Render Unto Jarvis...

THE STORY, like so many American tales, begins with a California eccentric. Nurtured on the mysterious elixir of sunshine and smog, Californians serve as a national test-track, measuring fads, products and ideas by their unique--and often contagious--standards. The sage of the tax revolt, touchstone of the most important social and economic movement of our era, seemed to emerge half from central casting and half from the Bible--the prophet come to save a nation, live and in color. His Jeremiad condemned demon government and its lecherous grope for the tax dollar; the reverberations of Howard Jarvis's leap in the dark still echo today, as his spiritual brethren control the White House, the Senate, and apparently, the national conscience.

Reactions to the shift in mood have thus far fallen along predictable ideological lines, with knee-jerk diatribes or celebrations the general rule. Robert Kuttner, former chief investigator for the Senate Banking Committee and currently editor of Working Papers magazine, has taken the first reflective and analytical examination of the subject in his book, Revolt of the Haves. Though he begins with the difficult but crucial step of acknowledging that something is wrong with the current incarnations of the Great Society, Kuttner does not suggest government abandon the cause of social justice to the free market. Kuttner proposes no liberal agenda, perhaps leaving that duty to Sen. Paul Tsongas's forthcoming book. But as a document that explains why government began to fail in the '60s, and why the people rose to punish it in the '70s, Revolt is an invaluable resource for the '80s.

Government "failure" is a curious concept, an idea much abused by political "outs" over the years. In the years of Democratic control of the national and most state legislatures since the New Deal, Republicans carped predictably about the shortcomings of government intervention; that is the opposition's job. But around the end of the '70s, even Democrats moved toward the realization that they did not have all the answers. If the "ins" had any doubts about their effectiveness, the overwhelming success of Proposition 13 in June 1979--and the similar proposals it inspired in other states--earned the tax revolt status as a bona fide national phenomenon.

And that is where Kuttner begins. The first and most entertaining third of Revolt is a narrative of the peculiar (in California what else could it be?) set of circumstances that led to the passage of Prop. 13. Mostly, it concerns the bejowled Jarvis and his trek from the lunatic fringe (Barry Goldwater disowned him as a fund-raiser in 1964 after Jarvis's "Businessmen for Goldwater" kept as "fees" $88,000 of the $115,000 it raised) to national celebrity. Within the context of the loony personalities, slick p.r. firms and confused politicians, Kuttner clears away the inevitable confusion to find that the revolt against property taxes was not only understandable, but justified. Taxes on middle class homeowners had grown ludicrously high, and, the owners, in their indignation, rose up to smite them.

From there, Kuttner's narrative takes off in two directions, the lesser known stories of how taxes got out of hand and who benefitted from them. The huge increases in property taxes were actually the result of "reform" of the taxes in 1965. A San Fransisco tax assessor--the man who sets the values at which the homes and businesses are taxed--was found to have been getting kickbacks from certain businesses in return for low assesments, and consequently low taxes. It turns out, however, that the assessor, Russ Wolden, had actually been keeping homeowners' assessments artificially low, and making up the difference with high taxes on the businesses that did not make the payoffs. Wolden went to jail and the system was "reformed" by Governor Edmund G. Brown, Sr. and the Democratic California assembly. The result caused all property to be assessed at 25 per cent of valuation, whereas before many businesses had been assessed at up to 50 per cent of valuation. Consequently, the reform set in motion a massive shift from business taxpayers to homeowners. Kuttner writes, "From his cell...the crooked assessor remained far more popular than the well-meaning reformers who helped send him there."

But the real outrage came with the wild inflation in the housing market in the late '70s, The property tax, as Kuttner explains clearly, is the product of the tax assessor's judgement of how much the house is worth times the tax rate. When the assessors began to raise their estimates on home values in line with inflation, the taxes people actually paid went haywire even though the government had not raised the rates. Because of the reforms that took power away from the assessors, "as housing prices doubled and then doubled again, the local assessor could only feed the inflating values into his computer and stand by helplessly like a sorcerer's apprentice."

