in front of voters in
November, here are six reasons why they should have rebuffed the governor and
stuck with it—even though they would have faced a fierce onslaught from
corporate opponents (read millionares).
Bait and switch. One
worrisome aspect of the deal with Brown is that he continues to gather
signatures for his original ballot initiative, ostensibly as a fallback in case
the compromise measure fails to qualify. With only six weeks to gather close to
1 million signatures, that’s a real risk. This raises the equally real
possibility that the governor has induced millionaire tax supporters to
withdraw their measure without enough time to get the compromise on the ballot,
thereby clearing the field for Brown’s original proposal, which relies more on
a regressive sales tax.
99 to 1.
With just two words, the “millionaires tax” captured what’s wrong with our
upside-down economy, and who should foot the bill to set things right side up.
The millionaires tax wasn’t a stop-gap aimed at plugging the current budget
hole—a limitation of both Brown’s measure and the compromise, which sunsets
after seven years. It was a permanent turn towards a more working class affordable type of tax
structure. Victory could have closed the door on the knee-jerk anti-tax
politics that have defined California for a generation. The new measure misses
the mark at defining a new common sense for the state middle class.
Money isn’t everything. The resource question haunted the millionaires tax
campaign from day one. How much money could the CFT and their allies get from
the rest of the labor movement? How much would business interests and
billionaires pour into a campaign to defeat it? Money has become the shorthand
for evaluating success in politics, and it’s a trap.
With tight timelines and high ballot
qualification thresholds, resources are necessary to hire signature gatherers
and mount a field campaign. But unions will never be able to match corporate
pocketbooks, and it’s time we stopped listening to the army of consultants,
political strategists, and ad makers telling us that money is the only tool we
have at our disposal. The millionaires tax could have been bulletproof at the
ballot box if its supporters had been willing to get out there and fight for
it.
John Kerry learned this lesson too late,
after he declined to back a 2004 ballot initiative to raise the Florida minimum
wage. The measure won big—unlike Kerry—sweeping every county in Florida despite
being outspent more than 4 to 1.
Break the insiders’ grip. Outside consultants and in-house lobbyists are
focused on the access that comes with playing the politicians’ game. When you
break ranks and run your own program, there’s always blowback. Legislators
threatened to punish CFT members during the budget process, and turned a cold
shoulder on their lobbyists and policy specialists in the corridors of the
statehouse.
But this payback for independence and
initiative was a small price compared with the promise of winning, which could
have broken the grip that insiders have on labor’s political strategy. As the
complicated wrangling with Governor Brown demonstrates, too often unions are
taking our cues about what to do, and what’s even possible, from Democratic
Party operatives. Politicians may tell you this is the last straw, but they
always come back. In fact, you can count the fact that they’ll always cut a
deal. We can’t afford to be so predictable.
Lay our cards on the table. One of the paradoxes of politics is that everyone
praises transparency, but laying your cards on the table makes it impossible to
bluff. That’s a problem for politicians, but it shouldn’t be for unions. The
analogy with strike preparation is instructive. The union hand is strongest
when everyone has debated the issues, knows the decision points, and has a
clear picture of what are and aren’t strike-worthy issues.
Compare this scenario to the common practice
in today’s labor movement, where only a handful of officers and insiders know
how big decisions are made and most rank-and-file members are in the dark. This
breeds confusion and cynicism, but more importantly, it reinforces the idea
that members are just pieces on a chessboard. Who is willing to take risks in
this kind of environment? If you’re going to ask members to make sacrifices,
you can’t be surprised when those who’ve stepped up want a say over what to do
when faced with hard choices. The millionaires tax campaign could have been a
turning point for the state’s labor movement, offering a concrete opportunity
to model a different, more democratic way of doing politics. Missing that
chance cost us more than dollars and cents.
Be willing to lose. It’s a necessary risk, if we’re fighting for
something worth winning. And it’s the only way to pull the Democratic Party in
a different direction, a move most unions consider a pre-condition for
reversing today’s austerity. The Tea Party learned that lesson almost
instinctively, and it’s why the Republican presidential candidates trip over
themselves to lay claim to the conservative mantle.
