Introducing Tax Revolt: Where the Cult of Reaganomics Began

Summary

Master Plan Podcast: "Introducing Tax Revolt: Where the Cult of Reaganomics Began"

Episode Overview

In the inaugural episode of the "Tax Revolt" miniseries, part of The Lever's award-winning "Master Plan" podcast, host David Sirota delves into the historical roots of America's anti-tax movement. This episode traces the origins of tax resistance in the United States, highlighting the pivotal role of Howard Jarvis and the passage of California's Proposition 13. Sirota explores how these events laid the groundwork for modern supply-side economics and the political strategies that have shaped U.S. fiscal policy over the past five decades.

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1. The Republican Tax-Cutting Tradition

The episode opens with a critical examination of the Republican Party's long-standing commitment to tax cuts. Sirota contextualizes this trend by referencing multiple Republican administrations:

• Donald Trump Announcement (01:34): "The next phase of our plan to deliver the greatest economy in history is for this Congress to pass tax cuts for everybody."

• Arjun Singh Commentary (02:05): Highlights Trump's proposed $5 trillion tax cut, emphasizing its disproportionate benefits for the wealthy and corporations, while significantly increasing the national deficit.

Sirota underscores that tax cuts have been a consistent Republican strategy since the 1990s, with each Republican president implementing them to stimulate economic growth, often at the expense of vital public services.

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2. Public Sentiment on Taxation

Exploring the public's attitude towards taxes, Sirota references polling data:

• Arjun Singh (03:05): Notes that a majority of Americans feel they pay excessive federal income taxes, with only a minority perceiving tax fairness.

This sentiment fuels the Republican narrative that taxes are burdensome, paving the way for widespread support for tax reduction policies.

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3. Birth of the Tax Revolt Movement

The narrative shifts to the emergence of the tax revolt movement in California during the late 1960s and early 1970s:

• Michael Gratz (05:12): Comments on the transformation of American democracy into a bureaucracy, highlighting the increasing wealth concentration.

• Howard Jarvis Introduction (05:50): Introduces Howard Jarvis as a catalyst for the tax revolt, leading to the creation of Proposition 13.

Sirota paints Jarvis as a maverick figure whose grassroots efforts against high property taxes galvanized a significant political movement.

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4. Howard Jarvis and Proposition 13

Delving into Jarvis's background and motivations, the episode covers his personal grievances with government overreach:

• Jarvis's Anecdote (12:09): Describes the confiscation of his latex during World War II, symbolizing his distrust of government intervention.

• Arjun Singh (15:00): Reveals that Jarvis fabricated stories to rally support, demonstrating his strategic manipulation of public sentiment.

Jarvis's leadership culminates in the crafting and advocacy of Proposition 13, a groundbreaking ballot initiative in 1978 that dramatically limited property tax rates and restricted the government's ability to raise new taxes without a supermajority.

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5. Campaign Strategies and Prop 13's Passage

The episode details the strategic maneuvers that led to the overwhelming support for Proposition 13:

• Jarvis's Campaign Tactics (22:24): Emphasizes direct voter engagement and leveraging conservative media to disseminate his message.

• Election Dynamics (25:02 - 25:23): Highlights the timing of tax assessments and the ensuing public outcry that significantly boosted Prop 13's polling numbers.

Despite opposition from major entities like the LA Times and public sector workers, Prop 13 secured a decisive 2-to-1 victory, fundamentally altering California's fiscal landscape.

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6. The Ripple Effects of Proposition 13

Sirota explores the immediate and long-term consequences of Prop 13:

• Art Laffer’s Involvement (34:27): Introduces economist Art Laffer, whose Laffer Curve theory gained prominence, advocating that lower taxes could spur economic growth.

• Jerry Brown’s Endorsement (30:26): Details Governor Jerry Brown’s strategic support of Prop 13, despite political risks, aligning with his fiscally conservative stance.

Prop 13 not only froze property tax rates but also imposed a supermajority requirement for any future tax increases, making fiscal adjustments exceedingly difficult and shifting the tax burden towards sales and income taxes.

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7. Legacy and Ongoing Influence

The episode concludes by assessing the enduring impact of the tax revolt movement:

• Susan Shelley (40:08): Represents the Howard Jarvis Taxpayer Association, asserting that Prop 13 continues to protect Californians from uncontrolled tax hikes.

• Michael Gratz (45:34): Reflects on the silent yet persistent nature of the anti-tax movement, noting its resilience compared to other social movements.

Sirota argues that the tax revolt has entrenched supply-side economics within American politics, enabling the wealthy to exert disproportionate influence over fiscal policies. The episode posits that this movement has effectively hindered fiscal progress by prioritizing tax reductions over equitable economic policies.

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Notable Quotes with Timestamps

• Donald Trump (01:34): "The next phase of our plan to deliver the greatest economy in history is for this Congress to pass tax cuts for everybody."

• Howard Jarvis (07:31): "We have a new revolution against the arrogant politicians and insensitive bureaucrats whose philosophy of tax, tax, tax, spend, spend, spend."

• Art Laffer (34:39): "Property tax is probably the single worst tax in the history of humanity."

• Jerry Brown (30:38): "At his core, Jerry Brown is fiscally conservative."

• Michael Gratz (45:34): "The anti-tax movement is the only movement among those that has not suffered a major setback."

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Conclusion

This episode of "Master Plan" meticulously charts the genesis and evolution of the anti-tax movement in the United States, with a concentrated focus on Howard Jarvis and Proposition 13. By intertwining historical accounts, personal narratives, and expert insights, David Sirota elucidates how these foundational elements have perpetuated a political environment conducive to the legitimization of tax cuts benefiting the affluent. The episode serves as a critical examination of how grassroots movements can reshape national economic policies, often with far-reaching implications for income inequality and democratic governance.

