Issue link: https://digital.copcomm.com/i/50712
the most part, have had a banner decade. Between 2001 and 2008, corporate income grew by 411 percent, and many have con- tinued to profit quite nicely even since the 2008 market crash. Yet through a myriad of tax loopholes, the proportion of state revenue paid by corporations has shrunk, while the burden on individual taxpayers has increased. An analysis of 25 major Cali- fornia corporations by the Orange County Register shows that nearly all paid far less than the official state tax rate. While many homeowners saw Proposi- tion 13 as a good thing, upon its passage public school funding was slashed and has never really recovered. Other glaring conse- quences of the law have been that identical homes in the same neighborhood pay wildly different tax bills and it shifted the overall tax burden from corporations to homeown- ers. Because commercial property changes hands much less often than homes, many corporations have unfairly benefited from ridiculously low property tax obligations. For example, under Prop. 13, the Anheuser- Busch corporation paid just $18,000 a year in property taxes on its 3 million square foot brewery location in Van Nuys, less than a penny per square foot. (Ironically, even when the brewery was finally sold in 2008, Los Angeles County forgot to reassess the property, continuing to cost the state and county millions.) Although Proposition 13 is often considered the untouchable "third rail" of California politics, more Califor- nians are open to changing this unfair advantage to corporations. A WIDENING INCOME GAP SHIFTS THE PROPORTIONAL TAX BURDEN TO THE POOR. Af ter World War II and through the 1970s, bottom incomes were rising faster than those at the top, expanding the mid- dle class and narrowing the gap between rich and poor. Starting in 1979, that all changed. Over the last two decades, the bottom 20 percent have seen a 19.5 percent decrease in income while the wealthiest 20 percent have seen a 21.4 percent increase. And while the poor and the middle class have seen their earn- ing ability decline, in California the top 1 percent have seen their incomes double. As the rich have gotten richer, the pro- portion of their wealth that goes to state taxes has shrunk, while the poor have ended up contributing more. Now the bottom 20 percent of wage earners in California pay 11 percent of their income in taxes, while the top 1 percent of wage earners pay under 8 percent. Aside from the fact that this starves the state of needed revenue, it simply isn't fair that those who can least afford it have a propor- tionally higher tax burden than the very wealthy. Some of the wealthy, including bi llionaire investor War- ren Buffett, have recognized this, calling for higher taxes on millionaires, while oth- ers still lobby against paying their fair share. In California, where many Republican law- makers have signed "no tax" pledges, getting the rich to ante up has run into more than its share of obstacles. CALIFORNIA CORPORATIONS AREN'T PAYING THEIR FAIR SHARE. While personal income for all but the wealthy has shrunk or stagnated, Cali- fornia corporations, for December 2011 • January 2012 / www.cta.org 31 POOR LEADERSHIP DECISIONS ON TAXES WIDEN THE BUDGET GAP. One of the first things Gov. Arnold Schwar- zenegger did after taking office in 2003 was to rescind an order by recently recalled Gov. Gray Davis that had restored vehicle license fees to their higher 1998 levels. In doing so, Schwarzenegger blew an immediate $4 billion hole in the state budget that had passed earlier that year. Despite skyrocket- ing deficits, he held steadfastly to this cut throughout most of his administration, but story continued on page 34 There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along. Elizabeth Warren, consumer financial protection advocate and U.S. Senate candidate from Massachusetts.