If we blink every time there’s a showdown,
then politicians like Jerry Brown will always count on that reflex. This
dynamic will consistently drag politics rightward. We also know from the civil
rights movement and labor’s 1930s upsurge that most great successes were not
achieved on the first outing. A string of losses usually preceded a big
breakthrough. If we’re not willing to live with a loss, then we’re never going
to have the breakthrough.
Paving the way for an uncluttered ballot in November, a
California teachers union struck a deal Wednesday with Governor Jerry Brown
that would combine a millionaires tax with a sales tax boost.
The state’s labor movement had divided over the best
way to put the need for public investment before the voters. The California
Federation of Teachers (CFT) and other unions had pressed for a stiff tax on
millionaires and were gathering signatures to qualify it for the ballot.
But with backing from the Service Employees (SEIU) and
the California Teachers Association (CTA), Brown put forward a competing ballot
initiative he touted as “shared sacrifice.” Crafted to minimize opposition from
business, the Brown measure would have hiked the sales tax and raised income
taxes by 1 to 2 percent on earners over $250,000.
The state sales tax in California, at 7.25 percent, is
already the highest in the nation.
The compromise announced Wednesday would cut the
proposed sales tax increase in half, to 0.25 percent, while lifting the rates
for top earners higher than Brown had proposed.
The income tax boost would last seven years, not the
five years Brown had first put forward.
“The petition drive to get the millionaires tax on the
ballot did have a real impact,” said Mike Parker, a retired union activist who
had pushed for the tax with the Richmond Progressive Alliance. “It forced Brown
to make a significant shift towards taxing the wealthy.”
The original millionaires tax initiative would have
permanently raised rates by 3 percent for income over $1 million and by 5
percent for income over $2 million, garnering close to $16 billion the first
two years.
The version agreed to this week would raise about $7 to
$9 billion annually at first, state Democrats said, before tailing off to about
$5 to $7 billion a year.
The money will head to the state’s general fund,
disappointing education activists who noted that the millionaires tax
initiative had set aside money for schools. The state faces a $9 billion
overall budget gap.
“The governor’s proposal will cut further from
education,” said Caitlin Fox-Hodess, a head steward in UAW Local 2865 at the
University of California Berkeley. “The purpose of the millionaires tax was to
have a separate fund for education and essential services.”
Playing the Inside Game
Jim Miller, who teaches at San Diego City College and
is political action vice president of the CFT local on campus, said the union’s
leadership caved to the governor and the unions opposed to the millionaires
tax.
“They folded like a cheap tent,” Miller said. “By
including the sales tax, it leaves the door wide open to anti-tax types who
will say the unions are coming to pick your pocket. It throws away the
incredible rhetoric of the 99% versus the 1%, it blurs the issue of progressive
taxation, and centrally, it’s still temporary.”
Both the CTA and SEIU campaigned against the
millionaires tax.
Miller said CFT switched its position without
consulting members, infuriating activists like him who have spent months
working with members and allied community groups to gather thousands of
signatures.
“The process was deeply undemocratic,” Miller said.
“This was the worst sort of inside-game, top-down unionism.”
Sources in the CFT said the union had planned to take
the issue before its executive council this weekend but found its hand forced.
CFT spokesman Fred Glass said the union always made clear
that it needed another partner from labor to commit resources to effectively
fight the resistance expected to the millionaires tax, but couldn't find one.
The California Nurses and Northern California division of the Longshore union
(ILWU) had endorsed the tax.
"We were able to push a sitting governor to make a
regressive tax much more progressive, and put a lot more responsibility on the
shoulders of those who should bear it," Glass said, adding sixth-sevenths
of the revenue raised by the compromise initiative will come from higher taxes
on high earners.
Fox-Hodess said other unions and community groups in
the millionaires tax coalition have not given up on the idea and will decide
this week whether to pursue the initiative. The task will be much harder
without the teachers union, the biggest and best-resourced partner in the
group.
Some backers of the millionaires tax say it wasn’t
clear their coalition was going to have enough signatures, which could have
influenced CFT’s decision.
