Reuters Whiffs on California Tax Burden
In a fine Reuters “Special Report: California or Bust” posted January 3rd, Nichola Groom reports:
But many in the state say taxes, rather than spending, are at the heart of California’s troubles. For some, the Golden State hamstrung its finances when a 1978 ballot initiative, Proposition 13, capped property taxes at 1 percent. California became more dependent on personal income, sales and corporate taxes, which can fluctuate wildly from good times to bad.
Prop 13 also limited the ability of California’s towns and cities to raise their own revenues by requiring a two-thirds vote to do so. The idea was to consolidate school funding at the state level to give districts an equal amount of money regardless of whether they served rich or poor communities.
This is all true but it fails to put California tax policies in a larger context. For as “low” as California local and state property taxes are, per capita state and local property tax collection is actually ranked 28th out of the 50 states according to The Tax Foundation. And Prop. 13 did nothing to stop California from making other types of tax burdens higher than average.
- Corporate Taxes – California has the highest corporate income taxes in the West. Even Apple, the star of California’s technology economy, set up a company in Nevada to avoid the state’s high tax rates. Only seven states have higher corporate rates.
- Income Taxes – California has the most progressive tax scheme in the country including the second highest rate in the nation for those making more than $1 million.
- Sales Taxes – California enforces a number of sales taxes including a general sales tax, a gas tax, and a cigarette tax. Overall California has the 13th highest state and local sales tax burden in the nation.
Overall California already has the nation’s 6th highest tax burden. Something left unreported by Groom.