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Further Listening

Listeners intrigued by the origins and ramifications of the tax revolt are encouraged to continue with the "Tax Revolt" miniseries on The Lever's "Master Plan" podcast. Subsequent episodes promise to explore the national expansion of the movement and its influence on contemporary political dynamics.

For more information, visit www.masterplanpodcast.com.

Transcript

[David Sirota]

Hey Master Plan listeners, It's me, David Sirota. Since the release of Master Plan, our podcast team here at the Lever has expanded. Part of our goal is to continue to bring you investigative stories both online and here on your podcast feed. If you liked listening to Master Plan, then you should go subscribe to our weekly podcast feed Lever Time. Just search Lever Time in your podcast Apple Right now. Like Master Plan, Levertime brings you reporting other outlets will never do, including deep dive investigations into the hidden forces shaping our society. For instance, levertime recently began releasing Tax Revolt, a four part miniseries looking at the history of tax fights in America. The series follows the growth of the anti tax movement and how supply side economics, or as I remember it, Reaganomics, became a cult like phenomenon in establishment circles and how it's now culminating in the Trump administration's push for hundreds of billions of dollars of new tax cuts for the wealthy. Today we're sharing the first episode of the Tax Revolt series. You're about to hear it right here. If you like it, you can search for LeverTime wherever you get your podcasts to listen to the second episode and future episodes as they're released. So enjoy this first episode and afterwards go search for Lever Time and dive right into the whole series.

[Donald Trump]

The next phase of our plan to deliver the greatest economy in history is for this Congress to pass tax cuts for everybody. There.

[Arjun Singh]

That's Donald Trump on March 4th announcing his new plan to cut taxes across all brackets.

[Donald Trump]

I'm sure you're going to vote for those tax cuts because otherwise I don't believe the people will ever vote you into office. So I'm doing this.

[Arjun Singh]

Senate responded with thunderous applause, but I.

[Donald Trump]

Know this group is going to be voting for the tax.

[Arjun Singh]

As of this taping, Republicans are preparing Trump's new tax cut, one that's expected to cut 5 trillion in taxes. Most of those are for the richest Americans and corporations. It's also expected to add $5.7 trillion to the national deficit. And it's still unclear whether Trump and the Republicans are going to end up cutting vital services like Social Security and Medicare to pay for. But this isn't a new story. Ever since I was born in 1992, Republican presidents have passed tax cuts every single time they've been in office.

[Donald Trump]

I firmly believe that those tax cuts are part of that engine for that economic vitality.

[Arjun Singh]

By the time I was in high school, George W. Bush had slashed taxes twice, and then he launched two wars, ballooning the national deficit and kicking off a period of economic anxiety.

[Donald Trump]

Economy is not Doing as well as we'd like it to do today, our response is let's make those tax cuts permanent.

[Arjun Singh]

Even as a high schooler, I knew it always came down to one who's gonna raise people's taxes. It's become so normal for Republicans to cut taxes now that in the last election, it felt like it was just a given that Trump would pass some kind of tax cut. And when he entered office, that's exactly what the new Congress set out to work on. But why? It's not just Republicans. One poll published in April found that 59% of Americans think that they pay too much in federal income taxes, and only 46% think their taxes are fair. But this is a tricky question. I'd wager most of us would prefer to save money and pay less taxes. But taxes are more than just what we give away.

[Donald Trump]

This Social Security measure gives at least some protection to 30 millions of our citizens.

[Arjun Singh]

Taxes fund the society many Americans feel patriotic about. They're how we fund infrastructure, education, and war. It's how our government spends our taxes. That's a reflection of our priorities. And in a democracy, that means it's a reflection of what the public wants. That's why for a long time, a lot of Republicans were okay with them. Republicans of the past were budget hawks, but they still saw the need for attacks to fund a civic society. But in the 1970s, that seemed to change. A new movement began to emerge in America, one that was cloaked in the new gospel of an economic theory known as supply side economics. A theory that envisioned a country free of taxation and full of prosperity.

[Art Laffer]

It was the supply side revolution. It went from the US to all these other countries, and God, you could see the huge change in the prosperity.

[Arjun Singh]

Of the US but that's not the country we ended up with. Today, income inequality is at a historic high, wealth is concentrating at the top, and our country is literally run by billionaires who are debating whether they should cut the services millions depend on to cover their bottom line.

[Michael Gratz]

We don't live in a democracy. We live in a bureaucracy.

[Arjun Singh]

It feels like the twilight years of what has been one of the larger, yet little discussed revolutions in modern politics. The tax revolt. I'm Arjun Singh. For the next few weeks on levvertime, we're going to bring you the inside story of the anti tax movement. And as LEV's new reporter, Ariella Markowitz found out, this conservative revolution against taxes started in the grassroots and in a state you'd never expect.

[Howard Jarvis]

California. Of course it's California. Home to Silicon Valley, neoliberals, Apple and Microsoft screensavers. Oh yeah, and the tax revolt set.

[Arjun Singh]

This scene a little bit. You've been in California, you're researching this anti tax movement. Now I'm all there with you. That this state has somehow gotten a very liberal image when it's really not. I did not realize that this would be the home base of people who just didn't want to pay taxes.

[Howard Jarvis]

Well, yeah, I mean in the late 60s and early 70s, California was prime for a conservative anti tax revolution. Ronald Reagan was governor and he was this kindly TV host and ex movie star. And he won in the late 60s on a platform to restore law and order to the tumultuous state. And around that time, taxes are about as high as they'd ever been. But the secret sauce that really kickstarts the tax revolt is the sweat and willpower of one man. Howard Jarvis. He actually had a cameo in the 1980 comedy film Airplane.

[Arjun Singh]

Wait, the one with Kareem Abdul Jabbar as the pilot?

