A new mood can be seen in the US where Californian voters supported plans to raise taxes. It suggests that former Republican governor Arnold Schwarzenegger won’t be back after all
The state that once gave us Governor Reagan and Governor Schwarzenegger last week delivered the Democrats a huge tally of electoral college votes for President Barack Obama, a massive endorsement of Congressional stars Dianne Feinstein and Nancy Pelosi and, perhaps most importantly of all, laid to rest a 34-year symbol of the small-state movement.
They may have rewritten the rule-book about tax rises being electorally unpopular and struck a blow for public services. Above all, they may well have sounded the starting pistol on a global race to shift the burden of taxation back onto the rich. In the country that until recently stood in awe of the ultra-libertarian Tea Party, this is a major turnaround.
This is the story of two referenda 34 years apart. In 1978, California voted for Proposition 13, which capped state property taxes and is widely regarded as having marked the start of the revolution that reversed the post-war trend of progressive taxation. It became a global symbol of the anti-tax revolution that has defined political life in the developed world for a generation.
Last Tuesday, the Californians whose parents sparked the small-state revolution may well have acted as midwives to its end by endorsing Proposition 30 by 54% to 46%. They voted for a temporary (seven-year) progressive increase in income taxes on Californians with annual incomes over $250k, $500k and $1m as well as a 0.25% sales tax increase (expiring after four years), to prevent $6bn in spending cuts this year alone.
Those $6bn of cuts in state spending may have been the straw that broke the Republican elephant’s back. And much of the heavy lifting on the doorsteps was done by public sector unions excoriated across the developed world for receiving taxpayers’ hard-earned cash in wages and pensions.
But there was also a clear mood that inequality had grown to unacceptable levels. Like much of the developed world, the gap between rich and poor has ballooned since the 1970s. The Financial Times reports (£) that: ‘During the 1970s, the richest 1 per cent in the state earned 10 per cent of personal income – then about $135bn. Their share has since increased to 22 per cent, while personal income has soared to $1.8tn.’
Small wonder that opponents like the billionaire Koch brothers donated $11m to the campaign against Prop 30. The FT quoted Dean Vogel, president of the California Teachers’ Association, saying: ‘If you are sick and tired of the "no new taxes" rhetoric, there is a way around it: go to the voters. Politics is personal and the best strategy is to get in front of people and talk to them.’
And as well as Prop 30, California voted Democrat in mountainous numbers. The ten million Californians who voted did so overwhelmingly for Obama (59% to 39%). In some parts of the state Obama won by more than three to one, including 83% of the vote in San Francisco County.
Democratic Senator Dianne Feinstein did even better, winning 61% of the popular vote and 88% in San Francisco. Nancy Pelosi, Leader of the Democrats in the House of Representatives, kept her San Francisco seat by 85% to 15% and wasn't even the best performing Democrat in the House elections.
Democrats also increased their grip on both houses of the state assembly. Will ‘the Govern-ator', as Schwarzenegger was dubbed, be back? It looks unlikely.
Owen Tudor is head of the European Union and international relations department of the Trades Union Congress
