Initiative: $10B for K-12, preschool
Molly Munger's plan: Raise income tax
An initiative that would raise $10 billion for K-12 education and preschools by raising the state income tax, primarily on the rich, will be submitted to the Attorney General’s office for review this week, the first step for placing it on the November 2012 ballot. The initiative would target low-income students, who’d get a larger piece of the funding.
The Advancement Project, a national civil rights organization that’s been active in California, is sponsoring the initiative. Its primary creator and financier at this point is Molly Munger, a wealthy Los Angeles civil rights attorney who co-founded the Advancement Project. The daughter of Charles Munger, Warren Buffett’s investment partner and vice chairman of Berkshire Hathaway, she says she and others will put up the millions of dollars needed to qualify and promote it. The California State PTA has already endorsed it exclusively – ahead of other tax initiatives for schools that are being floated about.
Despite a flagging economy and an unemployment rate stubbornly in the double digits, supporters of more money for schools say they’re heartened by recent polls showing Californians are disturbed by severe cuts to public schools and are willing to pay higher taxes. That includes one by pollster Mark Mellman for the Advancement Project that found that 57 percent of very likely voters would favor its plan, with a third of respondents opposed and 9 percent undecided, a result that “stunned” her and “suggests a once in a generation opportunity,” Munger said.
Last week the Think Long Committee for California, a tax reform group led by billionaire Nicolas Berggruen, also floated a plan to raise an additional $10 billion, but only $5 billion would go to K-12 schools and community colleges, and it would do so primarily by extending the sales tax to services, from car washes to attorney fees, while lowering the personal and corporate income tax rates.
The state’s 5 percent personal income tax raises about $50 billion; Munger’s plan would bring in an additional 20 percent by raising the rate an average of 1 percentage point. But it would keep the current system’s progressivity, so 92 percent of the extra money would be paid by families earning more than $70,000, with 50 percent, or $5 billion, coming from those earning more than $300,000, Munger said. For those couples with taxable income above $5 million, the marginal tax rate would rise 2.2 percentage points to 12.5 percent; they’d pay the most.
The personal income tax has fueled growth in state spending, but it’s a volatile tax, tied to the stock options and fortunes of a sliver of rich Californians. That’s why tax reformers behind Think Long want to broaden the sales tax.
Munger’s plan would take a different approach to leveling the roller coaster ride. Annual revenue that exceeds the increase in the average per capita income in the state would be set aside to pay down the state’s debt for school bonds, which accounts for about half of the state’s indebtedness, she said. That should free up money for future needs.
Money to follow the student
Between property taxes and the state’s general fund, about $45 billion funds Proposition 98 K-12 spending, so Munger’s plan would immediately boost money for schools by nearly 20 percent (community colleges would not be included) . However, the new revenue would go into a separate fund, protected from the Governor’s and Legislature’s subverting Prop 98 and finagling with its arcane rules.
Fifteen percent of the $10 billion would go toward supporting and expanding early childhood and preschool programs, which currently reach only 30 to 40 percent of qualified children, according to a summary of the initiative (the exact wording wasn’t yet available). The remaining 85 percent, or $8.5 billion, would be divvied up as follows:
- 70 percent of the total in a flat grant per public school student, including students in charter schools, with middle school students getting 20 percent more than elementary school students and high school students getting 40 percent more – reflecting the higher cost of educating older students;
- 18 percent would provide additional per capita money (about $670) for low-income students eligible for federal Title I aid;
- 12 percent per student funding for instructional materials, school site technology, and teacher training.
The initiative will state that the new money is not to be used to increase school salaries and benefits; no more than 1 percent can be used for administration.
The money-follows-the-student formula, weighted toward the poor, combines elements of transparency and equity that school finance reformers have been clamoring for. Schools will be required to show how the extra revenue has been used, and the information will be posted on a state Department of Education website, Munger said; parents will then know if districts have heeded their recommendations on how the money should be used in their children’s schools, such as to restore arts, hire more teachers to reduce class sizes, expand STEM (science, technology, engineering and math) offerings.
Assemblywoman Julia Brownley, who chairs the Assembly Education Committee, has similar elements in AB 18, the main finance reform bill that will be worked on next year.
The initiative would begin the transformation, Munger said. “When the model is out there, it gives a push to change the larger finance structure without piling it all in one ballot initiative.”
Hers and Think Long’s are two of several education initiatives that could collide on next November’s ballot. Gov. Brown and the California Teachers Association have yet to announce their plan to raise money for K-12. A proposal to tax oil and natural gas production, with money to K-12 and higher education, is gathering signatures.
Some tax advocates are hoping proponents will split their differences and put one initiative on the ballot that business, labor, and education reformers can agree on.
For her part, Munger said she’s open to talk in the next month and a half, while her initiative awaits the AG’s review. But she and supporters don’t want to substitute a progressive tax – the personal income tax – for a divisive, more regressive tax, she said. “We are pleased with a proposal that seems to be most reflective of what voters want to do this year,” she said.