[Howard Jarvis]

Yep, yep, that's the one. But yeah, in the movie, the taxi driver, hero of the film played by Robert Hayes, dashes off to catch a flight, leaving a guy in the cab with the meter running. The customer is an older gentleman with thick glasses and sagging jowls that Time magazine beautifully described as perpetually threatening to sweep over the knot of his tie. He checks his watch as his cab fare racks up to over $100.

[Donald Trump]

Well, I'll give him another 20 minutes, but that's it.

[Howard Jarvis]

It's just like a post credits gag, but it's way funnier if you recognize the guy.

[Donald Trump]

We have a new revolution against the arrogant politicians and insensitive bureaucrats whose philosophy of tax, tax, tax, spend, spend, spend.

[Arjun Singh]

So he was a really pissed off, angry guy, and especially about taxes.

[Howard Jarvis]

Yep, exactly. Howard Jarvis liked to say that he was mad as hell.

[Arjun Singh]

Wait, that, like that line that he got from the movie network? Did he steal that?

[Howard Jarvis]

Yeah, he was pretty influenced by that film. Howard Jarvis was the leader of California's taxpayer revolt that produced an amendment to the state constitution. That initiative, Prop 13, passed in 1978. It limited property taxes, but also the state's ability to create new taxes. And the movement caught on.

[Donald Trump]

Government is not the solution to our problem. Government is the problem.

[Howard Jarvis]

Howard Jarvis is going to influence decades of political action and thought. But at first he's just a relatively unknown guy. He's a conservative business owner living in la, frustrated by what he sees as excessive taxation. And one of the people I talked to for this story is one of the nation's leading experts on the life and times of Howard Jarvis.

[Michael Gratz]

Howard Jarvis really began separating the US who pay taxes from them, who live off of them.

[Howard Jarvis]

That's Michael Gratz. He started his career in Nixon's Treasury Department.

[Michael Gratz]

I saw politics up close. It was somewhat ugly then, but it's gotten much uglier since.

[Howard Jarvis]

Now he's a retired professor from Yale and Columbia law schools and he's written a handful of books on the subject of taxation. He told me he was getting lunch with his editor one day when she pitched him a new idea, a history of the modern anti tax movement.

[Michael Gratz]

And I said, well, everybody knows about the anti tax movement. Why would I do that? And then we had lunch and by the end of lunch she had convinced me that it was worth writing.

[Howard Jarvis]

That book became the Power to How the Anti Tax Movement Hijacked America. Gratz started his story with Howard Jarvis in 1978. So that's where I wanted to start too. Getting to know Howard Jarvis Hoxha.

[Michael Gratz]

He was a rough hewn sort of looking fellow, but he had his points and he knew how to make them. And he knew how to connect with people.

[Donald Trump]

We the people, not the politicians, are still the boss.

[Michael Gratz]

It was on radio shows over and night, constantly. You could hardly miss him on television in California.

[Howard Jarvis]

Jarvis preached to the power of the people, but he also stoked the fears of the middle class. Like in this interview on bctv.

[Donald Trump]

We have a tax system in the United States that manufactures poor people. That's what it does.

[Howard Jarvis]

Jarvis dabbled in politics his entire adult life, but he came across like a simple old man, a product of the Great Depression. The news at the time, like CBS, focused mainly on his age.

[Donald Trump]

Unassuming, unrecognized, 75 year old Howard Jarvis certainly doesn't look like the man who has just about every established politician in the state scared to death.

[Howard Jarvis]

He wore cheap suits that, according to his former aide, he bought on sale at the discount store. He'd often set them on fire by sticking his lit corn cob pipe in his pocket. He drank cheap vodka despite being raised Mormon. And his favorite food was allegedly one can of Del Monte creamed corn mixed into a cup of whole milk, simmered to just below boiling and plopped into a bowl. He sometimes used old timey racial slurs to describe his political opponents, which was a bit spicy for the time. One of the first things I did when I started researching this series was ordered his hard copy vintage autobiography off of Amazon.

[Arjun Singh]

Is it even a Good book.

[Howard Jarvis]

Honestly, I loved reading it. It was written as like just a super punchy manifesto. It has all of these outlandish claims in it and he loves to exaggerate for dramatic effect. And it's honestly a great read. My favorite chapter is called How I Got to Be Mad As Hell, which is basically his whole life story that made him hate taxes and the government.

[Arjun Singh]

Like, who is this guy?

[Howard Jarvis]

Yeah, he was born in a very rural town in Utah, but that didn't stop him from bumping shoulders with a bunch of famous people. Eisenhower, Earl Warren. Jarvis also claimed to have sparred with Jack Dempsey, who's the US former heavyweight champion. What? Which kind of speaks to his old time fighting spirit. He buys a local newspaper and kind of publishes popular columns, clickbaity articles about corruption, whiskey racketeering.

[Arjun Singh]

Nice early era Breitbart.

[Howard Jarvis]

Yeah. And then he goes on to move to la and he makes some very interesting claims there about starting the political career of Richard Milhouse Nixon.

[Arjun Singh]

Please tell me in this book he also is the one who told Nixon to say, I am not a crook.

[Howard Jarvis]

He doesn't claim that, but the guy likes to spin a yarn. During World War II, Jarvis started using latex to manufacture felt coverings for typewriters and business equipment. But Japan invaded Singapore, the center of the world's rubber production.

[Donald Trump]

We must rely more heavily on scrap rubber. You're scrap rubber.

[Howard Jarvis]

One day, government employees came to his factory and confiscated his latex to use for the war.

[Michael Gratz]

For Howard Jarvis, taking away his property was personal.

[Howard Jarvis]

Jarvis claimed to even visit the warehouse where the government took his latex and he saw that it had all expired. It was basically useless. Mush.

[Donald Trump]

Now we've had a phony thing grow up in that says human rights are more important than property rights.

