A California Tax Plan Meets the Mungers

Democratic Governor Jerry Brown was on the verge of persuading California voters to approve a tax hike to fund schools when he faced an onslaught from multimillionaire siblings—one of them a member of his own party. Brown inherited a budget mess in 2011, with 15 percent less in the state’s general fund than in 2008. To replenish the money, he came up with Proposition 30. The measure, on this year’s ballot, would raise $6 billion through a four-year, 0.25 percentage-point increase in the sales tax and a seven-year income tax hike of up to three percentage points on the wealthy. If the measure fails, schools and community colleges will lose $5.3 billion and state universities $500 million—automatic cuts that Brown baked into his 2013 budget as a warning that failing to pass Prop 30 would have dire consequences.

Until recently, Brown’s effort was on track. He got one of the state’s largest teachers’ unions to drop a competing proposal that only would have increased taxes on income over $1 million. He also persuaded much of the business community not to oppose Prop 30, even scoring contributions from companies including Warner Bros., Amgen, and Coca-Cola to promote the initiative.