It is understandable that many California taxpayers are disappointed with the election results.
The defeat of Proposition 6 means that last year’s big increases in both the car tax and the gas tax imposed on us by Sacramento politicians will remain in effect and California’s drivers are stuck having the second-highest gas tax in the nation.
Tax-and-spend progressives are interpreting the defeat of Prop. 6 as a green light to impose even higher taxes. In fact, some now believe that the iconic Proposition 13 itself may be vulnerable. But this thinking is faulty.
There are three major reasons why Proposition 6 failed and none of them are because voters were enamored with the Senate Bill 1 tax hike last year. First, the ballot label – which may have been the only thing low-information voters saw – made no reference to the tax hike passed by the legislature last year. Rather, it ominously stated that the initiative would “eliminate certain transportation funding.” This non-specific description ignores that, had Prop. 6 passed, California would still have the fifth-highest gas tax in the nation. In providing a blatantly misleading ballot title, Attorney General Xavier Becerra did the opponents a huge favor.
Second, the financial power of the “rent seekers” — those interests which secure financial advantage through higher taxes on the general public – was on full display during this campaign. Big business, including large construction companies, teamed with big labor to contribute well over $50 million in campaign funds. A one-time $50 million investment for $5 billion in tax proceeds every year is a heck of a good return on investment. Moreover, this amount of money dwarfed the approximately $5 million raised by the proponents. With that kind of spending disparity, the disinformation spewed out by the opponents could not be challenged effectively, particularly in major media markets.
Third, opponents engaged in repeated acts of questionable and even illegal behavior. Beyond just the over-the-top threats of collapsing bridges if Prop. 6 passed, there was the well-publicized use of Caltrans-supervised work crews to stop traffic and hand out campaign fliers urging a no vote on Proposition 6. And the full integration of Caltrans management with opposition campaign operatives was an example of real, not fake, collusion. While legal actions are pending on this kind of activity, it is of little solace to California drivers who are being punished every time they pull up to the pump or write a check to the DMV.
All of this demonstrates that it is not easy to persuade Californians to pay higher taxes. Proposition 6 may have been confusing to many voters because it was not labeled on the ballot as a tax cut. A vote of no was a ratification of the legislature’s tax increase. Even now it’s confusing.
A more accurate test of voters’ appetite for higher taxes is likely ahead in the next election. A proposal that would directly increase taxes on businesses has already qualified for the 2020 ballot. The measure would create a “split roll” for property taxes, triggering immediate reassessments on business properties and imposing billions of dollars in higher property taxes. This initiative is also a direct assault on Proposition 13 by weakening, for the first time, the core protections of that famous initiative.
Unlike the Proposition 6 campaign, the tax-and-spend forces will be asking for a Yes vote. Opposing them will be all the traditional taxpayer advocacy organizations accompanied by an armada of business interests. Many of those groups were part of the powerful coalition that soundly defeated Proposition 10, which would have unleashed rent control in California.
Proposition 6 was a disappointment and taxpayer advocates may be bloodied but they are not broken. To paraphrase Mark Twain, the news of our death is greatly exaggerated.