Prop. 38: Tax pain without educational gains

by Matthew Smith

Advancement Project

Proposition 38 is one of two initiatives that would raise taxes in order to increase revenue for public education. Only one can be enacted. In order to pass, Proposition 38 will need to win at least 50 percent of the vote and get more yes votes to defeat its rival initiative, Proposition 30. If passed, Proposition 38 is expected to generate $10 billion in revenue for the 2013-14 school year and about half as much for the remainder of 2012-13. Of the total, $6 billion would be earmarked for schools, $1 billion for preschool and child care and $3 billion to state bond debt payments.

One of the main differences between the two pro-education propositions is the tax structure. Unlike Proposition 30, which raises the sales tax slightly and increases the income tax on top earners, Proposition 38 raises the income tax on virtually all earners who make more than $7,300 per year. Proposition 38 sets the lowest tax increase at 0.4 percent for single filers making between $7, 316 and $17,346 per year and joint filers making between $14,632 and $34,692. The highest tax increase is 2.2 percent on single filers making more than $250,000 per year and on joint filers making $500,000 per year. The tax hikes for Proposition 38 are temporary and would expire in 2024.

Another major difference between the two propositions is which schools receive funding.

If Proposition 30 wins, it would provide revenue to K-12 schools and community colleges, as well as the California State University and University of California systems. If Proposition 38 passes, it will provide funding to preschools and early childcare, which Proposition 30 doesn’t fund. Proposition 38 would also provide roughly $1.2 billion more for K-12 schools than Proposition 30. Unlike Proposition 30, however, Proposition 38 will not provide funding for either community colleges or the UC and CSU systems. Without the funding, higher education would face automatic spending cuts estimated at $250 million each for the UC and CSU systems.

Proposition 38’s main supporter is wealthy civil rights lawyer Molly Munger, who made an expensive campaign to get enough signatures to put the initiative on the ballot. Munger has in turn donated $44.1 million to Proposition 38’s campaign and has run attack ads against Proposition 30. The California Parent Teacher Association is also a major supporter of Proposition 38. Only two major newspapers endorse Proposition 38; the San Francisco Bay Guardian and The Bakersfield Californian.

Proposition 38’s harshest critic has been Gov. Jerry Brown, who sees Proposition 38 as a threat to the passage of Proposition 30. Both the California Democratic Party and the California Republican Party oppose Proposition 38. Virtually every major California newspaper opposes Proposition 38, including the Los Angeles Times, the San Francisco Chronicle, The Sacramento Bee, U-T San Diego and The Fresno Bee.

Proponents of Proposition 38 raised roughly $47.75 million, 92 percent of which is provided by Munger. The next largest donors are Munger’s husband, Steve English, who contributed $3.25 million, and George Joseph, who contributed $195,000.

Opponents, on the other hand, report a lowly $42,300 in campaign contributions. The California Faculty Association donated $1,500, the California Medical Association donated $11,000 and the California Chamber of Commerce donated $23,500 to “No on 38.”


Proposition 38 is currently trailing in polls. According to a recent poll by the Public Policy Institute of California, 39 percent of likely voters support Proposition 38 and 53 percent oppose it.

Other polls such as a September Field Poll show Proposition 38 losing 44 percent to 41 percent. Considering the bad poll numbers, poor reception from most major newspapers and a more favorable view of Proposition 30 among voters, it’s unlikely Proposition 38 will pass.

Proposition 38 has good intentions to improve our school and Munger’s advocacy for higher education funding is admirable. However, it is the wrong approach for both public education and California citizens.

As much as the proposition can do for K-12 schools, the tax burden is too heavy. Individuals making as little as $7,316 will face tax increases, which will hurt lower and middle income households, including college students, not to mention being scheduled to last for an agonizing 12 years. An estimated 60 percent of the state’s population would face tax increases if Proposition 38 passes. Raising taxes on such a large chunk of the population in the middle of a slow economic recovery and skyrocketing tuition would be economic suicide.

Even worse for college students, Proposition 38 provides no funding to higher education. It will do nothing to stop the automatic budget cuts set to take place if Proposition 30 doesn’t pass, or if they both pass but Proposition 38 has more votes. If these budget cuts take effect, tuition for San Diego State students will increase by at least five percent next semester—and that is just the tip of the iceberg. CSU administration is considering additional tuition increases such as a $372 per unit fee for undergraduates who have taken more than 150 semester units, a $100 per unit fee for students who repeat a class and a $200 per unit fee for students taking 17 or more units per semester.

These are tuition increases college students cannot afford. Tuition has nearly doubled in the last four years already. Tuition and fees at SDSU for the Fall 2008 semester added up to $1,877 for undergraduates. Today, it’s $3,538. These tuition increases place a far greater financial burden on students than any California taxpayer has had to pay during the same time period.

Proposition 38 strangles college students as well as lower and middle income families in order to marginally improve lower-level schools. The state needs more funding for public education at a time when it has been decimated, but we need a solution that provides funding for higher education and doesn’t slap taxes on the poor. Proposition 30 is a more feasible alternative to Proposition 38 and will help all levels of education without placing the tax burden on the poor.

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