Jeffrey Scharf, Everybody's Business: Low property tax and high income tax a bad combination

Aptosian wrote:

For almost 30 years many of us have been subsidizing property owners who get the same services we do. That's not fair.
If property taxes, income taxes, and sales tax can't pay for basic services, something needs to be done about the tax rates. We shouldn't be continually asked to approve additional "taxes" to support police, library, and other basic services.

The one that gets me is when we are asked to approve additional taxes for a service, then when you go use the service they get little extra fees for utilizing it. I needed a copy of a police report for a theft at my home and had to pay $20 to get three pages. Poor example, but only on first cup of coffee.

The Real Problem wrote:

Yes, Prop 13 is contributing to the problem. A recent article said that that most states' income is 1/3 prop. tax, 1/3 sales tax, 1/3 income tax. In California, it's nearly 55% income tax and 40% of that comes from those in the highest tax bracket.
Keep in mind that CA's budget process is the most difficult in the nation. We require a 2/3 majority in the legislature to pass the budget (one of only 3 states that requires it); we also have a huge amount of our budget hard-coded (thanks to past ballots props) so there is very little room to move. This too is unique to CA. Our problems are caused by a combination of factors, and we need a solution that addresses more than one thing.

I've heard the hard-coded argument before and agree the voters did it (not me personally), but it was in the legislatures power to attempt to remove or modify the propositions that appear to be causing a lot of the problems by putting it back to the voters through the special election. Instead they asked for more money.

Fair is Fair wrote:

"Long-time owners pay a pittance compared to neighbors who purchased more recently. "
Not true, long-time owners have not only been payed more over the years they are also the folks who've been working to make our communities desirable places to live. If you like an area enough to move there, thank the folks who built it, made it and have been paying taxes to support it all along!

this arguement is ridiculous, you built this community ? every resident new and old is invloved in building and maintaining this community.
the cost of running government is ON GOING... they need a constant source of tax revenue every year.
we need new roads, new police cars, new libraries, salaries and pensions need to be paid, social services .. everyone should contribute equally regardless of when they bought their house ! when you buy a house should have nothing to do with how much tax you pay, the entire system is clearly wrong. Every property owner or resident should pay toward the cost of maintaining this State.

john wrote:

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this arguement is ridiculous, you built this community ? every resident new and old is invloved in building and maintaining this community.
the cost of running government is ON GOING... they need a constant source of tax revenue every year.
we need new roads, new police cars, new libraries, salaries and pensions need to be paid, social services .. everyone should contribute equally regardless of when they bought their house ! when you buy a house should have nothing to do with how much tax you pay, the entire system is clearly wrong. Every property owner or resident should pay toward the cost of maintaining this State.

Salaries like the Dean of Commies, at the University of the peoples republic of santa cruz. Property tax should be based on the value of you home when you bought it. I don't think it would be an issue if the lamos in the Govt. would not waste our money on the lamest things imaginable.

Xanthippe wrote:

The solution to the budget crisis is NOT more taxes. California might have comparatively low property taxes, but California has among the highest overall taxes in the country.
It is not a revenue problem; it is a spending problem.
No matter what the tax rate is, if politicians cannot rein in spending, there will never be enough.
Leave Proposition 13 alone. Our taxes - overall - are high enough.
Anyone who believes Prop. 13 should be overturned - I invite you to pay what you believe is your fair share of taxes to the government body of your choice - the state general fund, the local school, the city. I guarantee you, it will not be turned down.

Well Said.

