Calif. Prop. 13 Discussion Shows How Easy it Is to Mislead When Talking About “Fairness” in Taxes

Thanks to California’s incoming Democratic supermajority, Sacramento leaders are taking a closer look at Proposition 13, the well-known ballot initiative the limits property tax increases.

California has some of the highest taxes in the nation. It tops in sales taxes, income taxes and gas taxes. Even with the restrictions of Prop. 13, California’s property taxes rank 15th in the nation.

Changing Prop. 13 would be a pretty tough sell, but it looks like state Democratic leaders are going to give it a try by invoking the idiosyncratic, subjective concept of “fairness” as it applies to taxes. The Contra Costa Times helps pass along the talking points:

"It is time for a fix, because Proposition 13 is broken," said Assemblyman Tom Ammiano, D-San Francisco, who plans to introduce a bill next year aimed at forcing businesses to pay higher property taxes.

The landmark 1978 measure rolled back property taxes and capped yearly increases until a property is sold, but critics say one of its unintended consequences was shifting more of the Golden State's property tax burden from businesses to homeowners.

In addition to Ammiano's bill, two constitutional amendments heading to the Legislature would allow voters to approve local parcel taxes for schools and libraries on a 55 percent vote, rather than the 66.7 percent now required.

In a recent poll by the Public Policy Institute of California, 58 percent of registered voters said they favored a "split roll" property tax, in which commercial properties would be reassessed annually or semiannually according to their market value, while taxes on residential properties would continue to be capped at 2 percent annual increases. And since Democrats took full control of the Legislature in last month's election, some legislators have suggested that it's time for a so-called "split roll."

The reporting includes some lovely graphs showing the change in the tax burden in their readership area as a larger percentage of property taxes come from residents rather than commercial properties.

But there’s a lot of context missing from the story. What percentage of the property owned within these counties is commercial or industrial? Why is it operating on the assumption that a closer tax burden percentage is fairer? If 67 percent of percent of San Francisco County is residential property, wouldn’t a 67 percent residential property tax burden also be fair?

Furthermore, the reporting completely ignores the extremely important context of the other costs of doing business in California, costs that are driving businesses out of the state. In addition to having the highest sales taxes in the country, only eight other states have higher top corporate tax rates than California. How have business closures impacted these numbers? And what percentage of government revenue funds services meant for residents as opposed to business? And what percentage of government services “meant for businesses” is actually the bureaucracy designed around extracting more fees out of them?

Obviously Ammiano wants California voters to consider one idea of fairness – “It’s unfair when somebody pays less taxes than me.” When you can get folks into that mindset, you can game the numbers to make it look like California business are getting some sweet deal from Prop. 13, when in fact everything else about the state is conspiring to get that money in other ways.

California’s tax receipts (pdf) are 10.8 percent less than projected for November 2012, off everywhere except in sales taxes. Even worse, government expenditures are 4.9 percent above what was budgeted for the month. Even if the state’s projections had been on the mark, the state is still spending more than it is taking in. And despite the projection failures, the state is still taking in more revenue than it did last year.

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  • Ted S.||

    Scott:

    Businesses don't pay business taxes.

  • Adam330||

    Only because they are evil profit making tax evaders!

  • Tulpa (LAOL-PA)||

    I guess I don't pay income taxes either, since I have income tax rates in mind when I decide what salary to bargain with my employer for.

    Nobody pays any taxes by that logic.

  • Kat||

    Your employer doesn't care what your tax rate is when he's bargaining with you, so I guess you're still the one who pays, dear.

  • ||

    What percentage of the property owned within these counties is commercial or industrial? Why is it operating on the assumption that a closer tax burden percentage is fairer? If 67 percent of percent of San Francisco County is residential property, wouldn’t a 67 percent residential property tax burden also be fair?

    No, that would require one to think logically. California Democrats genuinely believe their own propaganda.

    Furthermore, the reporting completely ignores the extremely important context of the other costs of doing business in California, costs that are driving businesses out of the state. In addition to having the highest sales taxes in the country, only eight other states have higher top corporate tax rates than California. How have business closures impacting these numbers?

    The motto in Sacramento appears to be that the beatings will contiune until morale improves. When you've got absoulte power and no chance of losing it, you just stop giving a shit about the consequences.

