Tax Cuts Killed California

[marmar]

via AlterNet:



Tax Cuts Killed California

Posted by Steven D., Whiskey Fire at 4:11 AM on January 11, 2010.

Prop 13 led to disastrous results.



Once upon a time, there was a Golden State which had the arguably the best public schools and the best public higher education system of state colleges and universities. People longed to move there for its natural beauty, its climate, its good schools, its many jobs in the entertainment, defense and high tech industries, etc. Was it a perfect state? Far from it, but it did seem to be the place everyone wanted to be -- once upon a time.

Now? Not so much. You might even call it an unmitigated disaster, a failed state, one that is, for all practical purposes, ungoverned and ungovernable.

Gov. Arnold Schwarzenegger unveiled an $82.9 billion state spending plan today that calls for no tax hikes but envisions pay cuts for state workers, reductions in services to California's neediest residents - and relies on the benevolence of the federal government.

Well, the economy is bad. Times are tough. Yet I live in a state (New York) which, despite its fiscal problems, still manages to fund social services, good public schools, a good public higher education system, and provide all the other essential government assistance without massive layoffs or cuts. New York State has an $8 Billion deficit this year, but that's less than half of the budget deficit faced by California. New Yorkers suffer from high unemployment, but the values of our homes (at least those among us who don't live in super rich enclaves like the Hamptons or own condos in Manhattan) haven't gotten flushed down the toilet.

How did this all come to pass? How did New York manage to avoid a California budgetary collapse? Well, for starters, New York wasn't subjected to the grand conservative social experiment known as Proposition 13, a provision that, once approved, altered California's Constitution making it impossible to raise tax revenues and thus do what Government needs to do -- provide for the general welfare of its citizens.

Under Republican Gov. Earl Warren and Democratic Gov. Pat Brown, California epitomized the postwar American dream. Its public schools, from kindergarten through Berkeley and UCLA, were the nation's finest; its roads and aqueducts the most efficient at moving cars and water -- the state's lifeblood -- to their destinations. All this was funded by some of the nation's highest taxes, which fell in good measure on the state's flourishing banks and corporations. (...)

... With the state sitting on a $5 billion surplus, frustrated Californians grumped to the polls and passed Proposition 13, which rolled back and then froze property taxes -- effectively destroying the funding base of local governments and school districts, which thereafter depended largely on Sacramento for their revenue. Ranked fifth among the states in per-pupil spending during the 1950s and '60s, California sank to Mississippi-like levels -- the mid-40s -- by the 1990s.

Since 1978, state and local government in California has been funded chiefly by personal income taxes. Bank and corporation taxes have been steadily reduced. In the current recession, with state unemployment at 11 percent, tax revenue has fallen off a cliff.

But the problem with Proposition 13 wasn't merely that it reduced revenue. It also made it very difficult to increase revenue. Raising taxes now requires a two-thirds vote of the legislature, though in 47 other states a simple majority suffices. California has become overwhelmingly Democratic in the past two decades, but Republicans have managed to retain footholds -- representing just over one-third of the districts -- in both houses of the legislature.

So what was a bad situation for the rest of the country (brought about by the Federal Government's deregulation the financial industry -- but that's another story) was made much worse in Sunny California. Because a bare minimum of legislators, ideologues for the most part, is all you need to turn hard times into a financial catastrophe of epic proportions. All because of a myth that Government is always bad and taxation is always evil.

The current Republican crop has refused in good times as well as bad to raise business or other taxes (increasing the tobacco tax, for instance, has failed each of the past 14 times it has come up for a vote). Abetted by little local Limbaughs who inflame Republican brains, they protest that the state already has the nation's highest taxes. In fact, California ranks 18th among the states in percentage of personal income paid to state government, and its presumably beleaguered wealthiest 1 percent, according to Citizens for Tax Justice, pays just 7.4 percent of their income to the state, while the poorest Californians pay 10.2 percent.

But the myth of soak-the-rich high taxation persists among Republicans -- so much so that the GOP front-runner to succeed Arnold Schwarzenegger in next year's gubernatorial election, former eBay CEO Meg Whitman, is calling for cuts in business tax rates even though the state is staring at a $21 billion deficit that it somehow has to close. In short order, unless the federal government steps in with a bridge loan, the state will throw 940,000 poor children off its health-care rolls and lay off tens of thousands of teachers.

In a way I pity Arnold Schwarzenegger. By most standards he is a fairly moderate Republican. But he's hamstrung by his own party, which is far more radical than he is, and by the effects of Proposition 13 which makes it impossible for him to deal with California's present economic crisis in an effective manner.

