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I Like Some Taxes Less Than Others, Notes on the California Situation February 3, 2011

Originally the Republicans were going to be totally obstructive and try to keep the necessary ballot initiatives for the special election regarding taxes from going to the public at all.  Now Mimi Walters, who had been the Republican candidate for Treasurer in the last election, says she might consider voting to put the initiatives on if the public employee pension issue is confronted as well.  Public pension’s are Brown’s biggest challenge, because he was elected with the support of public employees as his main donors.  Simple justice requires that, at the very least, new public employees get a “defined contribution” plan like private employees do nowadays.  I remember 25 years ago when the question was first raised to me in my own office – defined benefit or defined contribution? – and it was finally gotten through my thick head what they were, I thought “Am I God?  Do I rule the future?” and went for the defined contribution plan.  So have nearly all private employers in America.  So it is entirely reasonable for Republicans to support the special election on taxes provided that they insist that something else on another front be done.

Incidentally, the expression “Public Employees are the New Welfare Queens” is making the rounds.  I consider that a good thing, that the poor – not that there aren’t still a few welfare queens – are not mostly being blamed.  And on the national level, of course, social programs for the ‘poor,’ with the possible exception of Medicaid, are negligible financially compared to the middle class programs of Medicare and Social Security.

A lot of people want to blame this whole mess on Proposition 13, back 33 years ago.  Well, it sure took a long time for Nemesis to catch up, didn’t it?  Prop 13 needs to be mended, not ended.  The most famous part of Proposition 13, the restrictions on raising taxes on a home that is not being sold or rebuilt, was a good thing.  Taxes that fall on a cash transaction, a wage or salary payment or a purchase (which is what income and sales and use taxes do) merely take a cut out of a sum of money that is changing hands.  In the case of property taxes, and, often, death taxes, there may not necessarily be a sum of money, only an illiquid asset that may have to be liquidated and sold to meet the tax burden.

And I could consider modifying commercial and income property taxes.  In their case, the value of a property has something to do with the productivity of the land or facilities themselves.  So I could accept a split roll for commercial property, though there should be a cap, and the productivity is often more easily taxable as income.  The same was true of farms.  When we started using the property tax as our main means of funding local government services, most Americans were still farmers and the value of the property had a lot to do with the productivity of the land.  For homeowners, the value of property has very little to do with the productivity of the piece of land but a lot to do with what is going on around that piece of land – which is why homeowners have usually not been able to bear the uncertainty of a free market of land owners deciding on land use and instead have insisted on zoning, CC&Rs, or more.  By the way, Walter Russell Mead has written on the parallels between the Homestead Act of 1862 and the measures taken to encourage suburban homeowning after World War II.  I have heard, in some other states, of gentrification being advanced in communities where a lot of poor people were homeowners, because they could not afford the rising taxes.  So this most famous feature of Prop 13 is worth retaining.  They could do away, however, with the two-thirds requirement in the Legislature for all tax increases – or, if we keep it, I would like to see added to it a provision that all “ballot box budgeting” initiatives like Prop 98, which set a minimum level of funding for government schools, have to have a two thirds majority of the popular vote and not a simple majority.  And this would have to be made retroactive, so that we would vote on 98 and anything else like it over again under the new standard!

Otherwise, I think the corporate tax is a little too high, the state income tax could be made flatter by increasing it on the upper middle class (it is right now too dependent on the fortunes of the rich) and while I don’t want most sales taxes to be increased I favor higher taxes on gasoline (maybe a “carbon tax”) and some luxury goods.  Like cigars, if they are going to tax cigarettes so much.  If Michael Barone is right, as he said some years ago, that “the real meaning of ‘the rich’ in politics is ‘not me,'” then the desire to “soak the rich” is not based on hatred or envy so much as fantasy – with these people in our society, I can be relieved of great burdens.  It reminds me of when, after Jesus fed the five thousand, that they wanted to make Him “king by force” (John 6:15) and He had to walk over water to escape that fate.

Related: GOP Senator: No Pension Reform, No Vote on Taxes by Steven Harmon at Contra Costa Times

One Comments
speotter 02/04/2011

Taxes, of course, are necessary to pay for the public services we all enjoy.  So then that leaves 2 questions:  First, what should the public pay for? Second, how best to spread the burden?

California has a huge spending problem.  It does NOT have a revenue problem. There are many “necessary” programs that are simply redistribution of the wealth.

California also spends too much for the services that they do need, for instance the CA cost to house a prisoner is approximately $50k/year, when in other states, they pay more like $20-$25k per year/inmate.

So IF California can stop doing things that it shouldn’t do (redistribution of the wealth) AND California can make what it does spend go farther, THEN we can talk about taxes. Hopefully by that point we are lowering the tax burden and creating a more reliable and nexus related tax structure, where all pay their fair share and none are carried by their neighbor.

I am adamantly against corporate taxes and a split roll tax base for corporate real estate.

Corporations do not pay taxes!  Their customer base pays those taxes as corporations pass on the cost in their product.  By lowering or eliminating corporate taxes we could entice corporations back into this state and make CA the best place to do business on earth!  Think of all the jobs and productive taxpaying citizens out there with a competitive business market place!

So taxes are a necessary evil, as is government, and we should minimize both as much as possible.

SCOTT PEOTTER

 

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