    California’s tax receipts (pdf) are 10.8 percent less than projected for November 2012, off everywhere except in sales taxes. Even worse, government expenditures are 4.9 percent above what was budgeted for the month.

    Well that's one way to keep your job in the state's budget office, contiunously overstate the amount of revenue taken in and punt the problem upstairs. Governor Dickhead is going to be lame-ducked by his on party if he tries to address this insanity.

  • Ted S.||

    If any private-sector firm did their books like this, everybody in the business would be in jail.

  • mad libertarian guy||

    Are you trying to say that government rigs the game so that that are always on the up-and-up?

    Unpossible!

  • ||

    People are stupider than dirt. If you make businesses pay more, they will pass that on to their customers. When businesses pay more, you pay more. Holy shit people are stupid.

    Also, Prop 13 fucks new homeowners hard. People who have had their house for years are capped, so the assessor assesses any new sales as high as they can possibly get away with in order to get as much tax revenue from the new sale as they can. Anyone buying a house in CA should immediately appeal their property tax no matter what.

  • mad libertarian guy||

    Anyone buying a house in CA should immediately appeal their property tax no matter what see a psychiatrist.

    FIFY

    There is NO FUCKING WAY I would ever live there. I have an aversion to even visiting there.

  • tarran||

    Epi, they can't pass it on to *all* their customers. Otherwise they'd jack up prices from the get-go to pocket that money people are willing to pay.

    So, businesses will either eat the decreased profits, or try raising their prices and lose customers.

    The possible outcomes are :

    1) Reduced profitability - this is what the politicians are hoping for.
    2) Substitution of cheaper inputs to reduce the cost of production (eg cutting cocoa powder with hazelnut powder)
    3) Reduced quality/quantity of product (Chocolate bars that are 15% less thick)
    4) A couple of companies go bankrupt - the smaller pool of producers charge higher prices to sell to a smaller customer base.

    Reality is going to be some combination of the four.

  • ||

    So you're saying that no matter what, customers will suffer. WHICH IS WHAT I SAID. Don't go Tulpa on me here, dude. Have another Bloody Mary and chill out.

  • tarran||

    Why are you offering me a Bloody Mary? Are you trying to rape it forward?

  • ||

    All I know is ball...and good...and rape. So, yes.

  • ||

    Tonite...YOU!

    Happy New Year, Epi!-D

  • ||

    So it's 9:30 PM for you right now, doc. I hope you're kind of loaded. I wish I was, but I have to work out first.

  • ||

    Not yet.-) Pacing myself, actually. New Year's here is celebrated over the span of three days and kicks off the Christmas season.

  • ||

    Pacing is for people with sense, doc. Don't be that guy. Sensible guy. Be drunk crazy guy. You know you want to.

  • Pro Libertate||

    For the doc, I propose a new drink: The Spice Trip. Other than some cinnamon, I'm not sure what should be in it, other than something to make it bluish and something to make it just like a spice overdose--possibility of death, visions of the future, remembering all of your ancestors' lives, etc.

  • ||

    NEEDZ MOAR MESCALINE

  • nicole||

    Pro L', that reminds me of the most horrible thing I've ever had the misfortune to drink: shots of equal parts Goldschlager and Jäger. Why did my college friends have such horrible taste?

  • Pro Libertate||

    Those are mind and conscience-killing substances, not mind-enhancing ones. Frankly, I think GM will need to propose some experimental prescription drugs.

    Say, an alcoholic beverage that requires a prescription. . .hmmmmmmm.

  • ||

    Say, an alcoholic beverage that requires a prescription. . .hmmmmmmm.

    The commentariat already hates me enough as it is, Pro'L Dib...Why are you suggesting a GUILD! drink? What would it be called, "Permission Slip"? "ORANGE C.H.O.A.M.?"

    Now the experimental fun drugs... And, for the record, if I did create some nifty molecule of happiness, I would dub it "C.H.O.A.M". Because it's an acronym and all science-y.

  • Pro Libertate||

    Well, I was trying to find an alternate method of employment for doctors, once socialized medicine ruins the profession.

  • Ted S.||

    We don't hate you, Maksim. At least, I don't hate you.

  • ||

    Why did my college friends have such horrible taste?

    Well, they were your friends, right?

  • nicole||

    Well, they were your friends, right?

