PROPOSITION 13 AND TAX LIMITATION EFFORTS

The passage of the property tax limitation measure, Proposition 13 in California, has contributed to a growing national concern over pressures on average taxpayers. Inflation, the increases in transfer payments including family assistance and unemployment insurance, the growing bite of Social Security payments, and the general rise in the costs of public services have also made reexamination of taxation a major national issue.

California's disastrous solution to tax relief must be recognized as unique in many respects. The state's accumulated surplus of $5 billion rightfully angered many property taxpayers. Property tax relief measures had languished in the state legislature for 18 months prior to the push for Proposition 13.

The American Federation of Teachers decries the use of simplistic and negative solutions like Proposition 13 to solve legitimate taxpayer problems. While support for such measures is more a call for tax relief than it is a reflection of anti-public school sentiment, we abhor their disastrous effects on education. California schools cannot tolerate the cutbacks in summer school, after-school athletics, pre-school programs, music offerings and other services that this measure's enactment has brought about.

Further, we do not accept the notion that such service cuts are an indication of declining support for the public schools since numerous national polls indicate continuing approval of the schools on the part of overwhelming majorities of taxpayers.

Unfortunately, many California voters did not understand just how poor a solution Proposition 13 was to the problems they face:

• Drastic cuts in revenues do not address the problems of government waste and inefficiency. Governments cannot deal with questions about their own performance in the midst of chaos created by extensive cutbacks.

• Cuts caused by Proposition 13 are regressive because they are weighted in favor of commercial and industrial property. Only one-third of the tax savings would go to home owners.

Cutting the property tax is the least effective way of providing tax relief. Since property taxes are deductible from federal income taxes, when property taxes drop, federal income taxes rise, thus canceling out much of the gain from the cut.

• If sales and income taxes are raised to compensate for property tax loss, these taxes will fall hardest on those least able to pay.

• California could lose funding from programs that now require state or local matching funds as a requirement for receiving federal aid. California received $8.3 billion in federal funds for such programs in fiscal year 1977--85 percent of the total federal grant funds that went to the state. These funds are now in jeopardy.

Yet, while Proposition 13 is an extreme response unique to the peculiar circumstances of California, many anti-government and anti-education groups like the National Tax Limitation Committee and the National Taxpayers Union are seeking to export its conservative impact by pressing for tax limitation measures in other states and at the federal level. Such efforts demand a response that directly confronts legitimate taxpayer discontent with creative efforts at tax reform and tax justice. They also necessitate review of the problems of government efficiency and waste. More broadly, they require us to look to larger economic solutions dealing with the control of inflation and proposals to federalize welfare. AFT must:

• Oppose measures like the Kemp-Roth proposal at the federal level that would make an across-the-board cut in personal income tax averaging 30 percent over a period of three years.

• Call for an immediate federal take-over of welfare so as to provide tax relief to hard-pressed states and localities.

• Urge reform of the property tax with circuit-breakers that allow tax benefits to low and middle income tax­payers and with measures that close loopholes now allowing for underassessment of commercial property and more expensive homes.

• Press for tax reforms that would make sales taxes more equitable by exempting necessities or by providing selected rebates.

• Call for an increase in reliance on progressive income taxes.

• Respond to charges at the state and local level that government and public services are wasteful and inefficient. In doing this, we must recognize that government bears a serious responsibility to see to it that tax dollars are well spent.

• Urge that the federal government make a greater commitment to state and local governments, to help them solve their financial problems.

• Urge the enactment of reasonable property-tax relief measures where they are feasible.

• Advocate policies that involve lowering of mortgage interest rates and promoting housing construction at lower cost to middle income buyers. One of the reasons for inflation of both housing prices and property taxes is the present housing shortage.

The American Federation of Teachers recognizes that the general economic picture, marked by high inflation, high unemployment and rising government costs, family assistance, unemployment expenses, and other transfer payments, are behind the call for tax limitation. We resolve to work closely with the AFL-CIO to resolve these complex and difficult problems.