An LTE in the San Bernardino Sun challenged the notion, promoted by the (real estate operator) governor, that California is overtaxed, with the following research:
We're not overtaxed
- California's property taxes under Proposition 13 are ranked in an Arizona study as 34th for residential property taxes and 41st for industrial property taxes under California's split-roll system.
- California's state and local sales taxes per capita are ranked 15th per $1,000 of personal income in a Wisconsin study.
- Our taxing of utilities ranks 12th per $1,000 of personal income in a Wisconsin study.
- California's personal income tax ranks seventh greatest among the states at $3.22 per $100.00 of personal income per capita.
- The state corporate income tax has a flat rate of 8.8 percent and is ranked sixth, but many corporations pay no taxes due to legal loopholes.
- Cigarette taxes of 87 cents per pack are ranked 30th among the states, less than the U.S. median of $1 per pack.
- Excise taxes on liquor ($3.30 per gallon) are ranked 19th among the states, less than the U.S. median of $3.75 per gallon.
- Excise taxes on beer (20 cents per gallon) are ranked 43rd among the states, considerably less than the U.S. median of 69 cents per gallon.
- The real estate transfer tax of $1.10 per $1,000 valuation is ranked 29th among the states.
- Gasoline tax of 35.3 cents per gallon is ranked third among the states, most of which has been diverted to the state's general fund for years, last raised in 1994.
- The recent increase of the state's vehicle license fee ("car tax") from .65 percent of the car's value to 1.15 percent raises the tax from 20th rank to about seventh, it appears, based on a Wisconsin study.
I concluded that Californians aren't overtaxed and that the governor's story is misleading.
This is evidence of the same old misleading and partisan tricks that cause us to be divided instead of illustrating a productive way for California to solve its problems.
President, Hemet Unified School District Governing Board
Director, Region 18, California School Board Association
I posted this comment:
Not over taxed, just relying on the wrong ones. Dense cities need infrastructure built and maintained, and are logical places for many other kinds of community investment -- in services such as education, emergency services, public health, etc. This costs money, but it also results in higher land values.
But Prop 13 prohibited the logical taxation of land value. To the extent that Prop 13 reduced taxation of houses and commercial buildings and other individually-funded improvements to land, it was a good thing. But that good is vastly overshadowed by its prevention of the use of the most logical and just tax yet devised: the tax on land value.
Land value rises for reasons which have nothing to do with the activity or inactivity of the individual landholder, and everything to do with the health and vitality and investment of the community. Every infrastructure project serves to increase land value. Good schools increase land value. Good jobs increase land value. Prop 13 permits the landholder to privatize all but a tiny fraction of that public investment, and forces the community into taxing, often heavily, things which ought not to be taxed at all.
Tax land value heavily. Not one acre will leave town. Not one building lot will wither and die under the burden. Not one square foot less will be "produced" -- the land is already there. What WILL happen is that the well-located acres which are languishing underused will be put to better use. This creates JOBS and businesses vying for your patronage and businesses vying for your labor, which drives wages upward -- the reverse of what we see now, where workers are competing for jobs, driving wages downward.
And lifting taxes off wages and off sales and even off corporate profits will have a whole other set of effects -- none of which are undesirable -- for the economy.
It isn't the amount of the total tax burden which is the problem. Rather, the load is badly placed. Rather than being put on the back of the horse, evenly loaded, it is put around his mouth and hung from his tail. No wonder he is struggling under the load.
San Bernardino sticks in my mind because of a 2006 Federal Reserve Board Study which showed, for 46 major metro areas in the US, the percentage of the value of the single-family housing stock which was accounted for by land value. For the aggregate of the 46 metros, the figure was 51% in 2004. San Francisco was 88%, and, of all the other cities in California listed, San Bernardino was the lowest at 62%. I'm guessing that they may not have experienced the horrendous run-up in housing prices that most of the rest of the state experienced, due in large part to Prop 13. But they're still stuck with the miserable tax structure that Prop 13 forces them into.
And think of the impact on all the towns that have courted car dealerships for the sales tax revenue, now that the auto manufacturers are shutting down dealerships.