He can't raise taxes to provide spending to stimulate the economy because it would never pass the legislature. So he is forced to look for tricks to get around the budget crisis he faces -- cruel tricks for all the people who are employed by the state of California, or the kids that attend its schools, or the people who rely on social services for their health care -- while also hoping (and begging) for assistance from the Federal Government led by President Barack Obama and the Democrats in Congress, will come riding in on it's white horse to save the day, or at least keep California from drowning in its own self created sea of red ink for another year.

And you wonder why Progressives laugh at Tea Baggers and other Conservative Republicans who mindlessly continue to repeat their mantra that cutting taxes is the only way to save the economy? Hey, we've seen that disaster flick played out in real life in the state that gave us Hollywood, and frankly the story doesn't have a happy ending.


http://www.alternet.org/blogs/peek/145056/tax_cuts_killed_california/

[Ian David]

1. Der Gropenfuhrer bankrupted the state because he's an economic girlie-man.

[madrchsod]

2. if ya think arne is bad.....

wait till.."i ruined ebay whitman" takes office.

[krabigirl]

17. She won't. nt

[jasi2006]

3. And now the tax cuts (by not raising taxes on those who can afford it)

now they will kill the country.

[Vinca]

4. Exactly! Every time I hear a Republican start yammering about

more tax cuts to get the economy going, I'd like to go for his/her throat. Considering Dubya's tax cuts, by their theory, we should have the most robust economy on the planet. Instead, we've got a great big, fat, Chinese credit card bill, no money and no jobs. Republicans charge and spend like a 14 year old at the mall who "borrowed" her mother's credit card.

[The Wizard]

51. Republican economic theory

Borrow and embezzle.

[AlbertCat]

64. Borrow and embezzle.... then move to Dubai

Oh wait....Dubai's in trouble too...

[Toots]

5. Funny how well California did during the nineties, twenty some years after prop 13

It wasn't until the Republican take over of Congress and the Administration that California began it's great decline. It was Republican energy giants that ransacked California and the Republican Federal government of the time refused to put a stop to it..Cheney said the ONLY way to fix the Crisis was to build a power plant every single day for five straight years..Then Jeffers switched Parties and the Crisis miraculously went away. However the Republican economic practices did not and California like the rest of America went bankrupt.

[marmar]

6. But much of the prospertiy of the '90s, in California and everywhere......

..... was built on the illusory real estate bubble. Now the chickens have come home to roost, with foul attitudes. (or fowl attitudes !!! :) )

[Johonny]

14. Yeah the tax base works in a good economy

That isn't the criticism at all. Arnolds own economic advisers told him he had to change the tax base in order to avoid total collapse during a down economy. Being a good Republican he ignored their advice. Frankly it's easy to run the economy when everythings going well, it's how you plan for the future crisis that counts. California is totally ill prepared for an economic crisis and sure enough when it came it faces total desperation. It isn't a shock we were told this countless times before this would happen if we didn't change the tax base. Even funny enough by Arnolds own economic advisers.

[Retrograde]

24. this ignores 2 other major tax contributions to the state

sales taxes and income taxes. The latter especially are way down - my county went from <2% unemployment at the start of 2000 to more than 10% now. And a lot of the currently employed are working for lower salaries.

But my property taxes continue with their regular yearly increase.

[pnwmom]

77. What I don't understand is why, if Californians rank 18th for the percent of

taxes they pay to state government, the state is so much worse off financially than most states.

[Garbo 2004]

10. CA had general fund budget deficits (crises) in the 80's during the Deukmejian

administration. A Repub gov who refused to propose raising taxes, but raised fees, borrowed money, moved special funds (not general tax revenues) to the general fund, cut budgets, programs, etc.

News clips from that time: http://www.youtube.com/watch?v=jt4WOhBTjzk

[Starry Messenger]

7. I'm no fan of Prop 13

but Enron really put us under water IMO. We've never recovered from that.

[Captain Hilts]

9. And Enron has yet to be punished for it. nt

[SoCalDem]

11. That's why the recall happened.. Arnie "settled" for pennies on the dollar

Davis had been in the process of ramping up the investigation/prosecution for the Enron debacle, and we might have gotten billions...instead we got chump change and a big chump governor too:(

[Starry Messenger]

23. Yep.

I can't wait to see the back of Arnie. In many ways CA is still living the Bush years. :(

[laughingliberal]

74. Yep. Pretty sure the whole recall was about getting Arnold in to settle the lawsuit

Enron was being sued by the state for $9 billion. Schwarznegger settled for pennies on the dollar. Let's see, the deficit now is $21 billion. Wonder if that $9 billion would have helped?