[Howard Jarvis]

There's some real emotion in Jarvis's voice in this BCTV interview. The voice of a man whose property was stolen and wasted.

[Donald Trump]

The most important human right there is is the right to own property. Without that, he doesn't have any right really worth talking about. It's essential to freedom. It's the most important human right there.

[Howard Jarvis]

In the early 1960s, Jarvis sold his manufacturing businesses. He spent over a year on the road campaigning for state senator and lost. He was ready to retire from politics. He even bought a boat and was going to move to the Bahamas. But the story goes that he got mixed up in taxes and never went. It's 1962. Jarvis attended an important meeting with a group of about 20 homeowners. Most of them were in their 50s and 60s. They gathered around a living room table just talking about how high their property taxes were. One woman, Leona Magidson, a widow with a skyrocketing tax bill and a fixed income, wanted to do something about it. She offered her home in West LA as the headquarters of a new movement. These elders wanted to organize to fight high property taxes, and Howard stepped up to be their leader. To Jarvis, this issue was literally life and death. In his early work, Jarvis claimed to see a lady die in the LA county hall of Administration, pleading relief for her high tax bill. But at this point, I gotta make some calls.

[Bob Kutner]

Record your message at the tone.

[Howard Jarvis]

I spent weeks looking through newspaper archives and calling LA county office buildings about this alleged death. I've been having trouble verifying this claim and I'm curious if there's any records at your office that can help me. I did get one simple note back from the LA County Tax Assessor's Office was unsuccessful to find any information on this. The thing is, Michael Gratz thinks making up stories is part of Howard's whole strategy.

[Michael Gratz]

Stories trump data, and the opponents of tax increases have been more, much more effective in marshaling stories.

[Howard Jarvis]

He recruited the exaggerated stories of old people eating cat food and dying in the hall of Administration to great success. His movement started gaining momentum. In 1968, Jarvis decided to try to get a measure to limit taxes on the California state ballot. His idea to create a proposition isn't New movements to create ballot initiatives to limit taxes actually go back to the 1930s. He got the idea from his buddy and collaborator, Phil Watson, who was a tax assessor in LA county sympathetic to his cause. To Jarvis, at least in the way he tells his story, this ballot measure was important. He saw himself as standing up for the common man, that everyday Californian who was being squeezed by the bureaucrats. And he saw this as the people's way of fighting back. But initiatives didn't happen often. Between 1960 and 78, only 31 initiatives even made it on the ballot. Voters approved seven, but it was still possible. Anyone with charisma and elbow grease could conceivably get a measure passed. Jarvis had both, and he was determined. He toiled for 15 years petitioning and advocating for ballot measures, including one sponsored by Ronald Reagan to limit the income tax.

[Michael Gratz]

But income taxes didn't catch on.

[Howard Jarvis]

Even Ronald Reagan himself couldn't sell tax cuts to Californians until fate stepped in.

[David Sirota]

The American automobile for so long.

[Donald Trump]

The symbol of America's wealth and extravagance is dying.

[Howard Jarvis]

In 1973, OPEC, a coalition of Oil exporting countries waged a total embargo against any country that supported Israel in the 1973 Yom Kippur War, including the USA.

[Michael Gratz]

The global economy exploded.

[Howard Jarvis]

The term stagflation entered the Zeitgeist, which means inflation and high unemployment. And in America, wages and jobs stalled. The effects of this global recession were hitting property owners nationwide. And to understand why, we have to follow the butterfly effect back to 1966. In San Francisco, the city assessor was convicted of bribery. Basically, the guy who told people what their property was worth was getting paid off to cook more favorable assessments in exchange for cash. It was a common practice happening all over the state. The Democratic governor, Pat Brown, tried to reform the broken system with the law. He was actually hesitant to do that out of fear of being blamed for raising everybody's taxes. And that's a dynamic you see play out in politics today. But the corruption scandal made the issue so prominent, Brown eventually changed course.

[Michael Gratz]

As so often happens with laws, the law sort of backfired and actually ended up shifting more of the tax burden to homeowners.

[Howard Jarvis]

That's because it modernized an outdated system. There was now no limit to how much assessors could raise property taxes on individuals. So people were facing property tax bills that were doubling or even tripling.

[Donald Trump]

Bobby Seale, the Black Panther leader, has been in trouble with the law for many years, and now he wants to be mayor of Oakland, California, where the Black Panther movement began.

[Howard Jarvis]

Progressives had their eye on the ball. In 1973, Bobby Seale ran for mayor of Oakland on a platform that included lowering and limiting property taxes. And then, since the global economy collapsing wasn't enough, Watergate, people have got to.

[Donald Trump]

Know whether or not their president is a crook. Well, I'm not a crook. I've earned everything I've got.

[Howard Jarvis]

We had a corrupt president followed by an unelected president. And meanwhile, Howard Jarvis was on tv. His popular takedowns of government employees fanned the flames of brewing cynicism.

[Donald Trump]

You just go over there this morning to city council's office and you walk through 15 city councilman's office, you'll see more people asleep and reading Playboy than you do in a hotel.

[Howard Jarvis]

One of Jarvis talking points was that because he was already rich, he was more trustworthy than public servants and politicians who were being bankrolled by taxpayers. But Jack Anderson, a famous investigative journalist, explored Jarvis allegedly shady background. As a campaign fundraiser, Jarvis claimed to raise money for Barry Goldwater's presidential campaign and the campaign of a California Republican senator.

[Michael Gratz]

He was a bit of A grifter. Neither campaign said they ever got the money.

[Howard Jarvis]

The Goldwater campaign sued Jarvis organization, which made him quietly stop collecting money.

[Michael Gratz]

Jarvis, of course, denied all of this.