The average citizen has a very short memory and simply refuses to acknowledge the fact our Democrat controlled State Assembly and Senate with only minor obstructions from three Republican governors in the past 30 years have been promising far too much to far too many special interest groups for far too many years. Money talks and the politicians now only listen to the big moneyed donors who represent any and all manner of those desiring self serving interests regardless if they are for the good of the country in general! The system is corrupt and fiscally dysfunctional! The system of corruption in both California and Washington will not change! California’s budget mess has been many years in the making and year after year we see stalemates similar to the current fiasco which is compounded in severity due to the recession and unwillingness of union and executive administrators to reduce their wages and benefits commensurate with the budgetary deficiency! It is entrenched to the point we have almost 50% of the population expecting the free handouts and generous wages and benefits to continue! Democratic Republics are frail! When 51% of the population votes to disperse any and all manner of assistance from the common treasury, the systems treasury inherently runs dry and the Democracy fails! Politicians rely on human greed, envy and sloth as the basis to maintain their positions in government. They promise ever more free stuff and the voters will always vote for the politician promising the most for free! Why not, it’s not their money and Democrats have managed to persuade you to believe the class envy that the filthy rich corporations can afford to pay for all the stuff you wish you could attain! This version of instilling class divisional envy has been practiced by every Communist and Socialist country in the world! The United States was once the economic engine which was the envy of the world but over the past several decades, corruption, sloth and Socialist ideals have ruined the work ethic, responsibility and moral fiber to continue to excel! We are a failing Democracy and unless a truly honest, ethical, and unselfish leader steps forward, we are on a spiral to Socialistic hell and a new tyrannical dictatorship as observed in many parts in the world today will emerge and remove your freedoms and liberties as if they never existed but in the history books of which undoubtedly will be amended as if it never occurred!

I've long wanted Prop 13 to be repealed. Put our tax base BACK on property and off of income tax! Prop 13 was a HUGE giveaway to agribusiness and corporations. And it's starved government services and schools. I suggest that California switch back to taxing property, but exempt owner-occupied dwellings. Since only 11% of property in California is owned by home-owners, this should protect retirees and young people struggling to make their mortgages but still provide the tax base we need to run our state.

Rich people own most of the property. Poor people own little or no property. Rich people can hire accountants and lawyers to wiggle out of paying income tax. Poor people cannot.

Joan wrote:

Why is it that they need to raise property taxes and taxes the democrats always think that this is the answer to everything. I pay my fair share of taxes and I pay a lot. We have bad leadership, and we need to get these people out. I am not saying a republican is the answer either. Our lawmakers need to take a pay cut, NOW!!!

As the old saying goes, Democrates like to tax and spend and Republicans like to charge and spend. And please do not let off the hook the other main culprit in this mess. Voters, who over the years have voted Billions in bonds in every election for whatever they thought was a good idea. The citizens of this and other states may be even more guilty than the politicians.

Becky Johnson wrote:

I've long wanted Prop 13 to be repealed. Put our tax base BACK on property and off of income tax! Prop 13 was a HUGE giveaway to agribusiness and corporations. And it's starved government services and schools. I suggest that California switch back to taxing property, but exempt owner-occupied dwellings. Since only 11% of property in California is owned by home-owners, this should protect retirees and young people struggling to make their mortgages but still provide the tax base we need to run our state.
Rich people own most of the property. Poor people own little or no property. Rich people can hire accountants and lawyers to wiggle out of paying income tax. Poor people cannot.

You write rich people, as if they are scum. Definitely some rich people are idiots, not all, if it was just all poor people, who would subsidize them. As for the schools, they waste their money just like our Govt. Less money more efficiency is what we need.

Dave wrote:

this system is way over due for change, it's both unfair and dysfunctional. Taxation should be a fair and equal burden on all residents. Everyone in this state should contribute toward the cost of running government. That includes schools, police, fire, education, parks, social services etc. There is way too much inequity in the current system of raising tax revenue. Way too many people and businesses hiding in shelters and paying very little if nothing while their neighbors can be paying THOUSANDS more. In CA with sky high property prices we should not be taxed on the VALUE of our HOME. If we do, it's very simple... half the property tax rate and apply it equally to all property (with an exemption for seniors or whatever)... another idea could be to assess a fixed "community tax" on each dwelling .. this tax would remain constant regardless of property price fluctuations... we could have a prop 13 type cap on how much this tax could rise every year... the point is everyone who lives in CA would contribute equally toward the cost of running this state.
we have a big problem though ... corrupt politicians who've taken "donations" or should we say bribes, from special interest groups. Isn't the Gov himself a large property owner? wonder how many homes he has that he's paying pennies on the dollar compared with his neighbor...

