The Antibusiness Moment

To take back political power and to win back tax money—these were the twin objectives of the tax revolt. Accomplishing these goals would be difficult, given the lack of support at all levels of government. What strategy would overcome the political roadblocks to tax reduction? What groups or forces could help? These were the questions that would confound tax protest activists for decades.

One possibly ally for the tax revolt was business. The support of small business in the final stages of the movement would prove decisive. But in the 1960s and early 1970s, activists from middle-income areas found that large corporations and even the leaders of small businesses in the community were unwilling to assist homeowners in their battle. Homeowners responded with dislike, distrust, and sometimes anger at business. These negative feelings affected the programs that the middle-income tax activists adopted.

Tax protesters counted among their enemies the industrial giants, utilities, and banks large enough to be listed in the Fortune magazine directories of top corporations. Large companies sought to reduce their own taxes and showed no interest in helping the homeowners' movement throughout its long history, to the very end. Many large firms took a public stand against Proposition 13 and donated large sums of money

to fight it; the California Taxpayers Association, whose directors are senior managers in large businesses, actively campaigned against Prop. 13. One community activist exclaimed, "The large corporations opposed it. The Bank of America opposed it. . . . They pretend to be for lower taxes, but in practice they were getting great benefits out of high property taxes." Not only did large companies allegedly have a different economic interest; they were also unwilling to help the homeowners gain political influence because they already had great powers in government: "Government listens to financial interests. . . . Government is dictated by financial considerations mainly. The rest of it is a show, I think. It's what will make money for someone, and the people who run our government are large corporations and banks, financial institutions. . . . Politicians make a pretense of working for the common man but in practice they don't, unfortunately."^[31]

Another activist agreed:

Most of our legislation favors big business. . . . It's going to be difficult to change this. We just don't have the lobbying power even though we are the biggest special interest that should be recognized. . . . Big business is out for itself. Because of its inefficiency, it needs to get out of us as much money as it can. . . . Since big business's interests are different from those of the consumer, its stance on public issues will reflect this.^[32]

Large institutions, both business and government, work together and concentrate power at the expense of the citizenry:

The big people work together. They may not always work directly together but they're working indirectly together. . . . This is a normal function of business. . . . Whenever a ruler, say, has gained power, he's sought more power, and learning the road to power he's learned the tricks. Like Caesar—once he learned to conquer one county he learned how to conquer another one, and then five and then ten and then twenty more. Same things happened here among the big corporations. They got a corporation. They see how to merge and take over another one and they get bigger and bigger and concentrate power. . . . The problem is that they're taking this power at the expense of the common man, the average citizen.^[33]

The activists' views about large corporations were quite in keeping with what the general public was saying in opinion polls during the late 1970s. For example the percentage agreeing that, "There's too much power concentrated in the hands of a few large companies for the good of the nation," rose steadily to 78 percent in 1975, remaining around there through 1981. Another question tapped opinions about the economic power of corporations: "In many of our largest industries, one or

two companies have too much control of the industry." The percentage agreeing also steadily rose from 58 percent in 1965 to 82 percent in 1975, fluctuating to 79 percent in the first year of the Reagan administration.^[34] When respondents were asked to state their opinions of industries on a five-point scale, the average percentage of "very favorable" and "mostly favorable" responses steadily declined, from 68 percent in 1965 to 35.5 percent in 1977. When tax activists criticized the power of large corporations, the activists found many others in the community who were inclined to agree.^[35]

Small Businesses in the Community: Backslapping or Back Stabbing?

Through their experiences in tax protests, activists developed negative views of big business. Activists had more direct and frequent contact with smaller businesses in their communities and, as the movement developed, it was this contact that decisively shaped the views of the activists. Most of them believed that small business had different interests and powers than large corporations:

I think that when you say business, we have to make a difference between business and monopolism, and what we've got today are two types of business going on—monopolism, which is the operation of large corporations and large banks that are using government to further their own ends at the expense of the average man. In contrast with that is small business and entrepreneurs and individuals and little businesses of five employees or less who are working in a really competitive situation and they aren't monopolists. They can't be.^[36]

In middle-income communities, a few owners of small retail outlets supported tax protests; after all, many of them paid high property taxes on their personal residences. "Some of our members were small businesses, so yes, we sought their help when we started our tax reduction activities. . . . Many small businesses did not want to join because they didn't want to get involved."^[37]