    Oh that wasn't predictable at all.

  • ||

    Like you didn't set that up for me. Shit, if I hadn't taken it you'd have given me shit for it. Just like a woman, giving me all losing choices.

  • nicole||

    Mwahaha!

  • ||

    Ah, they really did have horrible taste, nicole. They forgot the Rumplemintz. Equal parts of Goldschlager, Jager, and Rump, and named (incorrectly) "Three Wise Men".

    Heathens.

  • Ted S.||

    Somebody in college introduced me to the combination of vodka and Rumple Minze.

    Easy to get drunk very quickly.

  • Drave Robber||

    Not as bad as it could be.

    Rich Dead Nazi: Goldschläger, Jägermeister, and peppermint schnapps mixed in equal proportion (sometimes known as Three Wise Men) [7]


    (Pedowikia)
    The rest listed there are scary, too.

  • nicole||

    The internet turns up several names for my version, but we called it "Liquid Cocaine."

    What a fucking slur against cocaine.

  • ||

    There's already a substance for that, Pro'L Dib: AQUAVIT!

    With, as Episiarch suggests, mescaline. With a psilocybin garnish. Shaken, not stirred.

  • SweatingGin||

    Creme de Violet will make it blue. For the spice overdose, I'm thinking absinthe. Swiss absinthe is often blanc

  • ||

    All in due time. I wouldn't want to scare off the the future Mrs. Groovova, now would I? What may be even worse is if Drunk Crazy Groovus actually attracted The Future Mrs. Groovova.

  • Pro Libertate||

    If the Spice Trip works, you can select the perfect mate through the use of prescience.

  • ||

    I tried that once, using prescience, and led to extreme cardiac distress. I think I'll default to the traditional method, though The Spice Trip would certainly enhance it, no doubt!-D

  • Ted S.||

    Mrs. Groovova? I figured you would be Mr. Groovy (with an i-kratkoe on the end), and she'd be Mrs. Groovaya. It's a nice adjectival surname. :-)

  • ||

    Technically, she would be either Mrs. Maximovna or Mrs. Maximova, if taking a Russian surname. Ukrainian would probably be Maximovenko. Let me check my slovar'...

  • Ted S.||

    I figure a name like Maksim Groovy would be more appropriate for you in Russian, since it's easily declined. I know that in Russian, surnames of Ukrainian origin are indeclinable for women, although the ones ending in a consonant (eg. Kravchuk) decline for men. I have no idea what the hell they do in Ukrainian.

  • Tulpa (LAOL-PA)||

    tarran isn't as glib as you, Epi.

  • Tulpa (LAOL-PA)||

    If you make businesses pay more, they will pass that on to their customers.

    And if you make individuals pay more, they pass that on to their employers.

  • ||

    You really do say the dumbest things, Tulpy-Poo. I guess it's just your way.

  • Tulpa (LAOL-PA)||

    Just because it doesn't fit into the ruts conventional libertarian dogma have carved into your brain, doesn't mean it's dumb.

  • ||

    It's dumb because it's fucking dumb, Tulpy-Poo. Sometimes a cigar is just a dumb cigar. Also, let's not forget that I am not a libertarian, just like you're not. Well, not just like, but you know what I mean.

  • Tulpa (LAOL-PA)||

    Haha, TEAM logic is cute coming from you.

  • ||

    So you've decided to switch from dumb to nonsensical. Whatever works for you, I guess. Personally, I think you do dumb better, but that's just my aesthetic opinion.

  • ||

    Did you go fucking retarded or just hit the liquor early Tulpa?

  • Raston Bot||

    Is it 100% certain California will get a state stabilization bailout?

  • Ted S.||

    How many of the other 392 US Representatives would vote for it?

  • LTC(ret) John||

    The delegations from NY, NJ and IL would - quid pro quo, baby!

  • CE||

    I like limiting tax increases, but Prop 13 is inherently unfair, by any reasonable definition. Two neighbors with identical houses can have radically different property tax bills, based entirely on what year they bought.

  • tarran||

    It sounds to me like the neighbor paying more is having his taxes unjustly raised rather than the guy who is paying less getting an unfairly good deal. After all, at one point the guy paying less was paying the ordinary amount that everyone else was paying until the government got even more grabby.