[Garbo 2004]

13. Enron, Duke, etc. didn't help, but was a blip. The state's general fund revenue issues existed

before that and remain, independent of the electricity "restructuring" debacle. News clips during the Deukmejian administration: http://www.youtube.com/watch?v=jt4WOhBTjzk

[Caliman73]

36. I agree

It is a mix of problems. The energy deregulation crisis really stopped all financial momentum in California and set us back for decades. However, the prop 13 issue really put a structural time bomb and major obstacles in the way of any long term economic well being.

[diane in sf]

37. Enron cost CA around $9B, and we're not the only state they screwed

[defendandprotect]

61. Was just asking about that . . . why no lawsuits against the officials who let them do it---???

Just shocking theft and criminal activity by Enron -- but certainly those in

charge KNEW -- !!!

[JDPriestly]

79. Arnie refused to follow through on the law suit against Enron.

I think that Gray Davis was recalled, that the whole recall campaign was intended to save Enron from California's lawsuit. We never really recovered from Enron's attack on us. It was as though the oil bigwigs in Texas attacked California -- by destroying our economy.

[Cessna Invesco Palin]

88. The lawsuit against Enron would have netted *at most* a few billion.

That is, assuming any of that money could be realized before Enron itself went belly-up, which seems rather unlikely given the time frame involved.

[Captain Hilts]

8. Yes. And wanting the govt. to maintain services. You can't have both. nt

[taught_me_patience]

12. The biggest problem is the federal goverment sucking the tax teat of

California for too long. You can't keep sucking $50B out of California every year and not expect consequences. We have one of the highest state tax burdens in the country, so please stick with your Michigan politics and stop posting uninformed drivel.

[Romulox]

16. LOL. Michigan is a net tax donor as well. Shows you what you know!

:hi:

[taught_me_patience]

18. Actually I did know that

I never said they were not a net tax donor. Michigan is having difficulty too. Whether Michigan, California, NY, etc... state fiscal problems go way beyond prop 13.

[JDPriestly]

80. In addition to Enron's fraud on California, we suffered from

outsourcing just like the rest of the country. And, yes, Californians paid more in federal taxes than were returned to them. California's money went to some of the "poorer" states. Now its the turn of the "poorer" states to help out California. We'll see how they like it.

[marmar]

19. Yeah, I'll take your suggestion under advisement.....

:eyes: :freak:

BTW, I posted an article.....so the "drivel" is someone else's. But I wouldn't expect you to be able to recognize such subtleties.

[LuckyLib]

15. Californians, like other Americans, want it all but don't want to pay for it.

Schools, roads, services and other infrastructure should just appear -- tax dollars should not be raised to pay for them. Prop 13? the greatest flim-flam ever constructed. Folks who can well afford to pay property taxes pay nothing ($300 per year on a $700,000 house, anyone?). CA has been dysfunctional for so long that it's all now visible to those of us who grew up there in the 50's/60's -- going home you see one giant strip mall of corporate retailers who have been given "tax breaks" to bring their development to every corner of the state. Quality of life for residents of the state? It can go to hell. It has.

[dugaresa]

21. I have to concur, US Citizens love services but think the money comes from some special tree

that is fertilized with unicorn shit.

Tell someone that you will shut down an elementary school to consolidate with another to save costs and you will have parents coming out of the woodwork because that can't be! Tell them you must raise taxes to keep both schools and they will vote you out of office.

[catzies]

27. You hit the nail on the head.

This Californian thinks the biggest problems we face are caused by ourselves.

[Cessna Invesco Palin]

89. Indeed. And the end result will be two really shit elementary schools.

Same story all across the state.

[dugaresa]

98. the scenario occurs all around the US and it defies logic

but then again anything we humans get emotional about tends to divert from logic pretty quickly.

[dysfunctional press]

20. tax cuts have dealt the entire country a death blow...

from which we may never recover.

[Joanne98]

22. As a Californian I can testify to that. Prop 13 killed CA and the rest of the country too

CA has been attacked by real estate speculators ever since Prop 13 was passed. In the 80's Japan bought a bunch of property, created a bubble and then got slammed. Prop 13 speculators are what crashed the Japenese economy in 1991. Japan still hasn't recovered. But Prop 13 wasn't done destroying countries. The US mortgage crisis started in good old scumbag city Irvine. Home of the Ann Ryan Institute!
http://en.wikipedia.org/wiki/Ayn_Rand_Institute

I'm surprise someone hasn't taken up this subject more seriously. Prop 13 is also the reason everybody in the country has to register their cars every year.

