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California’s Temporarily Temporary Tax

eye on the news

California’s Temporarily Temporary Tax

A state tax increase, due to expire in 2018, might live on. August 17, 2016
California
Economy, finance, and budgets

In 2012, Californians adopted Proposition 30, a “temporary” tax that, according to the governor, state legislators, and teachers’ unions, would save the state’s education system by giving it an influx of at least $6 billion. The initiative jacked up income taxes on people earning more than $250,000 through 2018, and increased sales tax on everyone, through the end of this year. Now, the Golden State’s teachers’ unions, along with the Service Employees International Union, are looking to keep the higher income tax in place through 2030. (The sales tax increase will expire as scheduled.) California voters will decide on the tax extension in November, when the California Children’s Education and Health Care Protection Act of 2016, or Prop. 55, appears on the ballot.

It’s no surprise that the teachers’ unions would want to keep the higher tax—and the additional revenues it brings—in place. Earlier this year, California Teachers Association president Eric Heins claimed that Prop. 30 generated revenues that “continue paying back schools from the years of devastating cuts—especially those serving our most at-risk students.” But there was never any devastation. During the recession, spending dipped for K-12 schools and community colleges, but the decrease was hardly devastating. And since the end of the recession, California’s education spending has increased more than 40 percent.  

All the extra money has brought paltry results. The work of the late Andrew Coulson shows that between 1972 and 2012, California’s education spending (adjusting for inflation) doubled, but students’ SAT scores actually went down. Things have gotten worse since 2012. In fourth-grade math, California ranks at the bottom nationally, just one point above New Mexico, Alabama, and Washington, D.C., according to November 2015 data from the National Assessment of Educational Progress, known as “the nation’s report card.” In fourth-grade reading, only New Mexico and D.C. fared worse.

A recent study on the relationship between spending and achievement, conducted in Michigan, found no statistically significant correlation between how much a state’s public schools spend and how well students perform. Mackinac Center education policy director Ben DeGrow, who coauthored the study, said, “Of the 28 measurements of academic achievement studied, we find only one category showed a statistically significant correlation between spending and achievement, and the gains were nominal at best.” He added, “Spending may matter in some cases, but given the way public schools currently spend their resources, it is highly unlikely that merely increasing funding will generate any meaningful boost to student achievement.”

And yet, the unions look to be in strong position to win their tax-hike extension. A Public Policy Institute of California poll in April found that 64 percent of Californians support it. Among likely voters, 62 percent favor it. More than six in ten voters believe that the state should spend more on education. And after insisting that the tax would be temporary, Governor Jerry Brown is having second thoughts. In his May budget revision report, he said, “The emerging shortfall is in large part—but  not entirely—due to the expiration of the temporary taxes imposed under Proposition 30.”

Does the average voter know how much California already spends on education? Apparently not. A recent Education Next poll asked respondents to estimate per-pupil expenditures in their local school district. On average, the respondents guessed $6,307—but their school districts spent nearly double that, or $12,440 per pupil in 2012, when expenditures for transportation, capital expenses, and debt service are included.

The CTA has already sunk $10 million into the Prop. 55 campaign, with more to come. The Million Voters Project, an effort funded by many left-wing philanthropists, is working hard to pass it. Supporters insist that the tax falls only on the wealthy, whom they claim don’t pay their “fair share.” A look at the numbers tells a different story. A report issued by the Congressional Budget Office in 2012 shows that the top 1 percent of income earners across the nation paid 39 percent of federal individual income taxes in 2009, while earning 13 percent of the income. Hence, it’s clear that the rich are already paying considerably more than their “fair share.” At what point will California’s perennially overtaxed realize that their bottom line will be much healthier in, say, Texas?

American Federation of Teachers president Randi Weingarten and other union leaders continue to believe that we can spend our way to academic success. All the data show otherwise. With a debt of more than $1 trillion and counting, along with some of the highest tax rates in the country, California can ill afford more spending. The state’s residents have to stop falling for myths about meager education dollars. Voting “No” on Prop. 55 would be a good place to start.

Photo by Kevork Djansezian/Getty Images

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