Warren Buffet Advocates for Progressive Taxation

It's not the kind of thing that greedy millionaires want to hear, but Arnold Schwarzenegger's economic adviser, billionaire Warren Buffet, is suggesting that property taxes should be raised in California. (Warren Buffet also supports the federal estate tax, or the "death tax," as the conservative propagandists have labelled it.)

Buffet is the world's second-richest man, so he should know a thing or two about taxes.
Buffett makes a strong point. He told the [Wall Street] Journal that his home in Omaha is valued at $500,000 and that he's paying more than $14,000 in annual property taxes.

But Buffett also owns a home in Laguna Beach (Orange County). It's valued at $4 million, yet he pays only $2,264 in annual property taxes.

Moreover, he noted that taxes on his Omaha residence rose almost $2,000 this year. Taxes on his California house climbed a mere $23.

The reason, of course, is Prop. 13, the 1978 measure that generally limits property-tax increases to 2 percent a year.

The original idea was to prevent seniors and others on limited incomes from being tossed onto the street. The result, at least in part, has been a gaping hole in the state's budget reserves.

Buffett stressed that any decision Schwarzenegger makes will be his own. But when a guy of Buffett's fiscal stature speaks, even Terminators listen. "You've got to look at everything," Buffett said of potential solutions to California's economic woes.

Even those who oppose the idea of raising property taxes understand that public services cost money, and the funds have to come from some sort of tax. Kevin Wiley, president of the San Francisco Homeowners Association Political Action Committee, opposes repealing Prop. 13, but also "is equally cognizant of the fact that Bay Area homeowners have long lamented the quality of services received from local and state authorities. Police departments, fire departments, schools, roads -- all could be far better funded."
"You can't have it both ways," Wiley acknowledged. "You can't want property taxes to stay low and complain that services aren't what they used to be."

Ken Willis, president of the 14,500-member League of California Homeowners, said he can't imagine legislators ever receiving the go-ahead from voters for an increase in property taxes. "Once you give something away," he observed, "it's hard to take it back."

But Willis also serves as a City Council member in Upland (San Bernardino County), and he understands that someone has to foot the bill for all the services Californians take for granted.

"The money may not come from property taxes," he said, "but it will have to come from somewhere. Higher sales taxes maybe, or creation of a value-added tax like they have in Europe."

Ironically, the question of taxation and fiscal responsibility is the same dilemma we're facing nationally. It's ironic because the Republicans criticize Gray Davis for the record deficit under his leadership, while President Bush seems relatively unaffected by the record deficit he's managed on his watch. Bush can blame the struggling economy on 9-11 and the War on Terrorism, but his tax cuts for the rich seem to be doing nothing but insulting hardworking non-millionaires. Over three million Americans have lost their job since Bush's first round of tax cuts. By now they must be wondering about the logic behind Bush giving an $88,000 refund to the average millionaire while they received just $300.

It makes sense that the battle over progressive tax policy should be waged in California. The Republican-led recall in California is little more than a power grab, and California appears to be a major threat to the GOP's current dominance in American politics. Whether or not Schwarzenegger, or anyone else, can take back a tax cut, especially a 25-year-old one like Prop. 13, remains to be seen. But unless it be can done in California, it's unlikely it will be considered as long as borrow-and-spend Republicans run the White House and Congress.