CA congress didn't know how to replace the revenue prop 13 took away so the used the DMV instead.

I remember those days.. 1981 came and EVERYTHING WAS ILLEGAL.

This is why I got into politics. I despise Republicans to this day and I remember every single thing they did.

[MindPilot]

29. I think you are giving prop 13 a little more credit than it deserves.

Prop 13 has destroyed entire countries? It crashed the Japanese economy? It is the reason everyone in the country has to register their car every year? I was paying an annual registration fee in Colorado long before Prop 13 was conceived; are its powers like those of the Clenis so it can travel back in time to wreak havoc?

[Joanne98]

34. I was there. The Japanese bought huge amounts of CA real estate.

They created a bubble and then it burst. They haven't recovered yet. It's a fact. It's nice to know though that Colorado is responsible for the yearly fee. I thought CA congress thought of it. Either way WE didn't have it until the Prop 13 diaster had to be fixed. It wasn't just the registration either, there were fees and fines everywhere.

[sabbat hunter]

101. I don't know if I would trust

anything that comes out of Ayn Rand's wingnut group.

[MindPilot]

25. God, I love it when a New Yorker pontificates on what's wrong with California

First of all we are not dead. (cue Monty Python reference) California has its problems to be sure--and prop 13 is among them--but we are still the 6th largest economy on the planet and put way more into the federal budget that we take from it.

The big problem with prop 13 is that it should have excluded commercial real estate; there are lots of businesses that are paying 1970-level taxes on their commercial holdings.

[JVS]

30. Question: It is my understanding that the original purpose of prop. 13 was so that locals...

who had acquired property in the past when it was cheaper would be able to avoid paying more taxes simply because the value of the property was being driven up by the influx of people in the market, the rationale being that they never saw any of that increased value unless they sold, so why should they pay for it. I was wondering if getting access to that money via home equity loans caused their taxes to be re-assessed at the current value.

[MindPilot]

32. Essentially that was it.

Increasing property values coupled with annual reassessments based on current values was pricing people out of homes they had owned for a long time. At the time, it was a really good idea that protected homeowners especially those whose homes were paid for and were living on fixed incomes.

The answer to the second part of you question is no; the tax value is not reassessed when you refinance or take out a second. That only happens at change of ownership.

[Joanne98]

35. The people who supported 13 were just the regular tax haters

Most of them had seen property increases of triple in the 70's. They were like the teabaggers. They just didn't want to pay. They were selfish RW and they were charging renters and arm and a leg. They had plenty of money they just wanted more.

[POR]

48. True....but

I agree by and large, but the imagery that gave the initiative legs, was the that of poor widows who were forced to pay unfair real estate tax increases.

We, as fiscally-responsible Democrats, need to strategize how to properly paint the greed at the heart of Prop 13 into a corner, in order to repeal at least the commercial real estate portion of the law.

[Dreamer Tatum]

50. You're full of shit

It's selfish to not want your taxes increased up to tenfold just because the value of your property is increasing?

Let me triple YOUR taxes with NO incremental benefit to you...see how generous YOU are.

[varelse]

66. Many of them were homeowners who could not afford the tax increases

My parents were among them. Not anti-tax at all, but the exponential rise in property prices would have pushed their retired parents living on fixed income and many like them onto the street or out of the state.

[JDPriestly]

82. The claimed intention was to help older people on fixed incomes

keep their homes. The problem is that Prop. 13 applies to corporations as well as human beings. (Same old problem with corporations.) Well, corporations don't die, and there are really obvious ways for a corporation to buy stock in a company that owns a building, take over the company for the building and avoid a tax rate increase. Since the building is not bought and sold, the tax rate remains at the low level. That is the problem with Prop. 13.

And right now, Prop. 13 is not the problem. Real estate prices are dropping so raising property taxes probably would not increase revenue that much.

[POR]

46. Exactly!!

Prop 13 should have never extended to commercial real estate, but the whole initiative was a trojan horse set up to give commercial real estate buyers a huge tax break.

To this day there are shell corporations, whose only purpose is to retain ownership of commercial real estate, thereby keeping the taxes assessed on said property, at artificially low 1980 rates.

There are said to be tens of thousands of these companies, which result in an annual revenue loss to the state in the tens of Billions. Think that money could help the state out of the current budget mess???

