Californians cling to easily dispelled tax myths

[one...two...tree 2,762]

Steve Lopez, LA Times

...not until the governor signed on to raising taxes, including the car tax, did GOP leaders and good citizens get angry, vowing to go after not just Arnold but any Republican legislators who voted with him on a budget that includes the new revenues.

It didn't matter that state services of every type were threatened from Chico to Chula Vista, that the bus was headed for the cliff, that inmates were packing their bags for early release, or that firing every state employee wouldn't have balanced the budget without new revenue.

All that mattered were taxes.

"California has the highest taxes in the country," a reader named Mary wrote to me.

"I guess it's our patriotic duty, as residents of California, to pay the highest taxes (or close to it) in the country, for the most incompetent government in any state," wrote Art.

Most incompetent government? We're probably in the running, but two other states I've lived in were at least as screwed up, with Pennsylvania actually taking pride in its monumental incompetence.

As for the claim that Californians pay the highest taxes of any state or close to it, I'm sorry to disappoint, given the great joy so many people seem to derive from hyperventilating.

But we're not even close.

"We're 17th," said Jean Ross, executive director of the nonpartisan California Budget Project.

That means the residents of 16 states pay higher taxes than Californians.

In an April 2008 report by Ross' group, California is called a "moderate tax state" based on the latest available figures. The report includes state and local taxes of all types in its computation, and rankings are based on taxation as a percentage of personal income. We tend to be higher on income taxes and lower on property taxes, Ross told me. We're also low on taxes for fuel and alcohol.

Given that we've just been handed a tax increase, I asked Ross if we'd be moving up in the rankings.

Impossible to know, she said, because other states are also being forced to raise taxes, so it'll take a while to settle out. She also said she hadn't yet computed whether the federal tax cut that's coming our way would nullify California's tax increase for some people.

"We've been fairly constant over the last decade," Ross said. "We might go up one rank and then down one rank from year to year. But over a period of time, we've been right about in the same place."

Look, nobody can be very happy about forking over an even bigger chunk of their earnings in taxes, especially at a time when jobs are being lost in droves, nest eggs are shrinking and foreclosures mounting. People have a right to be ticked off about false promises from politicians, and in this disastrous economy, they have every reason to be scared.

As for those who write me constantly, asking why I don't go back to Mexico and take all the illegal immigrants with me, I'm afraid that wouldn't be enough to balance the budget.

As my colleague George Skelton pointed out in a recent column, illegal immigrants cost the state several billion dollars a year in services, and that's far less than our budget shortfall.

And even if it would solve things, how practical is it for one state to address the federal failure on immigration reform? How many billions would it cost to round up and deport everyone? And how many industries would go belly up without cheap labor?

Don't get me wrong. I'm no apologist for Sacramento, where Democrats take care of labor unions in return for campaign donations and Republicans carry water for corporations, with working taxpayers footing the bill on both accounts. But if you want to blow a gasket, there are better targets than a tax hike that might move us from 17th in the nation to 15th.

Does it make sense that on the same street in any California town, one resident pays $3,000 in property taxes while the owner of an identical house pays $20,000, thanks to Prop. 13?

Does it make sense that businesses got a huge tax break in last week's budget deal while working blokes got smacked? Between 2001 and 2005, according to Ross' group, the net personal income of California taxpayers increased 22.7% while net corporate profits in the state increased -- watch the blood pressure, now -- 557%.

California's business taxes are among the highest in national rankings. But companies benefit from a large workforce, a huge pool of customers and access to venture capital, said Jed Kolko of the Public Policy Institute of California. He's in the midst of a study that is debunking the claim that businesses are leaving the state in droves.

"We found that very few businesses either leave or enter the state," said Kolko. "California's job growth is pretty consistently at, or a little above, the U.S. average."

Don't you hate when facts get in the way of so many good myths?

Yeah, taxes are a drag, and we should get more for our money. But from a global perspective, if you sleep under a roof, drive a car on a paved road, drink safe water and can attend school, you're relatively rich.

Speaking of rich, the wealthiest nation in history is fighting simultaneous wars in two of the most impoverished countries in the world, to no apparent benefit. No state is paying more in tax dollars for those wars than California, and no state has lost more soldiers.

Where's Howard Jarvis when you need him?

http://www.latimes.com/news/local/la-me-lo...4.column?page=2

[scandal 951]

I lived in CA from 1999-2004. I don't follow state issues there now as I used to when I lived there.

I do agree that Prop 13 is totally messed up and should be repealed.