Dave, your version or perception sounds very similar to that propagated by the likes of the typical socialist/communist dictator who foments class envy and division for unrest and agitation as practiced and taught by the disciples of Sal Alinsky and two bit dictators! Californians who are gainfully employed and businesses pay the third highest taxes in the country! Anyone who has purchased a home in California since the inception of Prop. 13 back in the 1970’s are assessed 1 to 1.25% of the value of the home (based on the county) at the point of purchase not including the aforementioned 2% re-assessment per year allowed by Prop. 13 which does not factor the myriad of special assessment taxes for schools and any and all manner of additional special assessments! Dave, 40% of those who are gainfully employed but who earn less than the minimum declared earnings do not pay any Federal Income taxes and yet they receive money back from the government in the form of rebates from the politicians to ensure re-election favoritism. Hell, even Republican G. Bush last year got together with the Democrats to do just that! Remember that free $1,200 rebate you and the wife got? Even those who paid no income taxes got some free money! Why do you suppose the Republican President would sign off on that? Yes, it was an election year!

"Thirty years later, it is clear that Proposition 13 has greatly limited property tax revenue. California has the sixth lowest property taxes in the nation. It probably has the most unfair property tax system as well. Long-time owners pay a pittance compared to neighbors who purchased more recently."

Mr. Scharf if play fast and loose with the facts. California may have the 6th lowest rate of property tax but due to high property values it has the 10th highest return in property taxes per parcel. I also would not call what I pay in property taxes a "pittance".

Lawfull American Citizen wrote:

<quoted text>
Dave, your version or perception sounds very similar to that propagated by the likes of the typical socialist/communist dictator who foments class envy and division for unrest and agitation as practiced and taught by the disciples of Sal Alinsky and two bit dictators! Californians who are gainfully employed and businesses pay the third highest taxes in the country! Anyone who has purchased a home in California since the inception of Prop. 13 back in the 1970’s are assessed 1 to 1.25% of the value of the home (based on the county) at the point of purchase not including the aforementioned 2% re-assessment per year allowed by Prop. 13 which does not factor the myriad of special assessment taxes for schools and any and all manner of additional special assessments! Dave, 40% of those who are gainfully employed but who earn less than the minimum declared earnings do not pay any Federal Income taxes and yet they receive money back from the government in the form of rebates from the politicians to ensure re-election favoritism. Hell, even Republican G. Bush last year got together with the Democrats to do just that! Remember that free $1,200 rebate you and the wife got? Even those who paid no income taxes got some free money! Why do you suppose the Republican President would sign off on that? Yes, it was an election year!

I agree we pay plenty in taxes, I voted for Ron Paul... if you know who he is, you get it.
my post was more about sharing the responsibility of funding government.

Fair is Fair wrote:

"Long-time owners pay a pittance compared to neighbors who purchased more recently. "
Not true, long-time owners have not only been payed more over the years they are also the folks who've been working to make our communities desirable places to live. If you like an area enough to move there, thank the folks who built it, made it and have been paying taxes to support it all along!

Common sense does not prevail here. You must move out of California now.

I haven't bought a home because of property taxes. Everytime I ran the numbers since 2003, it didn't make sense to me to buy, since the property taxes, homeowner's insurance, and maintenance costs (costs which never go away even after the mortgage is paid off) were as much as my rent. I couldn't understand why others were buying under that scenario -- if you were buying it as a rental, how could you make money?-- but was aware that they had bought into the myth that property values will never go down. Will the inevitable continued drop in property values eventually even up the property tax burden?

Until we change the current group of politicians in Sacramento, any changes in the means by which we raise revenues will be meaningless.
The public employee interest groups dominate the Legislature leading to long-term pension/benefit costs which are ultimately going to drag everything else down: think GM. Any fix or mere change in the way we raise revenue is only a temporary fix. Inevitably, the taxers will come looking for more, and the public employee unions will always be able to argue that they are selfless public servants and they have the clout, i.e. money, to get what they want. But, slowly, the light bulb is going on over the heads of the rest of us who work for private employers and have no pensions or guaranteed benefits. By the way, you are the best thing about the Sentinel, keep up the good work.