[Howard Jarvis]

Jarvis ballot measure was called the Jarvis Gann Initiative. Paul Gann, Jarvis's less charismatic Northern California counterpart, also helped author the initiative, so his name's also on it. The petition seemed like a simple measure to limit property taxes on the surface. But Jarvis hid some really important Easter eggs in there.

[Donald Trump]

Hi, I'm John Coupeau.

[Arjun Singh]

Most Californians have heard about Proposition 13.

[Howard Jarvis]

To help explain, here's an informational video from the Howard Jarvis Taxpayer association itself, the anti tax lobbying group created in 1978.

[Donald Trump]

First, it limits the tax rate on.

[Arjun Singh]

All California property to 1% of value.

[Donald Trump]

Which for homes is usually the purchase price.

[Howard Jarvis]

Plus the assessed value can't grow more than 2% a year. Jarvis's logic was that if you decide a home is worth $80,000, he sets his own price and he sets his own taxes.

[Arjun Singh]

Now your taxes are limited by what you are willing to pay for your.

[Donald Trump]

Home and are not subject to the ever changing real estate market.

[Howard Jarvis]

Anyone who bought a House in 1978 will effectively get a big tax break in the upcoming decades. It applies to commercial property too, because it's only fair to give business owners a tax break. You only lose the tax break if you sell the property and then it gets reassessed. But Jarvis also wanted to limit any new taxes. Howard Jarvis wrote Proposition 13, so it.

[Arjun Singh]

Helps taxpayers in other ways too.

[Howard Jarvis]

So he wrote it into the petition that any state tax needs a 2/3 supermajority of both houses of the legislature. Same for any tax levied by local governments.

[Donald Trump]

And voters now have a greater say in whether or not new taxes will be passed.

[Howard Jarvis]

Despite the movement's democratic and even populist ideals, Jarvis strived to make cutting taxes easier than raising them.

[Donald Trump]

For 25 years we've had increasing taxes on properties.

[David Sirota]

Now it's a chance for the people.

[Donald Trump]

To say something about it.

[Howard Jarvis]

He learned that the best approach to get somebody to sign your petition was to just go up and say, hey, sign this. It'll help lower your taxes. Petition volunteers hit people door to door the sprawling shopping malls. Meanwhile, Jarvis hit the right wing AM talk radio stations in staged press conferences like in the CBS clip.

[Donald Trump]

We got a lot of marinated bureaucrats in government and they are on a big gravy train. They're all overpaid and underworked and they don't want to get off this gravy train.

[Howard Jarvis]

He even tried to run for mayor of la.

[Donald Trump]

I'm just a little farmer from Utah, and I'm no different than anybody else. I'm the last thing from a right winger.

[Howard Jarvis]

By the end of 1977, signatures poured in, enough to make it on the ballot, and the Jarvis Gann initiative became Prop 13.

[Donald Trump]

People have the rare and no doubt pleasing opportunity to vote their taxes down, to tell the politicians that they will pay this much and no more. Proposition 13, it's called.

[Howard Jarvis]

But Jarvis would need a lot more people on board to win the election. So, fueled by housing prices, he went to work. He debated county officials, school superintendents, Leo McCarthy, the speaker of the California state assembly. Like in the CBS clip, I know.

[Donald Trump]

Something about local government. I know people want local. Some control over local government. You see, Mr. McCarthy, we are not interested at all in making supervisors and city councilmen happy. That is not what we're after. We're interested. We hope we make them a little unhappy.

[Michael Gratz]

He was a great interview. He usually walked away thinking, well, you know, I don't quite believe everything Howard is saying, but he looks like him pretty much won. You know, the other person sitting there with a notebook trying to make points. And, you know, when you're explaining you're losing, and what do you think about.

[Howard Jarvis]

The chaos they say you are causing?

[Donald Trump]

Well, I think the only chaos will be that the politicians will have to go back to work.

[Michael Gratz]

Howard was not explaining. He was ranting and raving, but he was doing it with great effectiveness.

[Howard Jarvis]

Big businesses, mainstream politicians, the media, notably the LA Times, opposed Prop 13. The paper would publish op eds, saying it'd create massive layoffs in the public sector that relied on the property tax. Jarvis called these claims hysterical and even said, I think the Los Angeles Times is the enemy of the people. Schools and hospitals staged protests.

[Donald Trump]

If Proposition 13 passes, the impact on.

[Howard Jarvis]

The children of this country community will be tragic. And in early 1978, these arguments were working. Prop 13 seemed like an extreme solution to the property tax problem. But then, six weeks before the election, the spring property tax bills went out.

[Donald Trump]

And the new assessments reflect three more years of rising inflation in housing prices.

[Howard Jarvis]

That's Bob Kutner. He's a journalist, historian, and founder of the Economic Policy Institute. He wrote his first book, revolt of the haves, about the California tax revolt.

[Donald Trump]

The assessments for Los Angeles county, which has the hottest housing market, they come out only six weeks before the vote on Prop 13. There are camera crews staking out the assessor's office, and there are people coming out with their new tax bill just in Tears and people saying, I'm going to lose my home. Proposition 13 surges 20 points in the polls.

[Howard Jarvis]

California voters were getting mad as hell. To Bob Kutner, this is a classic allegory.

[Donald Trump]

When the political mainstream doesn't pay attention to people being taxed out of their homes because the tax system is grossly unfair, that opens the door to fringe figures with crazy remedies.

[Howard Jarvis]

And as NBC's David Brinkley reported on the eve of the Prop 13 election.

[Donald Trump]

It is thought to be about as much a vote against big, expensive, wasteful government as it is against the property tax. And it seems that nobody loves government anymore.

[Howard Jarvis]

Democrats, renters, even government employees, some of whom were bound to lose their jobs due to reduced tax revenue, voted for Prop 13. And Jarvis's bet paid off. People were more afraid of losing their homes than their jobs. People like my grandfather Mort Markowitz, who worked in the water department for San Francisco.