[JDPriestly]

81. Maybe we should start our own stock market, compete with

New York's Wall Street. We could then impose our income tax on those Wall Street salaries to say nothing of the sales taxes that we could rake in on those Wall Street lunches and luxuries. We'd be raking it in like New York state does. Hey, I know where there is lots of empty commercial state. Shall we grab those Wall Street bonuses for California?

[katkat]

26. Tax Cuts DID NOT kill California

Runaway, irresponsible spending by the legislature and Governors killed California.

Unless you think geometrically increasing property taxes are necessary for a state to be viable.

[diane in sf]

38. Tax cuts did, the taxes that used to be paid by business started being put on the public

in the 70s, this is why the revolting 13 was passed.

[Johonny]

43. It's terrible for business as well

Imagine trying to start a new business but paying modern property tax rates but trying to compete with the established business down the street who thanks to prop 13 gets to pay way lower than market value.

[POR]

49. Huh???

My uncle purchased his first home in 1980 for $20k. I purchased my first home, in the same neighborhood, in 2001 for $260k. My property taxes are roughly 5 times what my uncle's are.

Yet there are businesses in our community that pay property taxes at 1980 rates, even though they set up shop after I purchased by home in 2001.

Are you saying that these businesses shouldn't have to pay real estate taxes on par with what I pay as a home owner???

[xxqqqzme]

54. Go back & read post #25

Ant business, that owned it's own property is still paying those lower rates. Chances are real good those 'neighborhood' businesses are renting the space in that strip mall. There are huge multi-national corporations that own those stripmalls and high rise commercial property. I don't know where you are, but here in Orange County, the Irvine Company is still screwing us over and now, thanks to an all rethug Board of Supervisors, controls all the county public parks under the lame ass guise of it's cheaper to privatize the maintenance!

[JDPriestly]

83. Most people don't stay in their houses as long as your uncle

has. If you raise the property tax rates, people like your uncle are forced to move. It puts more houses on the market, and prices go down. Increasing taxes on residential properties is not the solution. Taxes need to be raised on commercial properties.

The real problems are the outsourcing of good jobs and the fact that wages all over the country have remained stagnant for years. Costs for nearly everything have gone up but wages have stagnated.

California does not just rely on property taxes. We also pay income taxes, sales taxes and taxes on other things like our cars.

[truedelphi]

65. Perhaps the really disstrous part of Prop 13 was letting Corporate Entities

ike Disneyland! be able to pay very little in terms of property taxes.

[Garbo 2004]

73. "Runaway, irresponsible spending?" Republican talking points swallowed whole.

Grover Norquist would be proud.

Billions in state tax cuts over decades to big corps had no impact on state gov't revenue? Really?

And voters keep voting for new programs that cost money but who do they expect to pay for it? Three strikes and your out? Cool. Where does the money come from for the increased prison population that resulted? Bond issues are popular...voters evidently consider it "free" money, but it's not. Bond issues increase state obligations and indebtedness.

How about the Legislature passing billions in tax breaks in a time of state general fund deficits that primarily benefited a few big corporations? (Not small business owners.) And tax breaks for the poor oil companies? Just an example of the stuff that doesn't make the headlines when the Leg benefits its true constituencies. The stuff the politicians don't talk about when they brag to the working stiffs how they're holding fast against increasing their taxes, but the working stiffs aren't getting those kinds of tax breaks either...or the same level of state services as in the past, should they ever need them. It's "Reaganomics" which maybe sounds principled to some, or just ordinary corruption. It's worked so well, hasn't it?

[closeupready]

28. I've known at least a dozen people who moved to CA only to move back.

A couple have stayed - one person was originally from LA, worked in New York for a while, and moved back there last summer. Another person not originally from CA moved there and stayed and loves it, but she moved there long ago, back in the early 70's. The only other people I know who have moved and stayed are people who are being paid very well - common people can't afford it anymore.

And also the quality of life is much worse than it used to be - most people kind of go 'ick' when you ask about daily life there.

[Joanie Baloney]

33. Tell them "thank you for visiting" from me,

a common Californian

Criminy :wtf:

[varelse]

67. Huh, it must depend on where you land here

I'm in Santa Cruz (mid to north coastal CA) and the quality of life is quite acceptable here.

[closeupready]

97. That's true - all these people tried Los Angeles.

Just like New York, some love it and stay, some hate it and leave. And then there are those like me who hate it and stay. :crazy: (Well hate it only sometimes, but that's not as funny. :rofl: )

[varelse]

99. I could not live in LA either

the air pollution would kill me. I can't even visit San Diego anymore because of that, and I grew up there :(

New York and LA would be nice to visit, if I could count on being able to breathe and not feeling like I've got a mild case of the flu...