Michael Rubino was irritated at the businesses in Alhambra for opposing his tax protest in 1964. Rubino thought that businesses did not support him because they had the money to pay their taxes and could work through established political channels rather than protests. Real estate businesses did not help, despite that fact that land and buildings, their stock in trade, were the targets for higher property taxes. Rubino charged that after homeowners could not make their tax payments, real estate agents were "buying up homes cheap." Rubino alleged that the attitude of the agents was, "Why should we help you? We stand to make

more money." The lack of business support made it difficult for the tax protest to succeed, for "it takes money, and we didn't have a lot. And it takes a lot of influential people, and we had very little of that."^[38]

In the middle-income communities of the San Gabriel Valley, Richard Carman also found it difficult to gain the support of community businesses:

The majority of the people I was working with were people who were medium class back in 1969. . . . We worked with down-to-earth people, grass-roots people. . . . I approached business owners for support . . . with very little success. The business community was not responsive in general. . . . I was wasting my time going to business people. . . . When you walk into a business place, number one, they've got customers and they're interested in serving their customers. The boss isn't in. If the boss is in and you state your case, by the time the clerk goes back to the boss, "Oh well, another one looking for a handout." They haven't got time to listen to it.^[39]

Although a few small retail outlets offered support to tax protests in middle-income communities, leading small businesses and business organizations in the community usually did not help. These community business leaders typically included the heads of organizations such as the community's chamber of commerce and real estate board, the managers of supermarkets and other business chains, and the owners of retail outlets and wholesale and manufacturing firms employing between five and fifty persons. In middle-income communities, according to a tax protester:

The chambers of commerce are a joke because where do they get their handout? They get it from the city. Where does the city get its money to give them a handout? From property taxes. . . . They're not going to bite the first hand. They're not going to give you anything, and they're not famous for the number of individual household tax participants. . . . Local real estate boards were practically no help. They didn't want to buck the politicians.^[40]

Another tax reduction activist who lived in the middle-income community of West Hollywood criticized the chamber of commerce:

I resigned from their board of directors because of the fact that they were all for business—of course that's the name of it—chamber of commerce. They were all for business, and the heck with the homeowner. And they don't live here. There isn't hardly a business in West Hollywood that the owner lives in West Hollywood. They live in Bel Air and Beverly Hills [two very affluent communities] and the [San Fernando] Valley and all over. They make their money and put it in their pocket and run home with it.^[41]

The newspaper accounts of tax protests indicate that in other middle-income areas, community business leaders usually failed to support tax protests. In table 2, those protests that community business leaders supported are marked by a "b" in column F. Of the twenty-four middle-income communities, community business leaders supported the protests in only three localities.

In one of the three instances (Temple City), the evidence for support is scanty. Newspaper articles reported that citizens could contact the town's chamber of commerce to obtain petition forms or learn when the next meeting would be held. Community business leaders clearly supported protests in two other cases, Van Nuys-Sherman Oaks, discussed in chapter 7, and Covina, discussed in chapter 6. The strength of these protests, as indicated by the attendance totals above two thousand, could account for the support of community leaders. Furthermore, in these two cases protests also arose in adjacent, more affluent areas where community business leaders supported the protests. Perhaps the business leaders in Van Nuys-Sherman Oaks and in Covina were following their more upscale compatriots.

These three middle-income localities where community business leaders supported tax protests are the exception, amounting to only 12 percent of the cases (compared to 75-percent support in upper-middle-class communities; see table 3). As the activists in middle-income communities pressed their grievances, they discovered that the institutions around them, from the largest corporations to the local chamber of commerce, from the governor to the town councilor, were either indifferent or hostile, creating a situation that can be termed generalized unresponsiveness. Activists reacted to this situation with angry antielitism, targeting the well-to-do and political leaders: "[W]e're wasting our time to pay taxes. For who? Some politician. What's he do with it? He goes [sic] buys a Lincoln limousine two blocks long and puts eighty gallons of gas in it and runs it down to Las Vegas."^[42]