[Texanadian 10]

Total taxation is hard to calculate. Some states have a 7 cent cigarette pack tax. Other states charge over $2.00 in taxes for a pack. Some tax military pensions. Some don't. Property taxes are high in some states. Low in others. Some states offer deductions for pension income. Some have no income tax but a small tax on capital gains and interest. Some have no income taxes period!

http://www.taxadmin.org/fta/rate/ind_inc.html (State income tax percentages and brackets)

http://www.taxadmin.org/fta/rate/sales.html (State sales tax percentages....not including local sales taxes if applicable)

California is not looking too good in either of those. I don't see how the original article in post #1 can say that California has low gas taxes. Gasoline in California is ALWAYS more expensive than other states.

[DEDixon 39]

I lived in CA from 1999-2004. I don't follow state issues there now as I used to when I lived there.

I do agree that Prop 13 is totally messed up and should be repealed.

Even more fair, so California does not force retirees out is to have absolutely no property tax. Increase the sales tax, increase hotel tax, rental car tax to make up for it.... increase tax on luxury items too (airplanes, boat, super expensive RVs).

I'd also agree to a mega-property tax on houses over a certain value... say 3 million so to discourage McMansions <-- make it an anti-green tax.

I've traveled to a lot of foreign countries, researched retirement in many places, the one thing many of these places don't have (the entire country) is property tax or if they have it, it is very low, so low that most can pay it from a day's wages.

Edited May 25, 2009 by DEDixon

[SuperDuper! 230]

I lived in CA from 1999-2004. I don't follow state issues there now as I used to when I lived there.

I do agree that Prop 13 is totally messed up and should be repealed.

If you owned a home in CA, you would like Prop 13. Prior to it, your grandmother was getting taxed, taxed, taxed out of her home, and that was no joke. Rather, the Businesses should not get the same Prop 13 benefits, so that portion of it should be changed.

Prop 13 stops "Feeding the Beast" of state gummint expansion.

[scandal 951]

I lived in CA from 1999-2004. I don't follow state issues there now as I used to when I lived there.

I do agree that Prop 13 is totally messed up and should be repealed.

If you owned a home in CA, you would like Prop 13. Prior to it, your grandmother was getting taxed, taxed, taxed out of her home, and that was no joke. Rather, the Businesses should not get the same Prop 13 benefits, so that portion of it should be changed.

Prop 13 stops "Feeding the Beast" of state gummint expansion.

I did own a home.

[DEDixon 39]

One more thought on the increase in sales tax and no property tax... let the counties set their own sales taxes so they compete with each other.

Although on the East coast, sales tax is set at the state level, since in the mid-atlantic region a bunch of small states are close to each other, states are reluctant to raise the sales tax too much (there are different rates, however). For example, my parents live in Maryland, but are 6 miles from Virginia, 7 miles from W.Va, 1 hour from PA, 2.5 hours from Delaware so if Maryland raises sales tax too much, people will shop in other states especially for big item purchases.

Delaware is actually a "no sales tax" state - this really messes with Maryland in a big way. Lots of people from Baltimore go to Delaware to buy high dollar items (they did, maybe not so much now, gas cost more so I'm not sure they do this as much as they did). Baltimore is 1 hour, 10 minutes from Delaware.

[sj5 4]

corporate tax click

Edited May 25, 2009 by sj5

[scandal 951]

One more thought on the increase in sales tax and no property tax... let the counties set their own sales taxes so they compete with each other.

Although on the East coast, sales tax is set at the state level, since in the mid-atlantic region a bunch of small states are close to each other, states are reluctant to raise the sales tax too much (there are different rates, however). For example, my parents live in Maryland, but are 6 miles from Virginia, 7 miles from W.Va, 1 hour from PA, 2.5 hours from Delaware so if Maryland raises sales tax too much, people will shop in other states especially for big item purchases.

Delaware is actually a "no sales tax" state - this really messes with Maryland in a big way. Lots of people from Baltimore go to Delaware to buy high dollar items (they did, maybe not so much now, gas cost more so I'm not sure they do this as much as they did). Baltimore is 1 hour, 10 minutes from Delaware.

This happens on the WA/OR border. People in Vancouver WA shop over the state line in Portland OR (no OR sales tax). However since WA has no state income tax, you can live in Vancouver WA and pay no income tax or sales taxes (if you shop over the line).

Here in the Chicago area, Cook county has notoriously high taxes on gasoline and cigarettes, so people from Chicago are always running over the county line to neighboring DuPage county (where I live) to buy their gas and ciggies.

[Scott & Lai 12]

I lived in CA from 1999-2004. I don't follow state issues there now as I used to when I lived there.

I do agree that Prop 13 is totally messed up and should be repealed.

If you owned a home in CA, you would like Prop 13. Prior to it, your grandmother was getting taxed, taxed, taxed out of her home, and that was no joke. Rather, the Businesses should not get the same Prop 13 benefits, so that portion of it should be changed.

Prop 13 stops "Feeding the Beast" of state gummint expansion.

I did own a home.

