California’s “Progressive Fiscal Values”

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

In endorsing Proposition 15 that would raise property taxes on commercial property, Governor Gavin Newsom used an unusual turn of phrase when he said the measure was “consistent with California’s progressive fiscal values.”

Exactly what are California’s “progressive fiscal values?”

Well, let’s see using statistics compiled by the Tax Foundation

The top income tax rate in the Golden State is 13.3%. That gives California the top income tax rate in the country. We’re number one!

The state sales tax is 7.75%, number one in the country again.

The gas tax at 60.6-cents a gallon—you guessed it. Number one again.

Businesses taxes are little more complex to work out.  Judging purely by California’s corporate tax rate, the state’s 8.84% rate is eighth highest in the nation. But the Tax Foundation takes into consideration other taxes business face in California and list the state business tax climate at 48th out of the 50 states and Washington, D.C. Unlike the other ratings the Foundation puts out, the higher number here indicates more taxation. Invert the rankings and California is number 3 in business tax climate. (That’s not good.)

Raising business property taxes probably will hurl the state to number one in the business tax category as well.

So that must make California the top taxing state in the nation. Not quite yet according to the Tax Foundation. That institution ranks California as the sixth highest state and local tax burden in the nation.

Maybe California is not on top despite high rankings in so many state tax categories because of the property tax, limited by the 42-year-old ballot measure, Proposition 13. The Tax Foundation pegs California as 34th of all the states and the District of Columbia in property taxes. 

But the governor announced he wants the property tax to fit into California’s “progressive fiscal policy”—which appears to be shorthand when it comes to taxes for “more.” Perhaps a “progressive fiscal policy” means California should lead the nation in all tax categories. Notice the governor didn’t say the money from Proposition 15 was needed because of the economic downturn due to the pandemic. He expressed it as a matter of policy.

There is obviously the other side of the fiscal policy question dealing with spending. How well are all these tax dollars spent? With the state struggling with leading the nation in homelessness and poverty, to take two examples, the policy doesn’t seem to be working so well.

Raising the property tax on commercial property probably won’t get California taxes to the top of the heap. But as a recent newspaper editorial commented, Proposition 15 is a “crucial first step” in dealing with Proposition 13. The next step is to go after residential property taxes and that would raise California’s “progressive fiscal values” to number one.

But a huge question must be answered first. Is it really all Californians who support “progressive fiscal values” or rather is it the values of liberal politicians who believe in bigger, more intrusive government and the public unions that reap benefits from increased taxes and who greatly influence these politicians?

Indications from the March primary election are the state’s voters don’t endorse what the governor calls California’s “progressive fiscal values.”

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