[Bob Kutner]

He was civil servant. He always had a job. We just didn't worry that he was going to be unemployed, and that was a nice thing. It's not the same today, of course.

[Howard Jarvis]

My grandmother Marilyn purchased her North Berkeley home in 1971 for around $30,000.

[Bob Kutner]

We borrowed from Mort's father for the down payment. So we chose it basically that we wanted to be able to walk to synagogue. We were able to do it even with our young children.

[Howard Jarvis]

She doesn't remember seeing Howard Jarvis on TV and right wing AM talk radio isn't really part of her kosher media diet. He'd be like, lower taxes.

[Bob Kutner]

He was like a clown.

[Howard Jarvis]

He was a bit of a clown, yeah. She found out about Prop 13 through conversations with her friends, fellow Berkeley liberals who were concerned about public school funding.

[Bob Kutner]

When I found out that, you know, this proposition 13, that I wouldn't maybe have to pay as much much in property taxes, that was something to think about, right?

[Howard Jarvis]

Marilyn doesn't remember exactly how she and my grandfather voted back in 78, but she's pretty sure it was a yes for Prop 13 and Mort didn't lose his job.

[Bob Kutner]

I look at my taxes now and I think, oh, thank goodness for Proposition 13, because they would even be higher without it.

[Howard Jarvis]

Fact of the matter is, when there's a tax cut for yourself on the ballot, it's hard to vote it down. Michael Gratz says this is par for the course.

[Michael Gratz]

It's a very difficult communication problem when you start talking about paying for government. People would rather have a government. They don't pay for it.

[Bob Kutner]

Sometimes it just seems that it's really hard not to Vote for your self interest and you know, and that's too bad because you make big mistakes that way.

[Howard Jarvis]

After the break, we're talking to the godfather of supply side economics and how he convinced the Brown political dynasty to embrace tax cuts.

[Donald Trump]

Jarvis is no longer viewed as the tax cutting old kook, but as a genuine political hero.

[Howard Jarvis]

Weeks before Prop 13 passed in the June primary election, the governor of California, Pat Brown's son, Jerry Brown, decided to stop pushing his own version of tax relief through the state legislature and fully support Prop 13.

[Donald Trump]

I have adopted a strategy of focusing maximum public pressure in the hopes that that will bring about property tax relief sooner.

[Howard Jarvis]

He even asked Howard Jarvis to endorse him in the election later that year.

[Donald Trump]

Some people didn't believe me when I said Proposition 13 would work, but I knew it would and I knew Governor Brown would. The man who could make it work.

[Howard Jarvis]

That ad helped Jerry Brown stay in power.

[Jerry Brown]

It was a political boon for the campaign.

[Howard Jarvis]

Todd Holmes is a professor at UC Berkeley and he interviewed Jerry Brown for his oral history. He told me that supporting tax cuts was in line with his whole political philosophy.

[Jerry Brown]

Jerry Brown, at his core, is fiscally conservative.

[Howard Jarvis]

In his first term as governor, he gave away his free Disney tickets, the private jet, the Sacramento governor's mansion, and he slept on the floor of an apartment on a mattress.

[Jerry Brown]

There's no frills involved.

[Howard Jarvis]

Jerry also dated Linda Ronstadt, the famous singer who once berated him during a concert for spending more time running for president and not enough time with her.

[Bob Kutner]

He went out to run for president for the last couple of months. And Henman for the fact that I got to see him on TV every night. I forgot what he looked like.

[Howard Jarvis]

Linda wasn't Jerry's only problem. He was knocked for focusing on national issues and ignoring local ones like the property tax explosion. And he caught some serious flack from fellow Democrats for supporting Prop 13.

[Jerry Brown]

Art Agnos, who was a very powerful Democrat, was quoted in the paper saying his behavior in the post Prop 13 political arena has been shameless. It's one thing to accept defeat graciously, but another to politically prostitute yourself and those who have caused so much damage to the constituency which has been so loyal to your political career.

[Howard Jarvis]

Blacks, Chicanos, to Art and other Democrats, supporting Prop 13 meant directly taking money out of the pockets of public schools that served California's diverse population.

[Donald Trump]

Brown didn't lift a finger to prevent Prop 13 from happening.

[Howard Jarvis]

Bob Kutner also sees Brown's endorsement of 13 as a surrender and shame on him. Jerry Brown, the tax revolt's first Democratic champion. He certainly won't be the last, but we'll save that for the next episode. The Prop 13 election was on June 6, 1978. D Day. Jarvis campaigned right up until the polls closed at 8pm that night. It was a landslide, a 2 to 1 victory.

[David Sirota]

It's kind of like a Boston Tea.

[Donald Trump]

Party that we are saying we've had it.

[Howard Jarvis]

Immediately property taxes shrank back to their 76 rates and Jarvis waltzed onto the national stage.

[Donald Trump]

I saved homeowners. Now what we did, we made it impossible to sell people's home to pay for welfare for illegal aliens.

[Howard Jarvis]

The little farmer from Utah took his perspective to international television.

[Michael Gratz]

Proposition 13 sort of made him famous. He had his photo on Time magazine after it was it was enacted with a big yellow banner saying Tax revolt with his picture.

[Howard Jarvis]

In 1979, Jarvis was runner up for Times man of the year. But he lost to Ayatollah Khomeini, the Iranian revolutionary.

[Donald Trump]

I am forming the American tax reduction movement for the United States.

[Howard Jarvis]

So like a true revolutionary, Jarvis made a TV special introducing his plan to cut 100 billion in federal spending within four years.

[Michael Gratz]

After 13 was enacted, 34 states enacted either super majority requirements or property tax limitations.

