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That's a totally legit theory. Maybe Prop 13 is so crippling California's ability to raise taxes that they can't raise amounts similar to what other states can

by Lazare 8y ago

That's a totally legit theory. Maybe Prop 13 is so crippling California's ability to raise taxes that they can't raise amounts similar to what other states can raise, and so literally can't afford to provide the services that other state's can raise. Let's check: https://www.taxpolicycenter.org/statistics/state-and-local-tax-revenue-percentage-personal-income https://www.taxpolicycenter.org/statistics/state-and-local-t... Nope! State and local taxes averaged around 10.08% of personal income in 2015 across the US, and California was sitting at 10.72%, comfortably above the average and at the 15th highest, comfortably above the median. And if we adjust for cost of living versus wages, California is only midrange: http://time.com/money/5177566/average-income-every-state-real-value/ http://time.com/money/5177566/average-income-every-state-rea... So yes, it costs more to live in California, but wages are higher, and then the state takes an unusually high slice of those wages. > You can't pay the 1978 cost of living to a new teacher in 2018. Good thing that the California state and local governments are flush with cash then. (Or would be, absent mismanagement...)

throwaway2048 8y ago
the discussion is about local governments, mixing in the state level tax numbers is pretty misleading.
- Lazare 8y ago
  The state as a whole has the ability to raise perfectly reasonable amounts of cash, and is currently doing so. So... 1) If it's not being distributed between the levels in an efficient or fair manner, that seems like a pretty simple fix. There are already mechanisms for intergovernmental transfers from state to city governments; does California need to increase their transfers a bit? 2) California is already a pretty high-tax state. Shifting the burden from income taxes (that flow largely to the state) to property taxes (that flow to cities) might be good, but will simply uncapping the ability of cities to raise money do this? In short, I think it's a mistake to conflate concerns about "how much tax can California raise" with "is the money flowing to the right level". Keep in mind, for the US as a whole, the largest source of revenue for local governments (over 1/3) is intergovernmental transfers, overwhelmingly (88%) from state government (https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-local-governments https://www.taxpolicycenter.org/briefing-book/what-are-sourc...). There is no expectation that cities can fund their operations purely from property taxes, and this isn't how cities work in the US in any state. All cities rely on transfers from the state government, and the California state government is raising a lot of cash. If it's failing to transfer it to cities the way it should (which remains to be demonstrated!), this has nothing to do with Prop 13.

by Lazare 8y ago

throwaway2048 8y ago

the discussion is about local governments, mixing in the state level tax numbers is pretty misleading.

Lazare 8y ago
The state as a whole has the ability to raise perfectly reasonable amounts of cash, and is currently doing so. So... 1) If it's not being distributed between the levels in an efficient or fair manner, that seems like a pretty simple fix. There are already mechanisms for intergovernmental transfers from state to city governments; does California need to increase their transfers a bit? 2) California is already a pretty high-tax state. Shifting the burden from income taxes (that flow largely to the state) to property taxes (that flow to cities) might be good, but will simply uncapping the ability of cities to raise money do this? In short, I think it's a mistake to conflate concerns about "how much tax can California raise" with "is the money flowing to the right level". Keep in mind, for the US as a whole, the largest source of revenue for local governments (over 1/3) is intergovernmental transfers, overwhelmingly (88%) from state government (https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-local-governments https://www.taxpolicycenter.org/briefing-book/what-are-sourc...). There is no expectation that cities can fund their operations purely from property taxes, and this isn't how cities work in the US in any state. All cities rely on transfers from the state government, and the California state government is raising a lot of cash. If it's failing to transfer it to cities the way it should (which remains to be demonstrated!), this has nothing to do with Prop 13.