But the millionaires tax had the advantage of
grassroots momentum, said Michael-David Sasson, a steward in Teamsters Local
2010 who works at the University of California Berkeley. The
signature-gathering activated many groups not typically involved in politics,
he added.
Sasson said the millionaires tax upset Democratic
leaders, however, who likely threatened to exact their revenge by opposing
CFT’s legislative agenda.
Longtime observers believe that both CTA and SEIU
expected their support for the governor’s tax initiative to translate into more
favorable treatment for their members when the ax falls in future rounds of
budget-cutting.
“One can imagine there were threats as well as
enticements in the discussion,” Sasson said.
Fast-approaching deadlines fed the need to find a
compromise. Backers of the consolidated measure will have only six weeks to
find 800,000 signatures to qualify it for the November ballot.
California has been hit hard by the economic crisis,
but anti-tax legislators have blocked most proposals to raise revenue, and
shortfalls have disproportionately translated into cuts. The state budget has
fallen from $102 billion to $87 billion in the last four years. Support for the
elderly and disabled has been slashed, libraries and parks have been closed, and
tuition at California’s public universities and colleges jumped 21 percent last
year alone, the highest increase in the nation.
Popularity Contest
Late February polls by the CFT showed support for the
millionaires tax at 69 percent and backing for the Brown proposal at 56
percent. A third tax initiative had 40 percent support.
Separate polling by the Public Policy Institute of
California showed the Brown proposal at 52 percent, down from nearly two-thirds
several weeks ago.
Taxes on millionaires are gaining in popularity
nationwide. Oregon voters passed a tax on the state’s wealthiest 3 percent two
years ago, and in the wake of the Occupy movement, New York's governor extended
special levies on high earners, backing away from his earlier opposition to such
taxes.
Despite the public enthusiasm for the millionaires tax,
several of California’s biggest unions had lined up behind the governor.
In January the 295,000-member CTA announced its
support. Despite the poll numbers, CTA argued that Brown’s measure had the best
chance at the ballot box. The California Business Roundtable and the Chamber of
Commerce, among other large corporate interests, opposed the millionaires tax.
A similar tension existed inside SEIU, which has
700,000 members in California. The SEIU state council voted to back the Brown
proposal in November, over the objections of several large public employee
locals that wanted to throw the union’s considerable resources behind the
millionaires tax.
But after a call for per-capita-weighted voting, the
endorsement tilted in favor of Brown. The council voted to bind locals to the
state council’s endorsement, barring dissenting locals from endorsing or
funding the millionaires tax.
Sources familiar with the endorsement confirm it was
driven by officials originally appointed by the SEIU International to run its
giant statewide health care union, UHW, after the local was trusteed in 2009.
Us Vs. Them
Rank-and-file activists expressed frustration with the
insider approach, especially after the openings created by Occupy and related
movements to challenge politics as usual.
“A lot of other unions think about electoral politics
as the whole game,” Fox-Hodess said. “It’s just one component of a larger
struggle.”
Amanda Armstrong, a head steward in UAW Local 2865,
said focusing on millionaires could have reversed the anti-tax mood that for
three decades has provoked a steady decline in funding for everything except
prisons.
Inspired by the Occupy movement, she and 50 Bay Area
students and faculty marched 99 miles to converge on the Capitol in Sacramento
March 5.
Joining thousands of teachers and students—from
kindergarten to college—their demonstration was fueled by nearly $5 billion in
state education cuts that will be triggered if voters don’t approve a tax
increase in November.
Hundreds attempted to occupy the Capitol, provoking a
standoff with state police that led to 68 arrests. “We’re not going to win this
fight by going up to Sacramento to lobby,” Armstrong said.
At his daughter’s school, Sasson had secured the Parent
Teacher Association’s endorsement of the millionaires tax. He had planned to
table for signatures Friday night and wonders what he should tell the parents
now.
“We had the crazy idea that people who are millionaires
should be taxed at a higher rate indefinitely, and that moving to Mississippi
levels of education funding is not a good thing,” he said. “It was a
hyper-reasonable way to engage people who think bake sales will solve the
school’s funding problems.”
