Something interesting happened on Election Day in California.  I am not talking about Governor Schwarzenegger bucking the national trend and getting re-elected.  I am talking about the voters of California soundly rejecting all tax increase ballot propositions.

The concept has been around for years.  Target an industry and make them pay for something broad based.  A recent example of this type of ballot initiative was the increase on the tax of those making over $1 million a year to fund universal mental heath care, which passed in 2004 in California.

This year there were 4 such ballot propositions:
Proposition 86 – a $2.60 per pack increase on tobacco to fund various healthcare programs
Proposition 87 – a $4 billion a year tax on oil producers to fund alternative energy research and production
Proposition 88 – creates a statewide parcel tax of $50 per real property tax to provide and estimated $450 million annually in additional funding of K-12.
Proposition 89 – Increases income tax rate on corporations and financial institutions to provide public funding of political campaigns.

All of which were soundly defeated.  This comes on the heels of the defeat in this year’s primary election of the “millionaire tax” to fund pre-school. At the same time, however, all of the infrastructure bonds (Propositions 1A – 1E and Prop 84) that were on the ballot this election, which add up to over $40 billion dollars, passed overwhelmingly.

What do we learn from this?  I believe it shows that Californians believe in fair taxation.  Punitively taxing an industry to fund something either broad based or earmarking those  funds is not fair and in the long term does not work.

If something broad based, such as education, healthcare, etc., requires additional funding, that funding should come from the general fund, not by punishing a group or industry simply because they may be an easy target.  I am hopeful that as we approach the new year and a new legislative session, policy makers remember what happened at the ballot box this year and steer clear of punitive taxation simply because it gets press and instead look at broad based and long-term solutions for these problems.