  • ||

    That is why any person buying a house in CA should immediately appeal their property taxes. You may not win but at least you're giving it a shot.

  • ||

    I like limiting tax increases, but Prop 13 is inherently unfair, by any reasonable definition.

    Any theft by the criminal gang running the government is unfair. The fair level of taxation is 0% for everyone.

  • califernian||

    good job California. Let's make it more expensive to be in business. WTF

  • GILMORE||

    'Fairness and Unfairness', Swedish Edition =

    http://www.thelocal.se/43656/20121006/

    Lunch lady slammed for food that is 'too good'

    A talented head cook at a school in central Sweden has been told to stop baking fresh bread and to cut back on her wide-ranging veggie buffets because it was unfair that students at other schools didn't have access to the unusually tasty offerings.

    Annica Eriksson, a lunch lady at school in Falun, was told that her cooking is just too good.

    Pupils at the school have become accustomed to feasting on newly baked bread and an assortment of 15 vegetables at lunchtime, but now the good times are over.

    The municipality has ordered Eriksson to bring it down a notch since other schools do not receive the same calibre of food - and that is "unfair".

    Moreover, the food on offer at the school doesn't comply with the directives of a local healthy diet scheme which was initiated in 2011, according to the municipality.

    "A menu has been developed... It is about making a collective effort on quality, to improve school meals overall and to try and ensure everyone does the same"....

    California's interpretation = "We're *screwing* you! Aren't you upset we're not screwing everyone else just as hard?! C'mon! For fairness-sake, lets make everyone suffer equally!!

    The idea that maybe the 'fair' thing to do would be to lower property taxes... inconceivable!

  • Tulpa (LAOL-PA)||

    There was a Reason article on this like a month ago.

  • GILMORE||

    NOW IT IS GERMANE, FOOL

  • Rights-Minimalist Autocrat||

    I thought Harrison Bergeron was just a story.

  • Tulpa (LAOL-PA)||

    Fuck. Maybe I shouldn't move to Sacramento after all.

  • ||

    Sacramento is a dreadful place. Other than a couple of decent bars and the kick-ass Squeeze In Grill, the place is just awful.

  • ||

    No, you probably shouldn't, TBQH. But then, wherever you relocate, you are probably going to get screwed.

    6 on one hand, half-dozen on the other.

    Also, you are correct about the murder rate in UKR, with Kiev being the highest (not surprising since it's the most populous city here).

    Interesting that noted fan favourite of the commentariat, Estonia, is no slouch in the Murder, Inc. dept. either:

    Europe's most murderous cities are to be found in the East, with Tallinn (in Estonia), Minsk (Belarus) and Chishinau (Moldova) topping the list. Estonia also witnessed a 15% drop in GDP and a 14% rise in unemployment rate in the same year, one of the most brutal downturns of the OECD countries.

    Via The UK Fraudian.

  • scareduck||

    If the split roll is in fact enacted, I will greatly enjoy watching as landlords fire off suitably large rent increases to all the morons (and they are pretty much always morons) who voted Democratic and demanded "fair" taxation on commercial property holders via the so-called split roll.

    The problem with a split roll is that Prop. 13 basically reassesses property only on transfer, but this is so complicated with businesses that basically you end up with the old pre-13 valuation methodology, wherein the county assessor has as much flexibility as the state desires. For that reason, it is an invitation to arbitrary taxation with little or no oversight by the legislature or the public. Since Democrats apparently know no one who actually is in business who doesn't take state money as a matter of course (e.g. but not limited to "green energy" companies), this will affect their base immediately; but see comments above.

  • scareduck||

    ... er, will NOT affect their base immediately ...

  • kinnath||

    It is time to forcibly expel California from the union.

  • Gilbert Martin||

    Anyone who is paying more in taxes to any entity of government on an absolute dollar basis than the absolute dollar value of verifiable direct services he is recieving in exchange for his money is already paying more than his "fair share" of taxes regardless of what manner of taxation is used to levy them.

    Anyone paying less than that is not paying his "fair share".

    That's all there is to it.

  • Lost_In_Translation||

    The coast has nice weather and beautiful architecture and there are some excellent vineyards there...

  • califernian||

    All the women are loose.

  • waaminn||

    Now there is a dude that clearly knows what he is doing!

    www.ItsAnon.tk

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