[mnhtnbb]

105. You couldn't pay me to move back to California. I was there from 1965-88

and watched what Prop 13 and Ronnie did to the state.

My brother, the Republican, OTOH, moved back two years ago and will be relocating from the Bay area
to north San Diego county early this year (job change). He can have it!

[KamaAina]

31. The reports of our death have been greatly exaggerated

Is the system broken? Yes. Can we fix it? HELL YEAH!!

[diane in sf]

39. I think we're on our way to fixing it--we only have to get rid of Repukes in the legislature

when they are under 30% we will be able to tax and govern. And the south and valley have been trending more blue for a long time.

[KamaAina]

41. I just met a Diane from SF

you didn't happen to be in Sac last week for an advocates' meeting, did you? :-)

[diane in sf]

62. No, but Hi!

[Johonny]

42. Requiring a super majority to pass tax law

is just killing the state. There is no ability to respond to changing situations. On top of that California has a terrible tax base. Even worse it has tons of ear marked programs whos funds are non-transferable. Basically the anti-tax cranks props have hamstrung the state. I don't think it's possible to believe California can pass an maintain a super majority in order to function effectively as a state. What a nightmare.

[defendandprotect]

60. When do you get rid of the Arnhold . .. ???

And by the way ... did you ever recover any money from ENRON?

As I recall that was tens of billions of pensions and government funds -- etal????

[left coaster]

52. I'm with you!

..and the first step towards fixing our budgetary woes in Cali is to get rid of the ridiculous 2/3 rule.. please take a moment to read, sign, pass it on, and consider getting involved with this:

http://ca.restoremajorityrule.com/

[Liberal_in_LA]

40. Things are bad but CA is still kicking

[PurityOfEssence]

56. There's a mild breeze and it's in the mid-70s...sheer HELL

Prop. 13 came up for a reason, although the reason was to protect small homeowners and has been beneficial for those not so vulnerable. Had there not been a Prop. 13, the housing price escalation of the last few years would have been a bloodbath that's hard to imagine.

Even with Prop. 13, I pay 2% more EVERY YEAR on our house, and over time, it'll get to be quite a pretty penny. Couple this with housing prices (we're in Silver Lake) and it can be ruinous.

With the additional levies to the county of late for garbage collection, we're paying effectively 1.5% of our purchase price in taxes to the county every year, and it's quite a bit of a hit.

As a final parting shot, the ballyhoo about California's environmental regulations will catch up to the rest of the country as others finally get around to enacting them, too. This state has a lot going for it, and as one of the few who's lived in the north and chooses to live in the south, business and industry will adjust and rebound in this state, even if it's not going to be a very pleasant next few years...

[Liberal_in_LA]

57. I pay more than $3000 per year in property tax. How much more would people have me pay?

[PurityOfEssence]

71. How do you pay so little?

Did you buy a long time ago, or are you just a great shopper?

[JDPriestly]

84. Precisely. Our housing costs more to begin with, so even

though the rates are "low" the actual taxes are high enough. In addition, the taxes go up a certain percentage every year. My husband and I pay a fair share of property taxes considering the other state taxes we pay. We bought the cheapest house we could find. We got a lot less house for our money than other members of my family got when they bought houses for less money in other states. We pay our taxes as a percentage of the value of the house when we bought it. I pay about the same taxes (in money terms) on my house per year as another family member pays on hers. On paper, my house is worth more, but I pay the same amount in taxes as this other family member who lives outside California. So, it isn't really the property tax rates on residential properties that are the problem.

I repeat -- even if California tax rates sound lower than elsewhere, our prices are valued more highly in general, so we actually pay the same taxes that people pay in other states.

[Hidden Stillness]

44. Just Like What Very Wealthy Orange County, Calif. Did to Itself During 1980s

Many disasters actually have warning signs ahead of them, if people will only pay attention and avoid the thing--such as the deregulation and corrupt savings-and-loan collapse and bailout of the 1980s being similar to the Wall St. hedge funds, bundled mortgages, credit default swaps, etc., collapse and bailout, of our time now. This story reminds me of something I remember from the 1980s, I think before this disaster the thread describes, concerning what was then the richest county in the country, Orange County, California. It is/was an archconservative, extremely wealthy, Republican area that got on another one of these kicks where they cut taxes, outsource (to kill Municipal unions), etc. After severe, sudden tax-slashing, their budget crashed, they could not pay for services, they cut things like basic school programs, fire, police, garbage pickup, really drastic cuts, had many "payless paydays," on and on for years as I recall--this very rich county actually was declared bankrupt! I think the greedy assholes finally, later, re-raised taxes to get back on budget.