The Social Origins of Antibusiness Redistribution Programs

Where antibusiness views were particularly intense, tax protesters supported proposals to increase the taxes on business and to lower the taxes on homeowners, consumers, and workers. Mike Rubino's protest in Alhambra was one of the 88 percent in middle-income communities that did not gain the support of business leaders. Rubino spoke out angrily against business and advocated tax benefits for moderate-income earners at the expense of business and the wealthy. Rubino argued that his movement championed the "little people" who owned only one house or, at the most, one in front and a cottage in the back. The Alhambra protesters of 1964 insisted that special tax relief should be targeted to senior citizens, many of whom could not afford to pay their tax bills. Rubino contrasted himself to Howard Jarvis, who allegedly was more concerned with big corporations and the people who own "fifty thousand acres" and "five apartment buildings." Rubino opposed Jarvis's plans to reduce property taxes for businesses as well as residences.^[43]

In the moderate-income areas of the San Gabriel Valley, the San Fernando Valley, and the coastal area, past conflicts, particularly those over urban growth and redevelopment, left a lingering negative view of business. This led activists to articulate and campaign for tax reforms that would redistribute downward, away from business.

Both in Alhambra and throughout the San Gabriel Valley controversies about the redevelopment of "blighted" areas pitted homeowners against small business leaders in the community. Through urban renewal projects, local governments acquired and cleared land and encouraged the construction of office buildings, industrial parks, and shopping centers. When improvements in the redevelopment area resulted in increased property tax collections, the revenues were not spent by the city operating budget but rather were used by the redevelopment agency to meet its costs and pay off bonds. Tax protesters saw redevelopment simply as one big subsidy to business, which siphoned off revenues from the city budget and imposed higher taxes on homeowners to pay for needed services.

Tax protesters in the San Gabriel Valley began to oppose urban renewal projects around 1970, leading to direct conflicts with community business leaders: "In nearly every city, the chamber of commerce supports redevelopment. In Alhambra, for instance, the chamber of commerce is supporting the redevelopment agency, and the BGA [the tax protest group] sued, the case called Fossilman v. Alhambra . We're certainly on the opposite side there. We're on the opposite side in Downey." Activists in the town of San Gabriel distributed one leaflet

arguing, "The 'big money' in this city is working to form a redevelopment agency. . . . A lot of little people 'working together' can fight the big machine."^[44]

Richard Carman was a major activist in the movement that fought urban renewal and high property taxes in the west San Gabriel Valley. His program was that property taxes should be cut in half. State government could subsidize the localities, replacing lost revenues. "They can tax the freeloaders. The insurance companies, the banks, and others who benefit through tax loopholes should be forced by legislation to take up the slack." Another one of Carman's redistributive programs, which he attempted to place on the California ballot in 1975, would have given tax reductions to residential property only, and not to "hotels, motels, business, industrial, or commercial properties."^[45]

In Monterey Park, a community in the San Gabriel Valley where the median family income was 1.09 times that of Los Angeles County, the issue of urban growth also sparked hostility against small business leaders. In 1976, the Monterey Park Taxpayers Association opposed the town's $13 million redevelopment program and later contested new construction by private developers. Another homeowners group in the town sponsored an initiative, which won the support of 85 percent of the voters, to limit the construction of new condominiums. But at a later election, "the developers knocked us all [the homeowners] off the city council. . . . They sent out a hit piece [negative ad] and, the last weekend of the election, they killed us." The lengthy conflict between homeowners and developers led many activists to conclude that there were fundamental differences between the interests of homeowners and businesses. As Irving Gilman, a past president of the homeowners, stated: "Our local chamber of commerce is our enemy. . . . They're promoting business and . . . [that] requires customers. The more the merrier. . . . They wanted developing; we wanted control." The board of realtors, which aggressively promoted development schemes, was "just murder."

In conflicts over development, activists formulated antibusiness stances that they applied in their programs for tax reduction. Before Proposition 13 was enacted, the Monterey Park Taxpayers Association supported the Tax Justice Act of 1977, which proposed to channel tax relief to moderate- and low-income homeowners and renters.^[46]

Growth became a major issue dividing homeowners and community business leaders in the middle-income parts of the San Fernando Valley as well. Here, increasing traffic and jet noise led homeowners to oppose the expansion of the Hollywood-Burbank airport, despite the many business opportunities there. Homeowners grew antagonistic to business leaders who supported airport growth. "You have to understand that the chamber of commerce and homeowners associations on many issues

clash. And even when we agree on things there's not really a close working relationship."^[47] One activist from the middle-income community of North Hollywood summarized how his opposition to airport expansion, billboards, developers, and high taxes shaped his views about business in the community:

When I was with North Hollywood Homeowners, we had folks that were in a much lower SES, socio-economic status, than let's say, the Encino crowd. . . . In North Hollywood . . . you had more of a blue collar mentality. . . .

