Giving up on the millionaire’s tax

March 20, 2012

Dana Blanchard, a member of the Berkeley Federation of Teachers, looks at her union's decision to drop its proposed ballot referendum for a millionaire's tax.

ON MARCH 14--the same day that more than 20,000 California teachers began receiving layoff notices--Bay Area newspapers reported that the head of the California Federation of Teachers (CFT) agreed to a deal with Gov. Jerry Brown to abandon a CFT-sponsored ballot initiative for a "millionaire's tax" and to rally behind a revised version of Brown's tax measure, which is weighted toward a regressive sales tax hike.

Before the agreement, the competing tax proposals were on a collision course as supporters of each attempted to gather signatures to qualify them for the November ballot.

The CFT's proposal, endorsed by several unions, including the California Nurses Association (CNA), would have increased taxes by 3 percent on income over $1 million and by 5 percent on income over $2 million. The centerpiece of Brown's plan, supported by the much larger California Teachers Association (CTA) and Service Employees International Union (SEIU), was a regressive sales tax increase of 0.5 percent and a state income tax increase of 1 or 2 percent for households making over $250,000.

California Federation of Teachers President Josh Pechthalt
California Federation of Teachers President Josh Pechthalt

Despite the fact that it originated among smaller unions like the CFT, the proposal for a millionaire's tax was widely popular. It captured the spirit of the Occupy movement's protests against the 1 percent--in opinion polls, it consistently won more backing than Brown's proposal.

Nevertheless, Brown insisted that he wouldn't compromise and said the CFT should drop its ballot measure. Leading Democrats pressured unions and community groups supporting the millionaire's tax to abandon the initiative.

Then came word last week that the CFT and Brown had worked out a deal. According to the Sacramento Bee, "CFT officials claimed victory Wednesday, saying they accomplished their goal of putting a progressive tax measure on the November ballot."

BUT WHILE Brown agreed to some changes in his proposal, it won't be a fully progressive measure.

There will still be a temporary sales tax increase, reduced to 0.25 percent, for four years. Brown's income tax increases on those making more than $250,000 will be at a higher rate than what he initially proposed, but not as high as the millionaire's tax proposal--with the result that the compromise will raise around half what the millionaire's tax would, according to estimates. And the compromise income tax increases would expire after seven years, unlike the permanent hikes in the proposal for the millionaire's tax.

The compromise initiative would also direct new revenues into the state's general fund, to be used at the discretion of the state government--unlike the millionaires' tax proposal to guarantee that 60 percent of the money raised would go to public education, including specific amounts for the University of California and California State University systems.

And there is a question of whether the compromise will make it on the November ballot. There are only six weeks left for supporters to gather more than 800,000 signatures to qualify the compromise measure.

Under the deal negotiated with the governor, the CFT agreed to abandon its signature-gathering efforts for the millionaire's tax. But Brown will keep circulating petitions for his proposal--as a backup plan, according to Democrats, in case the compromise doesn't make the ballot. But this leaves the door open to the Democrats sabotaging the effort for the referendum negotiated with the CFT, and sticking with Brown's original plan.

After its initial declarations of victory in the press last week, CFT leaders had to take a more sober response to the compromise, as rank-and-file members and supporters expressed disappointment and anger with the deal.

In a letter that went out to all CFT members, union President Josh Pechthalt didn't use the term victory, but nonetheless painted the compromise in a positive light: "We did not get everything we wanted. That is the nature of compromise. But we feel good that on balance, this is a solidly progressive measure, a great improvement on what the governor was proposing until now, and with a unified effort, has the best chance of passage in November."

On March 17, Pechthalt came in person to speak at a General Assembly for Northern California Occupy Education, one of the main groups that organized for March 5 protests in Sacramento with a main demand of passing the millionaire's tax. He presented a case for why progressives should support the agreement with Brown as an acceptable compromise.

But the GA wasn't buying it and voted overwhelmingly to continue to push for the millionaire's tax. Whether the ballot measure is still viable after its initiators, the CFT, pulled support is not clear, but supporters of the millionaire's tax will hold rallies in Oakland and Los Angeles on March 20 to continue efforts to qualify the referendum for the ballot.

SINCE THE CFT deal--negotiated by union leaders without consultation with rank-and-file members--was revealed, I have heard labor and community activists make various arguments in favor of the compromise worked out by Pechthalt and in support of giving up on the millionaire's tax initiative.

Brown did agree to concessions that make the compromise less regressive than his original proposal. But I think the concessions are fewer than people think, and they are less important than the fact that my union retreated from a proposal that was widely popular across the state--and that could have presented an important challenge to the austerity agenda, which is being driven by Jerry Brown and the Democrats.

For one thing, there is still an increase in the state sales tax, which always hits working people and the poor harder than the rich. This counteracts the effect of the compromise's increase on income taxes for households making more than $250,000 a year. Plus, Brown and the state government will still have control over the revenue that comes in, with no guarantees for specific funding for public education.