How about some real fiscal responsibility for a change? Balance a budget. Stop paying for mexican babies and helicopter flights after stabbings. Ship illegal immigrants home or put them to work at hard labor. Cut everything to the bone until California gets back to a healty fiscal situation

This is the dumbest piece of dribble I have read in a long time. Property taxes per se wont go up, but gee, some cities have so many bond measures tacked on that it equals the property taxes, it's just named differently. Used to be that property taxes were directly used to fund schools. Now it's all being send to Sacramento and squandered through general funds. To say only property owners pay property taxes is ridiculous. Why do you think rent has reached such ridiculously high levels? Apartment building owners can and will added cost on. Duh! To vilify long term residents/homeowners is just rude. How many homeowners thought of 'making a killing' buying and selling when property prices went up, thereby causing many of the younger generation looking for affordable property elsewhere. And the government didn't have enough foresight to bank the unexpected windfall of higher property taxes, not based on a higher rate but on a higher tax base, and they went ahead and spend it all immediately instead of reasoning that prices may very well fall, since a constant rise in property prices is simply unsustainable. No matter how much we are being taxed, property, income, sales etc., it will never be enough because the overall thinking process of our elected official is stuck in in deeply ingrained fallacies about money and future revenues and cost. Maybe it's time we required politicians to pass some exams testing their competency to deal with complex matters instead of just being able to deliver a pretty speech. How about some continuing education in finance and other related subjects, paid for, of course, by the politicians themselves, the way many of us 'regular' workers are required to invest time and money in continuing education just to keep our license current. Higher taxes at this point are not the answer, since the money would already be spend before it's collected.

Anybody care to say what Santa Cruz County's Planning Department bills us yearly? Do we really need the second largest planning department in the State of California? Per resident how much do we pay compared to San Francisco, Sacramento, San Diego, or Santa Barbara?

Even though I have been a benefactor of a lower property tax having bought my home in the 1970's I still think it's an unfair burden on the budget and on the people who are overpaying due to overpriced purchases. Why isn't there a process for reappraisal every five years or so bringing everyone to an even playing field. Why not have a "senior program" in place whereby anyone over 70 years of age with income limitations can pay a reduced property tax. When that person passes on or sells the property it goes back on the tax roles per the reappraisal. So, hire a few more appraisers or subcontract out to the many appraisers we have in this county, and get things in balance. Even with increasing the county payroll for the reappraisal process we would still be way ahead in both fairness and contribution to the property tax income.

Boulder Creek Greg wrote:

Sounds so good, but it ain't so. Wealthy people are leaving the state at a much lower rate than poor people, who have no choice. The wealthy people will stay here even if the rates stay the same.

Interesting. Do you have a link to the data backing up this statement? I'm curious to understand it.

The problem as I see it is that you don't need to lose many California Personal Income Tax (PIT) taxpayers to have significant decreases in revenues. California relies far too heaviliy on PIT for revenues. PIT provides nearly half the state's revenues and most of that revenue comes from highly-volatile capital gains income from a very small percentage of the population. The result is our current budget mess when PIT revenues do not cover state spending increases.

Here's a chart based on California Franchise Tax Board data (source link below). This uses 2006 data, the latest available. Essentially, 14 million taxpayers paid $43.1 billion in Personal Income Tax (PIT) payments, equating to an "average" tax bill of $3,100.

http://picasaweb.google.com/lh/photo/F-KYuuZ8...

The green line shows the $3,100 average tax bill. Note that a majority (85%) of California taxpayers paid LESS than the average while an electorally-insignificant 15% minority paid MORE (in some cases signficantly more). In fact, just 2% of taxpayers--263,000 taxpayers, about the size of Riverside, CA--paid HALF of the entire PIT tax bill!

If the "average" taxpayer paid $1 for every $1 of California government, the following chart shows what different populations of taxpayers paid.

http://picasaweb.google.com/lh/photo/RR1EvC11...

Again, the vast majority of California taxpayers (85%) paid less than $1 for each dollar of California government. In fact, the infamous 2/3rds majority required to pass new taxes paid 25 cents or less for every $1 of service.

Meanwhile, just 14% of California taxpayers paid more than $1 for every $1 of government. The top taxpayers effectively paid over $500 for every $1 of government.

Do you not believe that this bias and electoral disenfranchisement might encourage high-income California residents to seek official residency elsewhere?

Source data:
http://www.ftb.ca.gov/aboutFTB/Tax_Statistics...