[Howard Jarvis]

Jarvis types even duplicated in other states and created their own ballot initiatives. There was Douglas Bruce in Colorado, Barbara Anderson in Massachusetts.

[Donald Trump]

This is going to be introduced pretty soon. In Michigan, Oklahoma, New Hampshire, Connecticut, Massachusetts and Pennsylvania.

[Howard Jarvis]

The tax cutting movement developed a life outside of Jarvis wildest dreams.

[Donald Trump]

The thing is just leaving the country and it's beyond my capacity to really comprehend it if you want to know the truth about it.

[Howard Jarvis]

After Prop 13 passed, Milton Friedman, the influential Chicago school economist, complained in a Newsweek article that Prop 13 didn't go after the more insidious forms of taxation.

[Art Laffer]

He was wrong on all of those things. Property tax is probably the single worst tax in the history of humanity.

[Howard Jarvis]

That's Art Laffer. If his name sounds familiar to you, it's because he's another influential supply side Academic. In 1974 he scribbled a parabola on a napkin. That curve was then rebranded as the Laffer curve. It's Laffer's way of demonstrating lower taxation actually boosts the economy and government revenue. It's a contested claim, to say the least.

[Art Laffer]

I got picketed by the way, by all the teachers in my kids schools. My kids would say dad, that's my math teacher standing out there yelling at you. Oh, goodness gracious.

[Howard Jarvis]

Laffer got his PhD from Stanford, which he said was full of Marxists and He was actually teaching at the University of Southern California when Prop 13 passed. And Laffer loved Prop 13, loved it enough to write an academic paper supporting it. He explained that the money people would save from property tax would revitalize the economy.

[Art Laffer]

I think I got 3,000 requests in the first week for that paper. It just went viral in that day and age. So I became literally the third spokesman for Proposition 13.

[Howard Jarvis]

But his opinion wasn't popular.

[Art Laffer]

Everyone was screaming and hollering, this is the end of the world. There was the UCLA model which said that we'd lose all this jobs and everything, all silly stuff, and they didn't know what they were doing. They're not well trained economists at ucla. And all of that's not true.

[Howard Jarvis]

Laffer had really made a name for himself with his pro Prop 13 economic argument. So when it did pass, Governor Jerry Brown called him up.

[Art Laffer]

The governor, Jerry Brown said, arthur, I want you to come up here to Sacramento. I want to make sure this thing works and I want to implement it correctly. And I'd like to have you first thing up in the morning. And I said, well, let me see if I can get a ticket. And he says, you got one already. I bought it for you. It's waiting at the airport. The 6am Flight to Sacramento.

[Howard Jarvis]

He spent three days with Jerry Brown and his team coming up with a plan to keep the schools and public facilities open.

[Art Laffer]

We allocated the funds pro rata to the cities, counties and local districts in proportion to the loss of their revenues.

[Howard Jarvis]

And according to Laffer, the results were immediate and oh so sweet.

[Art Laffer]

It was just a terrific thing. Prosperity came in. It was a win, win, win, win, win across the board. And to this day, Proposition 13 is sacrosanct. It is just the most magnificent piece of legislation I've ever seen.

[Howard Jarvis]

Supporting Prop 13 helped make art Laffer famous.

[Art Laffer]

It got me to be quite well known. I could walk down the streets in New York, cops would come up to me and thank me. And I mean, it was just incredible. How can this little short, ugly economist get that type of notoriety? But that's what happened.

[Howard Jarvis]

He then went on to advise Ronald Reagan, partly because of nepotism.

[Art Laffer]

My godfather was Justin Dart, as you may know, who was head of Reagan's kitchen cabinet.

[Howard Jarvis]

And according to Laffer, Reagan wasn't all in on cutting taxes. At first. He was mostly big on social issues like anti communism and law and order. But with a little bit of convincing.

[Art Laffer]

He changed his paradigm 100%. And fortunately, I was very involved with him in that process. And Reagan did this 180 pivot on economics and became the most pro growth, democratic, economic free market capitalist president in US History.

[Howard Jarvis]

Art Lauffer also continued to advise the tax policies of Jerry Brown and helped him devise a flat taxpayer plan when he ran for president in 1992. And finally, after Prop 13 passed, Laffer got to meet his compatriot, Howard Jarvis. He always thought Jarvis was a little rough around the edges.

[Art Laffer]

I can remember one team watching him on tv, picking his nose. I mean, that was not what my mom had raised me to believe was the right thing to do. But then after the, after the election, I got very close to him, very smart guy. He was a little crude, a little crass, little, you know, but hell, he was really smart.

[Howard Jarvis]

Together, Laffer and Jarvis made a bigger impact on history than anyone would have been able to foresee.

[Donald Trump]

Once upon a time, four long years ago, most Americans could dream of owning a home. But Jimmy Carter's runaway inflation with record high interest rates and a lack of mortgage money has slammed the door on that dream.

[Howard Jarvis]

Concerns over housing and inflation were paramount in the 1980 presidential election. Art Laffer suggested that Reagan's platform should include tax cuts. So Reagan made an ad blaming stagflation that cranked up the housing prices on the Carter administration's policies.

[Donald Trump]

I pledge to all Americans that we'll get inflation under control and keep it under control so you can save for the home of your dreams.

[Howard Jarvis]

When Reagan won on a landslide, he said he couldn't have done it without grassroots support.

[Donald Trump]

And let me just say from the bottom of my heart that we would never come as far as we have today without the support of you, the American people.

[Howard Jarvis]

President Reagan invited Howard Jarvis to the White House in 1981. There's a picture of them shaking hands, looking happy and kind of rosy. Jarvis died in 1986, long enough afterward to see his work influence one of Reagan's signature pieces of legislation, a landmark tax cut in 1981. And now Jarvis's favorite talking points live rent free in our politics.

