Why is CA broke after having very high taxes (excpt Property)? (Los Angeles: HOA fees, assessor)

[mysticaltyger]

Originally Posted by ashguy77

I have been wondering about this. After moving from Dallas here last year, I have to pay additional 9-10% State Income Tax. The Sales Taxes are ridiculously high. Registering my car was 4-5 times as expensive. Then why is CA broke??

I read a few articles and the main reasons cited are:
* Proposition 13, limit on increase in Property Taxes
* People on welfare including Illegal Immigrants
* High Prison costs due to 3 strikes and other rules
* Unions, like Teachers etc.

What other things cause this? It's unimaginable where the revenue goes as the revenue must be one of the highest in the US.

Thoughts?

It's simple. Americans in general, and Californians, in particular seem to assume more money fixes any and all financial problems, whether it be in their personal finances or the government's finances.

But if you're in the habit of spending $1.20 for every dollar you bring in and not saving anything for a rainy day, well then....you're screwed.

Pretty much sums up the financial situation of California & the US, government & citizens alike.

But there will always be people on this board who stubbornly insist raising taxes would fix all or most of the problems. They will simply ignore all evidence to the contrary.

[mysticaltyger]

Originally Posted by ashguy77

What about Parks/Wildfires/Police etc? Are they a big drain on the system? Do you know if the ratio is disproportional to other states? Why haven't the people of CA speaking out against the free distribution of money to welfare programs?

Police, Firemen, & Prison guards get amazingly fat pensions in CA. In my city, they get up to 90% of they final year's salary as early as age 50 if they work for 30 years. I'm not absolutely sure of this, but I think their abundant overtime gets calculated into that as well (although I won't swear to that). They also get consistently larger raises than other government workers year after year after year. The benefit formula for police, firemen, & prison guards, even by government pension standards is crazy generous.

[Lovehound]

Originally Posted by mysticaltyger

Police, Firemen, & Prison guards get amazingly fat pensions in CA. In my city, they get up to 90% of they final year's salary as early as age 50 if they work for 30 years. I'm not absolutely sure of this, but I think their abundant overtime gets calculated into that as well (although I won't swear to that). They also get consistently larger raises than other government workers year after year after year. The benefit formula for police, firemen, & prison guards, even by government pension standards is crazy generous.

And we're complaining about city managers getting $800K salaries. The whole system of public employment is corrupt.

[West of Encino]

Looks like California lost it's statue as the Golden State since the 2000s.

[Curmudgeon]

Originally Posted by SoCal35

1) A flat tax would clearly shift the tax burden to the poor and middle class and make our modestly progressive tax system extremely regressive. Any half-way decent economist not on the payroll of the RNC will tell you that.

2) Have you never heard of the 16th Amendment to the constitution?

To quote the father of free markets Adam Smith, "It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

Of course. And federal taxation began with a flat tax.

I don't see it as regressive. The more one earns the more one will pay and it will always be proportional. Where in the 16th Amendment is it written that the dollar I earn is worth more than the dollar someone who has less than me earns. On the free market they both have equal value.

But I recognize that the trend to stick it to the rich -- and we're far from that -- is popular among progressives who don't seem to comprehend the simplicity of a flat tax with no gimmics, no deductions, and no loopholes.

[DANNYY]

California's economy will see a recovery, but the main question is when.

[Ultrarunner]

Originally Posted by SoCal35

The BIGGEST problem in the California budget process is two fold in my opnion:

1. A two-thirds vote is required in the state legislature to pass a budget;
2. A two-thirds vote is required in the state to pass any tax increases;

Point number one dates back many decades and is unfortunately written into our state's extremely outdated and in need of reform state constitution. I do NOT think there is any other state with such a crazy requirement.

Point number TWO is directly an outcome of Prop. 13 and REQUIRES a 2/3's vote for any tax increase.

Very hard to govern when you have tied the hands of the legislators in such a way. I am NOT saying we need to RAISE taxes. But I am saying let the pols we send to Sacramento have all the tools at their disposal. The voters can decide if they went to vote them back in or kick them out. But handcuffing them and crying foul everytime there is a budget impasse is just pointless.

Not quite correct... only 55% is required for new school infrastructure

[Ultrarunner]

Originally Posted by revelated

Counterquestion: Does that matter?

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Using Colorado as a safe example, they do three things which I find brilliant in this economy:

1. Assess the current property value as a percentage of the actual value. We know property prices are inflated, and home values are in the toilet. That means that an increase using this metric would not have a substantial negative impact on those who own and are paying for their homes without a problem today, yet would bring in more revenue without taking money before we even touch it.
   
   
2. Calculate an assessed percentage against the assessed value to determine the total tax rate and amount. Instead of a flat percentage that never changes even when our budget and economy are constantly fluctuating, we have a changing percentage from which to derive income. Cap it at a reasonable maximum - say, 50% of actual value - to keep it from spiraling out of control, but allow it to morph with the rest of the economy. Set this percentage based on volume of homes assessed.
   
3. Track a separate levy from which to derive the actual property tax owed. This is the key. So #2 is like a tax bracket, #3 is adjusted based on the area the home is located, the current budget health, and forecasted money on hand. Cap it at 5%.

Sample calculation:

Home is worth $750,000. Under Prop 13, they're paying what...$7500?

Under a potential increase as offered above, assessed value at 27% is $202,500, levy at 5% is $10,125.

I raised the annual tax burden of that individual by $2625 - a whopping $218.75 per month. I also increased the amount they can deduct come tax time. Multiply that for every homeowner and the increase in the coffers is substantial.

What California does is say, "the home is worth $1 million...welp, we only need 1%, so just cut us a check for $10k and we'll call it a day!!" That doesn't work anymore. To the detractors of such an increase, property taxes are and likely will always be deductible come tax time.

To me that seems a better plan than an EXTREMELY low fixed percentage for eternity.

Taxes maybe 1% where you are... my tax burden with all of the voter approved additional property taxes is close to 1.5%... 600k home here is $8800+ on taxes... I could only imagine the impact without Prop 13... another 1/2% would put property at about 12K per year.

[skilaketahoe]

Land tax here on non residential land is $12,000 on $2m of realty, $47k on $4m and $97k on $6m. Hmmm, NASA space shuttles can't match that rate rise.

To subdivide a farm into housing blocks attracts an 'infrastructure tax' of $97k per 1.5 acres. Meantime we pay income tax up to 50%, VAT/GST, council rates with levies for parks, stamp duty on the federal taxes, 1% on gross income for medicare, VAT/GST on the tax on gas, and heaps of other 'taxes upon taxes'. Wanna swap places?

[Ultrarunner]

Neighbors lived/worked in Austrailia for 2 years.... loved the country and people... found the taxes oppresive.