Small business . . . they tend to keep to themselves . . . mom and pop kind of operations. They're usually marginal operators, just breaking even. They don't have the time and money and resources to devote to community efforts. All they can do is stay in business at a profit. Bigger corporations of course are a little different. They've got the money to help. . . . By and large businesses have not been cooperative. Their principal measure of what they want is based on dollars in the short run. . . . As a result, I've gone head to head with the chamber of commerce for as long as I can remember. We've always been opposed to the chamber because the chamber has not been generally interested in homeowner concerns. . . . [W]e've not had cordial relations and right through the years that's been pretty much true.

[Banks and savings and loans?] . . . We've had contacts with them. Those have not been fruitful. I think they tend to be exploitative. . . . We approached a while ago a bank on a project. . . . I think they felt that our tactics and strategy were . . . not a suit and tie kind of thing, and as a result were not really supportive of what we did. Those have not gone anywhere, those kinds of things. . . . We've battled pretty much the real estate agents, developers. Real estate houses have not been overly cooperative with us. . . . We want to see tougher zoning and controls that are not consonant with the goal of an agent who is interested in getting and selling a piece of property and turning it over for cash.

This activist opposed Proposition 13, partly because it provided tax advantages to business rather than the homeowner. Since property under Prop. 13 would be reassessed upward with each sale, and since homes were sold more often than businesses, assessments on homes would follow more closely the upward trend of property values.

There is the matter of the turnover, . . . [that is,] when a business turns over its property for reassessment versus how often a [home turns over], and it's my understanding that homeowners are turning over faster than businesses, and as a result . . . homes were winding up by paying and were moving up on the [assessment] scale, whereas businesses have tended to be a little more static than the transient homeowner. . . . I see a definite conflict of interest between an apartment owner and a single-

family dwelling owner. . . . Much of . . . the Jarvis mentality was R-4 property owners [apartment owners] who . . . were paying a pretty hefty tax, who wanted to get out from under that and were one of the prime movers behind this [Proposition 13]. The homeowners bought into that. . . . What is good for the owner of a sixteen-unit apartment is probably not what's in the best interest of a single-family homeowner. And I feel very strongly about that.^[48]

From the Valleys to the Oceans, Views for Sale

In the coastal plain of Los Angeles County lies the middle-income community of El Segundo. Over one hundred thousand commuters stream into the town to work in the refineries, aerospace industries, and office-building complexes. Beginning in 1964, the El Segundo Taxpayers Association worked to lower tax rates, expose corrupt officials, reduce airport noise, and improve zoning regulations. When the association tried to influence local government, activists soon discovered that government had established close relations with the nearby large corporations. One leader of the association concluded that "the entire city was run by Standard Oil." The leader of the taxpayers group organized campaigns that succeeded in replacing all the probusiness members of the city planning commission and defeating three city council members.

This activist thought that the town's government should take an active role in solving traffic, pollution, and other problems caused by the many businesses operating nearby. She favored what she termed "planned progress," including stricter regulations over proposed office buildings. "The developer has certain rights, but his rights end where his property line stops. And if he's creating a problem for the community, then there should be some limitation put on it." When it came time to pay for solving the problems created by business, many members of the association favored increasing business license taxes and instituting a split roll for property taxes, which would tax business property at a higher rate than homes.

Oh, we'll have to tax industry. . . . Example. The city business license tax here has not been increased since 1947. It's $24 a year for the entire 20 stories of the Prudential Towers. (Now Palos Verdes [the affluent coastal community discussed in chap. 3] is $30 per employee.) And again they're paying absolutely nothing in the way of property taxes. But they desperately need some street improvements. I have no objection to creating a special assessment district enabling them to pay for the street improvements that they require. But I object vehemently when the public works director takes the money that he gets on gas tax which comes to the community on the basis of the number of residents and uses it to service the industry, who's getting off Scot free.^[49]

In short, the operations of the large businesses in El Segundo, usually invisible to residents of suburban bedroom communities, had led activists to support antibusiness tax programs.