Prop 13 changed all that. In short, the measure rolled back all assessments to the 1975-76 levels, with only token increases for inflation. Only new homes would be assessed at market value. So homeowners, particularly owners of large homes, saved as much as $5,000, while modest homeowners saved a few hundred dollars. New home buyers--usually young families--gained little because their homes were assessed at the values they paid for them. Landlords earned windfalls, and renters saved only what their landlords chose to pass along--usually very little. The biggest winners of all were the corporate property owners: Pacific Telephone saves $130 million; Pacific Gas $91 million; and Standard Oil saved $13.1 million in one county alone. In short, Kuttner writes, "unfortunately, in Proposition 13 and most of the other remedies the bulk of the tax relief went to those who needed it least."

The losers were a predictable lot: the poor, who now had to pay for many services that used to be free (public recreation and health service, for example), the mentally disabled, and the public schools. Layoffs hit minorities worst (84 per cent of the employees laid off in Oakland were Black of hispanic), but no group was entirely immune, as county governments cut back on maintenance of all public goods. No on benefits from a broken traffic light that goes unrepaired.

But Kuttner does not--and should not--attribute the tax-cutting impulse exclusively to hostility towards the poor, or the government.

I am convinced that voter anger in most states was directed against the unfair tax burdens first, general pocketbook frustrations second, and "government" only a distant third. But the failure of many orthodox liberals to take tax grievances seriously and their reflexive concern with defending the level of government outlays rather than their quality, drove many working-class constituents into an odd alliance with right-wing populists of the Jarvis stripe and later with business conservatives.

Middle class people were, as the slogan went, mad as hell, and the right-wing addressed their legitimate complaints, while the left ignored them, or accused them of greed. Consequently, the left had little to offer except more of the same--a clearly unsatisfactory status quo. "Like the respectable antiwar protestor of Jules Feiffer's 1966 cartoon who carried a sign calling for A Little Less Bombing, the cautious liberals of the late seventies were for a little less cutting. It was not a slogan likely to bring anybody to the barricades."

Given the impetus of the tax revolt, several well-organized right-wing groups have captured the ideological as well as political momentum away from the liberals (a word now about as popular as "child molester" with politicians). What's good for General Motors has become once again good for everyone. Tax abatements to attract business are a national fad, even though Kuttner says they do not succeed in attracting business, and even if they did, would not generate enough tax revenue to make up for their cost. Furthermore, he attacks the Right's insistence that the government causes all inflation. He notes that Germans, living in their elegantly humming capitalist machine, pay 44 per cent of their income in taxes, while Americans pay only 34 per cent. In fact, the only nation with a lower tax rate is Japan, where corporations pay for many of the social services we expect (or used to expect) from our government. He cites a study from the notorious radicals at the Congressional Budget Office to show that "each reduction in federal spending by $10 billion would reduce the rate of inflation by just one-tenth of one per cent."

There is almost a poignancy to Kuttner's clear (if occasionally turgid) readings of the taxation numbers in America. Given the political realities in Washington today, it sounds almost like so much baying at the moon, justified though it may be. Kuttner has few suggestions for the Left in the future, only warnings about the past. He concludes with a revealing discussion of the nation's health and housing policies, and how, liberals would be shocked to learn, more money has often meant worse services. Then again, less money probably would have meant even worse service. Structural reform is clearly what Kuttner seeks, but he seems to be in a quandary about such a movement's key issues and, more importantly, its constituency.

He hints peripherally at how this "movement" might take shape with a discussion of Massachusett's 1978 tax classification battle, Proposition One. Voters here did approve this referendum over the well-financed protests of the business community, and Kuttner devotes a long, celebratory passage to the efforts to pass it. But the author glosses over the approval two years later, of Proposition 2 1/2, the massive tax cutting ballot initiative. Kuttner's evanescent constituency even in the nation's most liberal state, disappeared almost immediately.

So Kuttner concludes with an almost mournful plea to learn from our mistakes; the problem is that so far only the Right has transformed the failures of the Great Society into an agenda for the '80s. Americans committed to social justice mow face the future leaderless, devoid of new ideas and without a working-class base of support. Sen. Edward M. Kennedy, a man conspicuous in his absense from Kuttner's book is fond of saying, "the flame may flicker, but the danger dream will never die." Yet the flame is in danger without the fuel of new ideas and vision. Kuttner begins to tell us where we were, but we must know soon where we should go.