[Donald Trump]

But we're going to find out where that money is going, and it's not going to be pretty. By slashing all of the fraud, waste and theft we can find, we will defeat inflation, bring down mortgage rates, lower car payments.

[Howard Jarvis]

One of the main things he pushed was the idea that governments are wasteful and fraudulent. I just keep thinking about that young guy from Utah who just got his latex ripped away and saw it turn into mushroom. Now California commercial property owners save an extra 6 to 11 billion dollars annually thanks to Prop 13. And the Howard Jarvis Taxpayer association is a powerful political force in California. In 2022, they helped block a wealth tax on people who made 2 million or more that would have subsidized electric vehicles and given money to local fire departments. I talked to a few previous members of the association. People didn't want to go on the record. But I received this message from their current head of communications, Susan Shelley. She said Prop 13 continues to protect Californians from uncontrolled tax increases from the property they own. That was Jarvis mission in the 1970s and it remains the mission of the Howard Jarvis taxpayer association today. Prop 13 did help some people stay in their homes. But when Jerry Brown and Art Laffer redistributed state funds, they fundamentally realigned California's financial bones.

[Jerry Brown]

Prop 13 cuts the rate to 1%. And so that has a few big consequences expected and unexpected, right?

[Howard Jarvis]

To find out how Prop 13 impacted California, I called up Darian Shansky. Shansky lives in Davis, California and teaches law students about taxes. He also used to help city governments manage their finances, which made him intimately familiar with Prop 13. Remember, Laffer and Brown reallocated funds in proportion to the city's lost revenues. The problem is California still divvies up that money the way we did it in 78.

[Jerry Brown]

Once that's set in place and it's a zero sum game where every entity gets their share of the pie, it's very hard to change. Because now if the school district gets a few cents more, who's losing? The city, the county, the fire district. There's just no rhyme or reason for it now.

[Howard Jarvis]

Cities rely on that chunk of cash from the state of California to pay for services like public schools. California collects income, corporate and sales tax, which are volatile funding during a recession.

[Jerry Brown]

Therefore, when the state gets a cold, these smaller entities get, well, fever.

[Howard Jarvis]

If low income cities want to fund their own schools and fire departments, they have to get a little crafty.

[Jerry Brown]

Cities have incentive, right, to find money where they can, which is often through the sales tax.

[Howard Jarvis]

For example, Dinuba, California, a small town of 25,000 people in the Central Valley, made a deal with Best Buy that funnels sales tax revenue into the city in return for a tax break for Best Buy. That's all thanks to an often used California loophole.

[Jerry Brown]

They're in a very tough spot and there should be some other way for them to foster development other than to cannibalize the sales tax.

[Howard Jarvis]

Professor Shansky researches a lot of these loopholes and he has his own ideas on how we can modernize our current system. But in Shansky's opinion, the two thirds Provision in Prop 13 is the worst hurdle. You need a super majority to raise any tax. So in other words, a third of Californians that oppose any tax based on principle can effectively block the state from raising any money. It's like anytime you want to raise a tax, you need like, a whole populist movement to, like, rally behind it.

[Donald Trump]

Exactly.

[Jerry Brown]

So it's totally asymmetrical.

[Howard Jarvis]

My grandmother's home is now valued at over a million dollars, though she pays tax as if it were worth 72,000.

[Bob Kutner]

Our society is just. It's just harder to do the things that were just normal, you know, when I was in my 20s. I don't know if that's. I don't know if that's good. I think it's bad.

[Howard Jarvis]

Prop 13 helps people like my grandmother, but it also gave way to a kind of family tree of loopholes and laws. Children and grandchildren that inherit property from the OG 13ers want to keep their hands on their parents tax breaks because otherwise they just can't afford a house.

[Michael Gratz]

You can't underestimate the optimism of people who think they're climbing up the ladder.

[Howard Jarvis]

Laffer and Jarvis promised a strong economy that would help people afford homes. In California, the opposite became true.

[Michael Gratz]

The ladder has become much harder to climb this century than it was in the past. And that goes back to the 1970s.

[Donald Trump]

Who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they're entitled to health care, to food, to housing, you name it, that that's an entitlement and the government should give it to them.

[Howard Jarvis]

In 2012, during a leaked campaign fundraiser with wealthy donors, Mitt Romney claimed that 47% of Americans don't pay any income tax. That those Americans who feel entitled to government services even though they don't contribute to society. But the granddaddy of this rhetoric was Howard Jarvis. He blazed the trail for a powerful lineage to follow.

[Michael Gratz]

You know, I've been around the tax business for a long time.

[Howard Jarvis]

Michael Gratz told me that the tax revolt didn't happen overnight. Since the 1980s, a small coalition of radical tax cutters hijacked American politics to effectively block any new tax.

[Michael Gratz]

I kept asking people to name a social and political movement, and people said the women's movement, the civil rights movement, the LGBTQ movement, the MAGA movement, the environmental movement. I never heard the anti tax. Nobody ever mentioned the anti tax movement. And yet I thought, you know, the anti tax movement is the only movement among those that has not suffered a major setback. I'm an optimist by nature. I've been an optimist my entire life. But it's very hard to see how this stops.

[Howard Jarvis]

Next up on Lover Time, what happens when Howard Jarvis tax revolt goes national and how it brought down a Republican president.

[Donald Trump]

Read my lips. No new exes.

[Howard Jarvis]

Thanks for listening to another episode of Lover Time. Lover Time is part of the Lovers investigative newsroom and distributed by prs. This episode was produced by me, Ariella Markowitz with help from Natalie Bettendorf and Arjun Singh. It was fact checked by Chris Walker. It had editing support from Joel Warner, Lucy Dean Stockton, Jared Marr and David Sirota. Our theme music was composed by Nick Campbell. We'll be back next week with another episode of Lover.