Another coastal community, Venice, is an area where the median family income in 1976 was 90 percent that of Los Angeles County. But this one statistic does not capture the great contrasts in the town. Venice includes a largely black neighborhood where incomes hover around the poverty line. Nearby, blue-collar Portuguese and Greeks could still afford in 1970 to buy their tiny houses lost amid a maze of alleyways and, yes, canals. But one person's alley is another's charm. Flocking to Venice are the young professionals, whose favorite haunts include Beyond Baroque, an old city jail now resplendent with art exhibits and resounding with poetry, and the Rose Cafe, the fine purveyors of fresh croissants, quesadillas made with brie cheese, and fish with blueberry sauce. Among these Venetians of fashion, "industry" refers to film-making and not to the oil refinery a scant five miles away. In Venice one can also find a network of political organizations favoring women's rights, rent control, environmentalism, and nonintervention in Central America.

Although the liberal climate made tax protest hardly the proper cause, real estate inflation made it a necessity. One activist recounts how his neighbor paid $2,700 for his house; by 1975, the market value had topped $100,000, and $300,000 the year Proposition 13 passed. This activist volunteered with the American Association of Retired Persons to improve social security benefits and services for the aged. He campaigned to reduce noise levels at a nearby airport and pressured developers—"the big interests"—to build more housing for seniors while preserving the natural habitat in the wetlands by the beach. But his major political work was to organize the Coalition of Homeowners and Renters of Los Angeles County, which campaigned against the privileges of large property owners. As he wrote in an open letter in early 1977:

[L]arge and affluent property owners . . . pay only a small, if any, share of their fair taxes, especially those who made substantial campaign contributions to the Assessor. . . . A sampling of properties owned by some of [Assessor] Philip Watson's contributors along Wilshire Blvd. show an underassessment of $500 million and may reach $2 billion. . . . Among properties enjoying assessment advantages are reported to be the 53-story UCB [United California Bank] building; . . . American Savings and Loan—Sherman Oaks—unchanged since 1970 although residential property 2 blocks away was reassessed higher up to 300%. . . . Because of the Assessor's conferring of assessment advantages to his favorite special interests, the historical 1966 collection ratio of 55% of the taxes from the income producing [business] properties has been reduced now to 45%, thus shifting 10% of the taxes to the residential taxpayers.

This activist's program for tax reform included making homeowneroccupied property tax exempt, which would help accomplish the larger objective of "reduction of the combined total property and income tax now burdening the low and middle incomes."^[50]

Generalized Unresponsiveness

During their protests to reduce property taxes, activists in middle-income communities discovered that the governments of their towns, cities, counties, and states were unresponsive to their petitions. Through their own experience, activists learned that small businesses would offer little assistance and that community business leaders and large corporations would not help at all. Activists gave tirades about the unresponsiveness of big business and big government and, in doing so, were able to tap the feelings of many citizens who felt powerless against all dominant institutions.

Such feelings, widespread in the 1960s and 1970s, are a recurrent feature in the American polity. According to Samuel Huntington, suspicion of the power of government and other institutions such as big business is a long-standing American creed. Periodically, in times of "credal passion," democratic ideals were used to challenge existing institutions. In these periods, "[A]uthority . . . [was] widely questioned or rejected. . . . Traditional American values of liberty, individualism, equality, popular control of government, and the openness of government were stressed in public discussion. . . . Hostility toward power (the antipower ethic) was intense, with the central issue of politics being defined as 'liberty versus power.'  . . .Movements flourished devoted to specific reforms or 'causes.'"^[51]

The tax revolt was one cause that dramatized activists' and citizens' feelings that government and business had become unresponsive. Many leaders and institutions stood in the way of lower property taxes—the office of the county assessor, whose computers inexorably printed out the higher tax bills; the chiefs of government agencies, who built their bureaucratic empires at public expense; the politicians in Sacramento, who endlessly haggled over tax relief and never delivered; and finally, the executives of corporations, who along with politicians, labor union leaders, school administrators, the media, and the experts warned that Proposition 13 was folly.

In their confrontation with unresponsive institutions, tax protesters sputtered sparks of angry rhetoric that inflamed middle-income communities. But although it was like a fire that refined them, it was also an anger that isolated them from the allies that might have brought success.