June 14, 1978

California Vote A "Spending" Revolt

The resounding vote in California last week against property taxes is a significant political trend, but another Boston Tea Party it is not.

Bona fide tax revolts are few and far between.  Even the American Revolution was less of an objection to taxation than to forced participation in a royal trade monopoly that curtailed colonial profits.

Something of the same kind of frustration is at work in California and elsewhere throughout the nation.  The revolt is aimed at government spending, not taxes per se.

To be sure, Californians zeroed in on a specific, real estate tax - just as the Bostonians of two centuries ago vented their spleen on the tea tax.  Every bonfire has to have a spark to get going.  The California tax - automatically reassessed every time a neighborhood house is sold - is uniquely unjust and operates to price home owners out of their own homes.  Doubling of taxes each year is not unusual.

The California Proposition 13 is just a skirmish in a larger war for "tax-expenditure limits" - or TEL as it is called by Milton Friedman and other fiscal conservatives nurturing their troops through a symbolic "Valley Forge."

The battle to limit government spending by a variety of legal "caps" began about 15 years ago on a state-by-state basis.  Almost unnoticed, political curbs of some sort have been nailed down in 17 states.  Ohio, with its constitutional requirement for a balanced budget, is a fore runner.  A similar constitutional amendment to restrain the federal government has been approved by 23 state legislatures.

Clearly, Americans are in a mood to halt the liberal spending that has contributed greatly to runaway inflation.  They have not yet refused to pay all taxes - a true revolt - but they have signaled a determination to start selecting targets.

A good example of this selectivity is defeat of the Cleveland school levy for the second time in the face of certain collapse.  There is widespread resentment of forced bussing, teachers' salaries relatively higher than the tax payers', and arbitrary orders by a federal judge.

A recent comment by a Parma resident is typical, "We have lost control of our local schools and are willing to destroy the system so we can start over."

Some politicians are starting to get the message.  Within days of the California vote, Congress voted overwhelmingly to lop off a billion dollars from the Health, Education and Welfare budget.  California Governor Jerry Brown immediately froze state hiring and vowed to carry out "the will of the people" without a new tax.

Opponents of TEL techniques predict catastrophic increases in crime and fire as safety forces are cutback.  Politicians who succumb to the temptation to "punish" voters by wholesale firings of police and firemen most likely will find themselves without a job shortly afterwards.

It is interesting to note that amidst all the dire predictions of massive cutbacks, not a single politician has grasped the voters' intent of frugality - in contrast to sacrifice.

The taxpayers are trying to say wages of public employees should be cut to that of the market place where they have to struggle.  They are demanding elimination of nonessential subsidies and a more strict evaluation of what is essential.  They are advocating less government and a larger share of their own earnings.

Chicken Little politicians who rush about in the next few weeks crying that the sky is falling may be laughed out of office.  It is estimated that tax revenues in California will be reduced by $7 billion as a result of the recent vote.  Yet there is a $5 billion surplus in the state treasury, and dependence on property for income is to be reduced only from 3 percent to 1 percent of market value.

A modest cut in manpower, and a 5 percent reduction across the board in pay for public employees to the private sector average, would quiet the natives.  Thereafter, sensible increases in other taxes would be supported if proven necessary.

Opinion polls disclose that inflation is the number one concern of Americans, and that they perceive government spending as the primary cause.  They distrust continual borrowing of money to finance social causes.  They worry about the erosion of purchasing power of hard earned pensions.  They believe the day of reckoning our national debts is close at hand.

All this worries Mr. and Mrs. Average American.  They have lost confidence in their representatives' will and ability to control the financial forces gathering momentum.

Either the national and state legislatures call a halt to spending, or a true tax revolt might be ignited that would consume the good with the bad.

Fortunately TEL is a constructive alternative to angry purges.  Whether mandatory balanced budgets, or tax ceilings limited to a fixed percent of total gross national product, legal restraint offers hope.  It would take our representatives off the special-interest hook and force all of us to prove need for public services.

Best of all it would be a giant first step to licking inflation and stabilizing our economy.

The battle against taxation without representation continues.

Author: Lindsey Williams