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> Prop 13, voted in by the residents themselves 40 years ago, is a giant sandbag on the state's finances. Yes, prop 13 is a stupid piece of legislation. But it
by bradleyjg 8y ago
> Prop 13, voted in by the residents themselves 40 years ago, is a giant sandbag on the state's finances.
Yes, prop 13 is a stupid piece of legislation. But it isn’t an insurmountable obstacle to good governance. Prop 13 made it impossible to have a reasonable property tax system, so California (and its subdivisions) should not rely on property taxes. Problem solved.
- dragonwriter 8y ago> Prop 13 made it impossible to have a reasonable property tax system, so California (and its subdivisions) should not rely on property taxes. Problem solved. Hence California's high income and sales taxes, but both taxable income and consumption are more volatile than property values and more tightly synched with business cycles, which (given a Constitutional balanced operating budget mandate) makes countercyclical spending very difficult (further complicated by the lead time on bonds since they need public advance approval, which makes using the capital budget for countercyclical spending more difficult.)
- jedberg 8y agoWhat should they rely on instead? Increased sales taxes would disproportionately hurt the poor.
- bradleyjg 8y agoHow about income taxes?
- Kalium 8y agoYou have accurately described the current state of affairs. There have been a lot of unexpected knock-on effects. Among other things, it means Californian budgets swing wildly according to how well the local economy is doing. Another is strongly encouraging the permitting of offices over residences, further contributing to an already painfully low supply of housing.
- bradleyjg 8y agoI don’t believe the status quo is no property taxes in California. Despite the fact that the only kind that’s allowed is bizarre and broken, they are still in place.
- Kalium 8y agoPlease accept my apologies. I can see I've been unclear. The situation you call for, depending largely upon income taxes for government revenue, is the status quo in California. As you correctly note there are property taxes. However, they comprise a lower percentage of state revenues than is typical among states. This situation has produced the aforementioned side-effects. I do hope that is clearer. Please don't hesitate to ask if you have any questions!
- bradleyjg 8y agoStability is good for governments but bad for people. If you hold the tax amount steady and vary income (or wealth if you want to go that direction) then you are necessarily going to to have a less progressive and more arbitrary system than if you vary taxes with income/wealth.
- jedberg 8y agoThat's exactly what this article is about though. The variability of income taxes and how that causes problems budgeting for recurring costs.
- paulddraper 8y ago> California (and its subdivisions) should not rely on property taxes. Problem solved. Wow, just like that. Thanks HN!