Some activists have argued that we can't be dismissive about any revenues coming into the state that would help poor people, no matter how they are obtained. But this completely misses the point of the campaign for a 100 percent progressive tax measure.

For the last decade in California, the rich have gotten back money from the state over and over again in the form of tax breaks and loopholes, while lawmakers have slashed away at public education and other programs ordinary people depend on. It shouldn't be the responsibility of working class people in California to pay for a crisis they played no part in creating. A sales tax increase, no matter how small, shifts the burden further onto those who can least afford to pay.

There is plenty of money in our state to cover the budget shortfall without regressive taxation at all. But working people will have to stand up and organize for initiatives to make the rich pay, like the millionaire's tax, in order to get at that money.

Another point I've heard--not only from the leadership of my union, but from labor and community activists--is that a compromise was necessary to get even a little bit of what we want.

What's most upsetting about this argument is that it disregards the fact that the millionaire's tax proposal was winning--it regularly gained more support in opinion polls than Brown's original proposal. Once it became clear to Brown that he wasn't going turn public opinion against the millionaire's tax, his best hope was to coopt the campaign. He had leading Democrats offer a deal while he insisted he wouldn't back down.

We should be clear that Brown got what he wanted all along--the millionaire's tax initiative derailed, and united support for his proposal, with some revisions. Brown came out the winner by getting supporters of the more popular initiative to pack it in.

Another argument raised in defense of the compromise is that this gives us time to build campaigns in the future to challenge wealth imbalances in California. But the millionaire's tax was a perfect first step for just such a campaign--and by pulling its support, without any discussion with rank-and-file members, the CFT has actually created distrust that will certainly hamper our work in the struggle for public education and social services in the future.

Would the millionaire's tax have eventually been defeated, after the corporations and the rich, with the support of the two mainstream parties, geared up against it? There's no way to know for sure.

But we know that defeat is guaranteed if our side gives up before the battle. Even if the millionaire's tax had lost in November, it would have contributed to building a grassroots movement against inequality, and we would be stronger for it.

This, to me, is the most important point of all. Our unions and our movement need to make a choice: Do we want to fight for what we really want, and commit to building the kind of struggle, one uniting workers, students, community organizations and more, that will be necessary to win? Or do we accept the narrow view that we can only get as much as the Democrats are willing to offer after they've finished compromising with the Republicans?

SOME ACTIVISTS--in the Occupy movement, for example--reacted to the news of the compromise on the millionaire's tax by slamming the CFT in particular, and unions in general.

I share their disappointment in my union's agreement with Brown, including the undemocratic way it was reached. But it should be said that the CFT was going up against the much bigger CTA and SEIU, which backed Brown from the start, and many of the unions and community groups that initially supported the millionaire's tax were either peeled away under pressure from the Democrats, or didn't put any financial resources into the campaign, like the CNA.

The CFT was the last union left standing by the millionaire's tax. Its leaders should be challenged for agreeing to the compromise, but they shouldn't be held solely responsible--the other unions that supported Brown's proposal should share the blame.

More generally, I think it's important for activists to understand that unions can be important tools to defend our rights--if we can organize real rank-and-file pressure.

In recent years, we have all watched the vast amount of money flowing from labor to the Democratic Party, while at the same time, unions haven't put enough resources into defending their own members or organizing new ones. The link between the Democrats and the labor movement has been a one-way street, with unions giving unconditional support to a party that is as devoted to austerity as the Republicans. We shouldn't let union leaders off the hook for this.

But these same union leaders can be pushed into taking a different stand if they feel enough pressure. As a CFT member, I was inspired by the willingness of my union to initiate the campaign for the millionaire's tax, against the opposition of Democrats and other major public-sector unions. This represented an important opening that we have to organize to build upon.

Activists who think unions and union leaders are part of the problem are conceding this political space to the Democrats. We need to continue to work within our unions to build up support for independent political power and militant struggle.

We took some steps forward with the millionaire's tax by raising demands within labor that went against a sitting Democratic government in Sacramento. Considering that, it would be a mistake, following the compromise, to give up on hopes for winning rank-and-file members to challenging the Democrats and rebuilding the labor movement.

Whether it will still be possible to campaign around the millionaire's tax is a question activists will have to answer in the coming days and weeks. Certainly it will be more difficult after the CFT's retreat.

We had the potential in this campaign to begin the process of mobilizing the sentiment against the 1 percent--to give a concrete form to the widespread desire to tax the rich. In addition, the millionaire's tax represented a challenge to our unions and other progressive organizations to break with the Democrats' agenda and support an alternative to austerity.

The CFT's compromise with Brown is a step away from this potential. Those of us who want to see a different California have a lot of organizing ahead of us to build the kind of force we need to stand up for the interests of workers and the poor against the rich and powerful.

If we are serious about that fight, we need to do the hard work of continuing to push for measures like the millionaire's tax--and of building a movement that challenges the status quo in this state.

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