It’s time for someone to consider our future leaders. It seems that many of our elected officials are concerned about the wealthy and have forgotten about the kids in this country. If you think about it, we have students that are in the sixth, or seventh grade that have been seriously deprived of a high quality education due to constant budget cuts. You just can’t replace teachers every year and expect the students to receive the high quality education they need and deserve. I’m truly disappointed in the leaders of this nation. Although this is a problem that we can’t just blame on the governor, or the president of this country. We all are responsible for allowing this to happen to our kids. It’s simple, we either educate them, or care for them for life as they are confined by our unjust criminal system.
Report this comment for abusive language, hate speech and profanity
“we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.”
…
“Examining IRS tax return data by state,… measured the impact of large income-tax rate increases on the rich ($200,000 income or more) in Connecticut, which raised its tax rate in 2003 to 5% from 4.5%; in New Jersey, which raised its rate in 2004 to 8.97% from 6.35%; and in New York, which raised its tax rate in 2003 to 7.7% from 6.85%. Over the period 2002-2005, in each of these states the “soak the rich” tax hike was followed by a significant reduction in the number of rich people paying taxes in these states relative to the national average. Amazingly, these three states ranked 46th, 49th and 50th among all states in the percentage increase in wealthy tax filers in the years after they tried to soak the rich. … Examining data from a 2008 Princeton study on the New Jersey tax hike on the wealthy, we found that there were 4,000 missing half-millionaires in New Jersey after that tax took effect.” (Laffer & Moore, “Soak the Rich, Lose the Rich,” WSJ).
So please don’t be surprised by more headlines like Tech-rich buyers help Tahoe real estate rebound. They tend to buy not in Truckee, CA but in Incline Village, NV. For obvious reasons.
Report this comment for abusive language, hate speech and profanity
Primarily the rich….earning more than $70,000. With a family of FIVE, earning $71,000 does not put one in the RICH bracket. The only words I an come up with to describe this idiot legislation is obscene and our elected representatives are doing their best to ensure income redistribution from the lower middle class that works its butt off to the non working class or those who simply have not worked as hard to achieve. Politicans are simply descpicable.
Report this comment for abusive language, hate speech and profanity
According to a note in the sidebar on this page, the average CA teacher makes $67K. That means 50% make more than that, which puts them into the “rich” bracket by this proposal. Even more if they are married to a wage earner.
By not including higher education this further alienates a lot of potential supporters.
You need over 60% support going into the election before the attack ads whittle down your support for a measure to pass.
This is DOA.
Report this comment for abusive language, hate speech and profanity
I need a lot more information on this initiative! I agree that raising taxes will cause many to flee/make changes that enable them to pay less. The definition of “rich” is laughable. Is it 70K before the $10,000 in health insurance contributions and costs? Is it 70K before the kids’ college tuition is deducted – along with the health insurance? I know from volunteering endlessly, that there are many people earning about 70 – 100K who are donating thousands of dollars already to their kids’ schools so that ALL students receive the benefits.
And … back to my boring band wagon … will there be evaluation strings tied to this money? I taught in a high poverty school where student achievement was lowest in the district. Then at another school where many students from the earlier school entered via VEEP. The achievement of those same students was higher at the second school, even though the cost per student was thousands lower. Until California uses the data it has in its possession to evaluate the variables that affect student achievement, school by school, class by class, money is not going to solve anything. Where is CALPADS???
Report this comment for abusive language, hate speech and profanity
So typically what they mean when citing an income level is net taxable income after all deductions are taken, and then the increase would only be on the amount over that threshold. So a 1% increase on $70k sounds like a family grossing $70k would pay an extra $700, but more likely it’s a family making over $90k gross would pay an extra 1% on the amount over the bracket, meaning that a family making $100k might pay an extra 1% of $10,000, or $100.
Report this comment for abusive language, hate speech and profanity
Interesting, I think money would help the problems we have in our local schools tremendously! It would lower class sizes which would provide a much better education to my kids than the one they are currently receiving. They wouldn’t have to fundraise for every little thing the school needs, no more begging parents and community members for supplies such as paper, glue, scissors, pencils, etc., and no more bullying and getting into trouble for students because there would be proper supervision. As I see it, the real problem in our schools is a lack of money. Yes, we need to not misspend any funds that come the way of the schools, but they are on the brink of collapse altogether, because of never ending budget cuts to education. No district I know is going to go out spend these funds frivolously, they are simply going to have the funds to pay for the basics of a good education. And, honestly, all the data in California does not adequately reflect all schools. I think local school boards, administrators, and teachers know what their schools really need, not some suit in Sacramento.
Report this comment for abusive language, hate speech and profanity
Thanks for every other magnificent article. Where else may just anyone get that kind of information in such an ideal manner of writing? I have a presentation subsequent week, and I am at the search for such information.
Report this comment for abusive language, hate speech and profanity