So then, you're fine with people losing their homes when their property taxes increase beyond their ability to pay?

[scandal 951]

I lived in CA from 1999-2004. I don't follow state issues there now as I used to when I lived there.

I do agree that Prop 13 is totally messed up and should be repealed.

If you owned a home in CA, you would like Prop 13. Prior to it, your grandmother was getting taxed, taxed, taxed out of her home, and that was no joke. Rather, the Businesses should not get the same Prop 13 benefits, so that portion of it should be changed.

Prop 13 stops "Feeding the Beast" of state gummint expansion.

I did own a home.

So then, you're fine with people losing their homes when their property taxes increase beyond their ability to pay?

No, I didn't say that.

I said Prop 13 is broken. It allows long term homeowners to pay ridiculously low tax rates, while new homeowners pay a rate based on current market assessments.

Paradoxically, it is often the established homeowners that have the better means to pay a higher rate, while new owners are often younger people starting out - the very people that if we are going to tilt the system in one direction or another, we'd want to tilt it to their favor and certainly not against them.

Regarding elderly homeowners on a fixed income - surely a system could be devised to keep their property taxes affordable on a means-tested basis, while not giving this sop to the 45 year old VP at a tech firm in Silicon Valley who makes $1.5 mil per year, owns a house with a fair market assessment of $2 mil, yet pays less property taxes that I was on my modest townhouse in Sunnyvale.

Anyway, I don't live in CA any longer. High property values and taxes are among the main reasons I told myself I would not live there again.

[SuperDuper! 230]

I lived in CA from 1999-2004. I don't follow state issues there now as I used to when I lived there.

I do agree that Prop 13 is totally messed up and should be repealed.

If you owned a home in CA, you would like Prop 13. Prior to it, your grandmother was getting taxed, taxed, taxed out of her home, and that was no joke. Rather, the Businesses should not get the same Prop 13 benefits, so that portion of it should be changed.

Prop 13 stops "Feeding the Beast" of state gummint expansion.

I did own a home.

So then, you're fine with people losing their homes when their property taxes increase beyond their ability to pay?

No, I didn't say that.

I said Prop 13 is broken. It allows long term homeowners to pay ridiculously low tax rates, while new homeowners pay a rate based on current market assessments.

Paradoxically, it is often the established homeowners that have the better means to pay a higher rate, while new owners are often younger people starting out - the very people that if we are going to tilt the system in one direction or another, we'd want to tilt it to their favor and certainly not against them.

Regarding elderly homeowners on a fixed income - surely a system could be devised to keep their property taxes affordable on a means-tested basis, while not giving this sop to the 45 year old VP at a tech firm in Silicon Valley who makes $1.5 mil per year, owns a house with a fair market assessment of $2 mil, yet pays less property taxes that I was on my modest townhouse in Sunnyvale.

Anyway, I don't live in CA any longer. High property values and taxes are among the main reasons I told myself I would not live there again.

Yes, and many long term homeowners are retired, and need a lower tax rate. Before Prop 13, they were being taxed out of their homes.

[Mr. Big Dog 10,747]

I lived in CA from 1999-2004. I don't follow state issues there now as I used to when I lived there.

I do agree that Prop 13 is totally messed up and should be repealed.

If you owned a home in CA, you would like Prop 13. Prior to it, your grandmother was getting taxed, taxed, taxed out of her home, and that was no joke. Rather, the Businesses should not get the same Prop 13 benefits, so that portion of it should be changed.

Prop 13 stops "Feeding the Beast" of state gummint expansion.

I did own a home.

So then, you're fine with people losing their homes when their property taxes increase beyond their ability to pay?

No, I didn't say that.

I said Prop 13 is broken. It allows long term homeowners to pay ridiculously low tax rates, while new homeowners pay a rate based on current market assessments.

Paradoxically, it is often the established homeowners that have the better means to pay a higher rate, while new owners are often younger people starting out - the very people that if we are going to tilt the system in one direction or another, we'd want to tilt it to their favor and certainly not against them.

Regarding elderly homeowners on a fixed income - surely a system could be devised to keep their property taxes affordable on a means-tested basis, while not giving this sop to the 45 year old VP at a tech firm in Silicon Valley who makes $1.5 mil per year, owns a house with a fair market assessment of $2 mil, yet pays less property taxes that I was on my modest townhouse in Sunnyvale.

Anyway, I don't live in CA any longer. High property values and taxes are among the main reasons I told myself I would not live there again.

Yes, and many long term homeowners are retired, and need a lower tax rate. Before Prop 13, they were being taxed out of their homes.