People used to know this: taxes are good, they pay for things. You do not live in a first-rate country if you do not pay for services and good Government; not particularly tricky.

[xxqqqzme]

55. Orange County went bankrupt through fraud.

People went to jail.

[Hidden Stillness]

100. Thank You for That Reply--I Think I Have Two Things Mixed Up

I think I must have two incidents mixed up in my mind, because they happened so long ago, and I remembered something wrong. I remember a very rich area, during the 1980s (I think), earlier than the Orange County crime, that selfishly lowered and lowered its taxes, deregulated whatever they were able to do on this (county?) level, and suffered total collapse. I always "remembered" it as Orange County, Calif., but your reply made me wonder if I somehow got the tax-cut-bankrupt thing confused with this other "Republican behavior" of speculation and fraud. I am apparently thinking of some other case, some other area, but now I can't remember where it was, because I always thought it was Orange County, Calif.; it was something else.

By the way, Michigan here also has a story of its own disaster from huge tax cuts. Some years ago, the Michigan Legislature consolidated all corporate taxes to one general one, (why, I don't remember). It turned out, it taxed different business types at an unfair difference of rate, (and also wanting as usual to hurt our Democratic Governor) the then-Republican Legislature suddenly killed the Single Business Tax completely, (so there were effectively no commercial taxes), and with our stupid Republican "Balanced Budget Amendment," this lost like one-third of our total revenues just like that, and so Gov. Granholm had to slash very basic and needed services, because there was no alternative. A budget was recently agreed to , with Granholm excluded, by the Republican Senate head, and Democratic Speaker of the State House. We have suffered a lot because of crap Republican moves to kill all business taxes, many times over the years.

[madamesilverspurs]

45. Wasn't Doug Bruce behind Prop 13?

He's in Colorado these days, getting his initiatives on the ballot. We need to be paying attention to California.


---

[Capn Sunshine]

47. Elephant in the room

Unlike other states, California has no extraction tax for minerals like gold, petroleum and the like.

This would be a huge step towards tax equity

[Bette Noir]

58. There was an initiative a few years back, the point of which was to impose

royalties on oil drilling. The oil companies bought TV ads proclaiming it the biggest tax increase in history; it lost at the polls.

[left coaster]

53. Time to fix what ails us.. starting here..

http://ca.restoremajorityrule.com/

[defendandprotect]

59. California and its liberal policies was targeted . . . just as NY has been . . .

by the right wing -- Nixon, of course, did all he could!

Reagan -- deadly right wing policies to enrich the elite even further --

[WhiteTara]

63. REPULICANS and Ken Lay

destroyed California. The Boobengroper has played his part, but never forget DIEBOLD who set up the electronic voting machines in Riverside county.

The rule that 2/3 must pass the budget has given the pukes the ability to just say destroy the state with one sylable, NO.

[cliffordu]

68. I went to school in California in the '50's and '60's.

I will attest that to public schools were grate.

:rofl:

No kidding though - we were all taught like we could go to college. And we could too, the state schools were within reach of all residents.

And then Proposition 13 killed California. Reagan the walking corpse helped push that along. Between him and Bush, you are going to live in a third world country pretty soon.


My 3rd grade teacher and the outstanding library in my elementary school kept me from doing life in prison, prolly.

[Garbo 2004]

75. Ditto on public ed & I worked my way thru state college in 70's working part time & no debt. nt

[djp2]

69. It;s not the houshold property tax, but instead .....

It's the corporations, as usual

which aren't paying enough...They all scream about high taxes...let them go back to the 1950s...which would they prefer..the 1950s tax code and rates with fewer loopholes or the 2009 code with enough loopholes to drive a train through! I bet they aren't paying anything comparable inflation-wise to the 1950s..

In California the Property tax rate on business property which has been owned since 1978 hasn't gone up more than 1.3% a year...that's the problem.... corporations aren't paying their fair share..since they are not reappraised as they are often never sold! Remember these CPI inflation Indexes! I work it out at 124.8% in the last 31 years. With an annual increase of 1.3% in valuation they have increased the appraised value by only 40.3%..meaning they are paying 84.5% lower property taxes than they should be....and that is only Inflation added, not the hyperinflation of property values in California over the past 10 years.

