Will tax-hikers finally get the message?

Although election results are not yet official, it is clear that Proposition 15, the $12 billion property tax hike also known as “split roll,” has failed. But, true to form, the proponents are not giving up their 42-year goal of destroying Proposition 13.

Recall that the proponents – mostly public-sector labor interests – had huge advantages in this battle: A massive turnout of Democratic voters who loathed the current president, a deceptive ballot label that was devoid of the words “tax increase,” a presumably vulnerable target in the form of business property owners and a seemingly endless amount of campaign cash.

But even all those advantages were not enough to push split roll over the finish line. So what are tax raisers going to do now? The first and most obvious answer is that they will try again to pass their failed split roll proposal. In fact, it was only moments after the election was called against Prop. 15 that the spokesperson for Evolve California, a far-left nonprofit that advocates for the destruction of Proposition 13 stated, “We’re really close to having a majority of California voters agreeing with us. It took us 42 years to get this point and so if it takes another two to four years to get where we want to be, then that’s what it is.”

It is unclear what makes the proponents of Proposition 15 believe that the results would be any different in a political environment that is unlikely to be as favorable to them as this one. Their excuses for failure don’t make a lot of sense. For example, they blame the pandemic for the defeat and rationalize that, in the next fight, COVID-19 will be far behind us. But this argument runs counter to their own campaign ads which repeatedly relied on the pandemic as a reason why local governments and schools actually needed the funds. Although pundits will speculate endlessly about the impact of the pandemic on Prop. 15’s demise, at best, it was probably a wash for both sides.

Are the Prop. 15 backers’ threats about resurrecting another split roll initiative in the near future to be taken seriously? We suspect that their consultants would advise them not to proceed and that it would be foolish to charge up that hill once again. After all, that strategy did not work well for General Pickett at the battle of Gettysburg.

While this direct assault on Proposition 13 failed, it does not mean that progressives will cease their never-ending efforts to extract more revenue from productive segments of society. Among the possible “revenue enhancements” that have been proposed previously is another step-up in the income tax rates. But since California’s top marginal rate of 13.3% is the highest in the nation, the wealthy will either join the millions who have already left the state or supercharge their tax avoidance strategies.

A slightly different “tax the rich” strategy is an outright wealth tax. Rather than tax the income of the wealthy, this tax would take a slice of one’s balance sheet every year. Again, should this foolish proposal start to gain traction, look for a massive outflow of capital from California to Texas, Nevada, Florida or a host of other states where elected political leadership rejects collectivist economic policies.

Also on the table is a sales tax on services. This would be proposed under the guise of comprehensive “tax reform” of which the sales taxes on services would be but one element. In any of its forms, don’t expect that “tax reform” in California would be revenue neutral. It would be a tax increase.

The defeat of Proposition 15 was a great victory for taxpayers. But one thing is certain. While the tax-and-spend lobby might think twice about pursuing property tax increases, they will seek out more tax revenue anywhere they can find it.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.