I take it Prop 13 is a deal similar to the "Save Our Homes" scheme here in Florida where your tax cannot increase more than 3% or somesuch annually regardless of what the property value does. The scheme in FL was amended recently to make the tax savings portable since too many people essentially got stuck in their homes. So, you had people that no longer needed a 4 or 5 bedroom home after the children moved out that had no way of being able to afford a smaller house - the tax would've killed them. Likewise, people that bought a smaller home and needed to expand couldn't do that either. That's on top of potential first time home-buyers not being able to make it since they'd be picking up a tax burden that adds 30% to the mortgage bill. Stifles the real estate market quite a bit.

Property taxes ought to be kept affordable across the board. Save Our Homes and Prop 13 and any other such deals are pure BS, they are necessarily unfair and typically the result of state governments unloading funding burdens on counties and cities and / or counties and cities failing to exercise fiscal constraint. There is just no justification for two homeowners carrying a different tax burden on the same property based solely on when they happened to have purchased that property.

[one...two...tree 2,762]

I take it Prop 13 is a deal similar to the "Save Our Homes" scheme here in Florida where your tax cannot increase more than 3% or somesuch annually regardless of what the property value does. The scheme in FL was amended recently to make the tax savings portable since too many people essentially got stuck in their homes. So, you had people that no longer needed a 4 or 5 bedroom home after the children moved out that had no way of being able to afford a smaller house - the tax would've killed them. Likewise, people that bought a smaller home and needed to expand couldn't do that either. That's on top of potential first time home-buyers not being able to make it since they'd be picking up a tax burden that adds 30% to the mortgage bill. Stifles the real estate market quite a bit.

Property taxes ought to be kept affordable across the board. Save Our Homes and Prop 13 and any other such deals are pure BS, they are necessarily unfair and typically the result of state governments unloading funding burdens on counties and cities and / or counties and cities failing to exercise fiscal constraint. There is just no justification for two homeowners carrying a different tax burden on the same property based solely on when they happened to have purchased that property.

Look up the name, Howard Jarvis, if you ever are interested on what really was the motivation behind Prop 13. It was pitched to Californians as saving old widows from paying high property taxes but the real beneficiaries of Prop 13 weren't old widows. The ballot initiatives here in Cali are just so bloody stupid. We have petitioners standing outside of grocery stores asking everyone walking by if they want to put criminals behind bars for good or some other 'feel good' proposal, but the details of the initiative are most often deliberately convoluted and deceptive. Meanwhile, our state spends hundreds of millions of dollars on special elections. There's a lot this state could do to help get us out of this mess.

[DEDixon 39]

I take it Prop 13 is a deal similar to the "Save Our Homes" scheme here in Florida where your tax cannot increase more than 3% or somesuch annually regardless of what the property value does. The scheme in FL was amended recently to make the tax savings portable since too many people essentially got stuck in their homes. So, you had people that no longer needed a 4 or 5 bedroom home after the children moved out that had no way of being able to afford a smaller house - the tax would've killed them. Likewise, people that bought a smaller home and needed to expand couldn't do that either. That's on top of potential first time home-buyers not being able to make it since they'd be picking up a tax burden that adds 30% to the mortgage bill. Stifles the real estate market quite a bit.

Property taxes ought to be kept affordable across the board. Save Our Homes and Prop 13 and any other such deals are pure BS, they are necessarily unfair and typically the result of state governments unloading funding burdens on counties and cities and / or counties and cities failing to exercise fiscal constraint. There is just no justification for two homeowners carrying a different tax burden on the same property based solely on when they happened to have purchased that property.

Look up the name, Howard Jarvis, if you ever are interested on what really was the motivation behind Prop 13. It was pitched to Californians as saving old widows from paying high property taxes but the real beneficiaries of Prop 13 weren't old widows. The ballot initiatives here in Cali are just so bloody stupid. We have petitioners standing outside of grocery stores asking everyone walking by if they want to put criminals behind bars for good or some other 'feel good' proposal, but the details of the initiative are most often deliberately convoluted and deceptive. Meanwhile, our state spends hundreds of millions of dollars on special elections. There's a lot this state could do to help get us out of this mess.

True, very true, like the bullet train "study" that was just recently on the ballot. Bullet train from SF to LA, it would take 2 hours to get to LA, it takes 6 hours to drive to LA and if you drive, you have a car to get you places. Families won't want to use the train, because they'll have to rent a car when they arrive in LA. A bullet train would be a great idea if LA had a good transit system in place, but LA is spread over many miles and LA doesn't have a good transit system but stupid voters thought it was a good idea so it was passed. The study has a huge price tag - it is just a study that we are paying for. I'm not well versed on the proposition and I'm to lazy to dig so can't get into details of it.

If I were going to LA alone, I'd not take the train. I don't like driving so I'd love to sit back and relax on a train, but when I get there, I'm stuck at the station where plenty of 5 dollar per mile taxis will be waiting and buses that will get you 10 miles away in 2 hours.... I'll pass on that one.