If the state wonít collect the commonwealth Ö
Let communities collect revenue that they create
It's time to let local California communities raise revenue to pay for the services they want. And money is no object; communities have lots of potential revenue, if they just look to the land, to the value of locations that the presence of community swells up into fortunes. This 2011 op-ed is from the Los Angeles Times, May 13. The writer is president and CEO of Public Counsel.
by HernŠn D. VeraAs California lurches once again toward major budget cuts, the state's justice gap keeps getting wider. That's the space between our promises of equality and opportunity and the reality on the ground for millions of people.
California has fallen to the bottom in delivering such basic things as decent schools, affordable homes, and safe workplaces. Meanwhile, in Sacramento, a minority of lawmakers has refused to let Californians vote on whether to pay higher taxes to better support such things.
In the absence of such a vote, there is little that cities, counties, and school districts can do. Under California's Revenue and Taxation Code, only the state can impose or raise taxes on income, alcohol, and vehicle licensing as a way of supporting social services.
Giving the state sole authority over most taxes was supposed to simplify our tax system. But in reality it has made it easier for a handful of politicians to block spending on programs they don't like and for alcohol, tobacco, and oil companies to successfully lobby against new or higher taxes. As a consequence, even as the state's wealthiest people have prospered, state services to the disabled, the elderly, and the impoverished have been slashed.
We need a new deal: If state government is failing to fund basic services, it should get out of the way and let local residents fill the gap temporarily.
A new bill proposed by state Sen. Darrell Steinberg (D-Sacramento) would end the state's monopoly on many taxes and allow cities, counties, and school districts to impose additional taxes on such things as cigarettes, vehicle registration, alcohol, oil production, and income. These higher taxes could not be imposed without voter approval.
Here's what could happen under SB 653:
Last year, some struggling schools lost more than half their teachers in layoffs. This year, thousands more teachers have received notice that they may be laid off. Angelenos could vote for supplemental school funding.
That's what already happens in wealthy school districts in places like Newport Beach or Santa Barbara, where higher property tax revenues help retain top teachers and pay for the kind of arts and music programs that Los Angeles had to abandon long ago.
Millions of Californians are homeless or live in substandard housing. Voters could, if they wished, raise taxes to address housing needs. [Ed. Note: Not raising but shifting taxes would actually accomplish that goal.]
Or county residents might decide to support childcare for working parents with young children. Studies show that childcare is critical to getting people back to work. A county like Los Angeles or Riverside with high unemployment could supplement state funding.
Groups like ours have gone to court to protect programs that close the justice gap. Over and over, we have won temporary relief to what are really permanent problems.
Right now, the state imposes tight restrictions on what local residents can do. Property taxes are strictly regulated, and sales tax rates are set at the state, with cities allowed to deviate by only 2 percentage points from the state baseline. Municipal bonds, often used for school construction, roadwork or other major improvements, can't be used for ongoing costs.
Critics on the left will attack the bill because wealthier cities and counties might be better able to take advantage of the proposal, but this misses the bigger picture. If the state won't step up to help them, local residents need tools to make their lives better. The legislation won't eliminate inequities, but it could help some California communities gain ground.
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JJS: Is the problem just some conservative politicians acting stingy or is it that the old model of take from the rich and give to the poor does not, deep down, actually work?
However you answer that, it does not matter, because there is a way to both simplify the tax system and to sufficiently fund worthy causes like schools and the social safety net.
For simplicity, limit the use of taxes to collecting the values that society generates, not for expropriating any value that an individual creates. As a rule, society generates the value of land (including resources) and of government-granted privileges such as corporate charters, utility franchises, and the like. Meanwhile, individuals create the value of work, of buildings, and of businesses. So, de-tax wages and sales and property and use taxes or fees or dues or leases to recover the commonwealth.
To fund social services, society could draw from the commonwealth to subsidize schools, housing, medical insurance, child care, etc, or cut out the bureaucratic middleman and pay dividends to residents directly, empowering them to hire the teachers and doctors that best meet their unique needs.
There you have it. Simple rules for raising public revenue, plus plenty of public revenue for funding what the public wants. Itís geonomics and it has worked wherever tried, to the degree tried. For more on the topic, here's ...
Frank de Jong: An excellent new video from Fred Harrison on how those who rent effectively pay most if not all of the taxes. While the people who own land or resources also pay taxes, they receive most or all of it taxes back in land value uptick.
To check this out, just calculate your total tax paid over the last 10 years and weigh this against your total land value increase of the same time period.
In my case, we've paid about $100,000 federal, provincial, sales, and municipal tax in 10 years but have received back about $150,000 in land value increase. Not bad, eh. Good deal for land owners.
To see the video, click here
Editor Jeffery J. Smith runs the Forum on Geonomics.
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