http://www.rateinflation.com/inflation-rate/usa-histori...
rounded...
2008 3.8%
2007 2.8%
2006 3.2%
2005 3.4%
2004 2.6%
2003 2.3%
2002 1.6%
2001 2.8%
2000 3.4%
1999 2.2%
1998 1.6%
1997 2.3%
1996 2.9%
1995 2.8%
1994 2.6%
1993 3.0%
1992 3.0%
1991 4.2%
1990 5.4%
1989 4.8%
1988 4.1%
1987 3.6%
1986 1.9%
1985 3.6%
1984 4.3%
1983 3.2%
1982 6.2%
1981 10.3%
1980 13.5%
1979 11.3%
1978 7.6%

[djp2]

70. Here's a better link to the inflation data...

http://www.rateinflation.com/consumer-price-index/usa-historical-cpi.php

[annm4peace]

72. thanks for the article and your additional comments

As someone who grew up in Fresno, CA during the 70's and 80.. I not only felt the decline of CA but became an economic refugee like many of my college educated cousins and left the state.

I knew as a 7th grader that the Prop 13 was a bunch of crap. and Howard Jarvis was a grumpy tired windbag.

This article allows me to share the story with others in a much more articulate way then I ever could.

It also supports my "this is what happens with no-taxes is passed and conservatives take over".

[leveymg]

76. Why Can't Prop 13 be overturned by a new Referendum? Seems time to do that.

[Cessna Invesco Palin]

87. It can be, but it's not going to happen.

Nowhere near enough support.

[Selatius]

90. That, and the business oligarchs would pour vast amounts of cash to defeat such a referendum. nt

[Cessna Invesco Palin]

91. They wouldn't need to.

You aren't going to get people to vote to raise property taxes in the middle of a recession even if you offer them free blowjob unicorn robot butlers. Ain't gonna happen.

[Selatius]

93. The problem is Prop 13 treats commercial property the same as residential property.

The answer is rather plain: Decouple the two. Any cuts to residential property taxes could be made up by taxing commercial properties above a certain threshold. It would make for a more progressive tax structure. As it stands, it can't be done both politically and, because of 13, legally. In five or six years or whenever the economy hits a very strong upswing, the issue could be put to a vote if the entire shebang were advertised as dropping property taxes on homeowners and shifting the burden onto the rich who pay less taxes than their workers. The federal government, at this point, isn't likely to bail-out California, simply because it would garner widespread criticism by other states that got no bail-out.

[earcandle]

78. Thank you for posting.

[1]

85. california is going to be fine. yup, times are tight now, some things will get cut back...

but california will bounce back.

this is nothing new. sometimes there is money, sometimes not...

california knows how to roll with the times.

[democracy1st]

86. K & R for later

[Ozymanithrax]

92. Prop 13, and requiring a super majority to pass a tax increase killed California...

We could be resurrected if we hold a State Constitutional Convention.

I won't hold my breath.

[1]

94. stop that. california does not have a tax problem. california has a spending problem...

california has to get over its need to spend itself to death.

and then california will be just fine...

[Ozymanithrax]

102. I've heard that somewhere....

Ohhh yeasssss!

[varelse]

103. A Republican/Necon talking point, perhaps?

*sigh*

[djp2]

107. sounds like NEOCON tak radio to me..

double sigh....

[sam sarrha]

95. it was something called the "Grand Experiment", create utopia by packing the place with as many

different Foreign emigrants as could be found, lowered wages=lower taxes.,.. Reagan's ending tariffs that paid for job retraining and the 4th best educational system in the world, now about 56th. Reagan's educational catastrophe resulted in wide spread illiteracy.. in 97 only 2 of 7 HS graduates were at ed level 4 of 7 couldn't fill out a job application.... industry left due to the fact people couldn't read work instructions.. in 98 my little town had so many Illegals children in school they out numbered locals by 3 to 1 and couldn't even read in spanish..!! gangs spread, parks closed due to murders.. etc etc

everyone i new there has left. my home town had 20+% unemployment it is so over populated. LA uses about 76% of the taxes..

[fasttense]

96. That's what happens when you vote in Republicon Governors. n/t

[hack89]

104. So a Democrat dominated legislature has nothing to do with it? nt

[djp2]

108. Not when their hands are tied by...

Prop 13 type laws. Tax corporations their FAIR share, which is about 3 times what they are now paying in proerty taxes.

[hack89]

109. They could have planned for a rainy day

and not spend like the good times would never end. I agree about Prop 13 but don't forget that it is what the people of California wanted. Knowing that there was a cap on revenue, they should have insisted on a cap on spending. You can't put the blame on a single office - the responsibility for this mess is borne by all.

[Roland99]

106. Norquist would be pleased, eh?

[Nye Bevan]

110. So states where taxes are *lower* than California

must be in even *bigger* trouble?

Right?