Governor Gavin Newsom announced the record budget of the state of $ 227 billion last week, despite the fact that unemployment rose over 10 percent in one year and the homeless crisis hit devastating levels in Los Angeles and beyond.
He has proposed targeting much of California’s premium towards low-income residents and families, and it remains to be seen whether the state will receive similar tax breaks in the years to come. If this is a one-off windfall, Newsom and lawmakers will have to find other resources to get additional help – and face pressure to raise tax rates even further for the rich.
“There’s a way the pandemic has exacerbated all of these systemic and societal issues that we’ve always been aware of,” said Brandon Greene, director of the Racial and Economic Justice Program at the ACLU in Northern California. “These gaps persist and grow. And if it can happen here, in a blue state where you have the political capital, it can happen anywhere. “
California’s low-income workers and people of skin color have borne the brunt of both the economic aftermath of the recession and the physical aftermath of the virus itself. The death rate for Latino Covid-19 is 22 percent higher than the national average, and the death rate for blacks is 16 percent higher, according to the California Health Equity Tracker.
Even before the pandemic, zip codes, where only 2 percent of California’s population lived, owned 20 percent of the state’s net worth, according to the impartial Legislative Analyst’s Office. In 2020, more than 40 percent of households making less than $ 40,000 a year saw a reduction in work hours or pay, and an equal percentage had to cut back on food, according to the Public Policy Institute of California.
“Decades of inequalities, these pre-existing conditions of race, ethnicity, the pre-existing conditions of wealth and income inequality have clearly come to the fore and need to be addressed,” Newsom said as he outlined his budget proposal last week.
Moments later, he made a sharp proclamation about how the other side is doing: “The people at the top are damn fine.”
The 53-year-old Newsom is not only a governor but also a multimillionaire. His personal life has shown the extreme differences in California. His dinner at the French laundry in November not only enraged the public for disregarding his own advice against collecting; It was a visual issue with menu prices that many Californians cannot afford even in normal times. Newsom sent his own children back to private classrooms in late October while most of the families were in distance learning. When he was quarantined in November, he said he was “blessed because we have many rooms” in his Sacramento County home.
The Democratic governor takes pride in bridging the equity gap, however, and has branded his efforts as “California for All” since taking office two years ago. He appointed the state’s first General Surgeon, Nadine Burke Harris, who has focused her career on treating childhood trauma in disadvantaged communities and having vaccine discussions while keeping equality in mind. Newsom has gone to great lengths to reopen public schools this spring as it says students in low-income areas struggle most with distance learning.
Newsom has proposed $ 600 in government economic reviews to nearly 4 million low-income workers as part of its budget plan. At the beginning of the outbreak, he struggled to house tens of thousands of homeless Californians in hotel rooms, then switched to a program designed to convert this into permanent housing. He helped protect tenants from eviction and would like to extend this protection.
Californians saw a number of reliefs in 2020 as all levels of government sought to ease the burden. Children who live in communities that have long had no broadband and high quality internet access were given hotspots and other wifi access. The cities no longer used parking tickets and no longer lugged around to generate income. Other subordinate offenders have been released from prisons and jails following virus outbreaks.
Proponents say the harrowing juxtaposition in the pandemic, when the state’s richest got richer and its poor got poorer, prove it isn’t enough. They are campaigning for Newsom and the lawmaker to use California’s unexpected gust of wind to help the state’s most vulnerable by expanding the social safety net and turning temporary relief provided during the pandemic into permanent solutions. They fear that once the vaccine hits the masses and Covid-19 is in the past, the momentum is already wearing off and that things will return to normal.
“Those things that were implemented as a lifeline of sorts are now running out and people still need them,” said Jhumpa Bhattacharya, vice president of the Insight Center for Community Economic Development in Oakland. “We live in a society where we don’t believe in government interference, and there is this narrative that you can pull up by your bootstraps. When the pandemic broke out, we saw that was not true and I hope we can gain a new understanding of how our society works. “
The California Democrats have proposed higher taxes for the ultra-rich as a solution. Groups like the California Teachers Association last year pushed for legislation to increase taxes for residents with net worth more than $ 30 million. That bill failed, but assembly member Luz Rivas (D-Arleta) was just proposing to raise taxes on businesses by $ 2 billion to help finance housing for people with homelessness.
Newsom made it clear last week that it will not have any major tax proposals, stating “they are not part of the conversation”. The distant work culture of the pandemic has taught information-based businesses that office location may not be as important as thought, while California’s high housing costs, regulations, and taxes are daunting.
Further taxing the rich is proving to be a political risk and a threat to the system that enables California to thrive in dark times. Just last month, Oracle and Hewlett Packard Enterprise announced that they were moving their headquarters to rival state of Texas. Elon Musk, now the richest person on the planet, also said he would be moving to the Lone Star State, although his Tesla company will remain in California.
“There are about 1 percent of taxpayers who pay half of the state’s income tax, and the reason the state revenue has been so high is because those taxpayers had a very good year. As long as these people are willing to stay in California and to be taxed, the money will come in, “said David Shulman, senior economist emeritus for the UCLA Anderson Forecast. “But there’s a point where they’ll say it doesn’t work anymore. The question is, are we at a tipping point? There is certainly more evidence that we are getting closer to that.”
The last major tax increase in California was a 2012 voter-approved resident tax earning more than $ 250,000, championed by Governor Jerry Brown, which voters later extended to 2030. However, voters rejected an election initiative in November to tax commercial real estate in their country from its current value, which would have generated up to $ 12 billion more annually.
Proponents say another tax hike is overdue, but even without one, the state could shift its priorities to better use its billions.
“It’s all very frustrating as these things are fixable with the fifth largest economy in the world. The money is there, ”said Courtney McKinney, spokeswoman for the Western Center for Law and Poverty. “It is a matter of priorities – whether or not millions of people plunged into poverty are seen as destabilizers to encourage the affluent, business and political class in California to put money into fighting poverty and the problems of the poor Environment in smart to put sensible ways. Easier said than done.”
Congregation member Alex Lee (D-San Jose), co-author of legislation to extend the eviction moratorium for an additional year, said opposition to more permanent solutions to support low-income residents was a reminder that California is not as progressive be as it claims.
In the November elections, California proved that it is not the liberal bastion people think it is. Not only did they oppose the trade tax increase, but they also opposed positive action and rental controls while advocating gig employers and dialysis companies in the place of unions.
“Whether or not to displace people in a recession during a pandemic … even if we just have to argue about it, we are still not where we should be,” Lee said. “I think a lot of people are doing this stuff and even though we have democratic super and ultra majorities, we are not doing justice to the progressive potential that we have. I would never call us a progressive state. “