You probably know the old saying that has been quoted many times: "The only things that are certain in life are death and taxes." And who would want to have taxes? I mean, if I work my bottom off every day earning enough money to help support a family, then why do I have to send some of my hard-earned cash over to the government? Why is it that when I want to buy an iPod nano marked at $149, I have to pay $161.29 to buy it? How dare the government take my money away from me!
Taxation is probably one of the most (if not THE most) hotly debated issues in our country. While the conversations behind it may be more complex, the really boil down to the reactions that I just paraphrased: we don't want the government taking our hard-earned cash. Some of the biggest political debates in our country during recent years have circulated around the question of taxes--in fact, we just got through the issue of the state budget which boiled down to a struggle between raising taxes to fix our budget problems (which the Democrats mainly supported) and not touching taxes at all (which the Republicans wholeheartedly supported). And it's not an issue that's going to go away, since this year's resulting budget mainly pushes the problem over to next year.
The California electorate passed Proposition 13 a little over thirty years ago, capping the rate of property taxes in the state to no more than 1% of the assessed value of property, and saying that regardless of inflation or changes in the assessed value of the property, the taxes on a property could not increase year-to-year by more than 2% unless it was resold or significantly expanded/remodeled. Prop 13 effectively took one of the most reliable, most stable taxes in our economic system and kicked it down to the point where it barely makes enough revenue to fund what it supports (hint: public education), and continues to lose real value as it is unable to keep up with inflation if inflation exceeds 2%, which it usually does.
Time and time again over the last thirty years, we have seen the results of Prop 13 across our state. We have seen them in the form of a failing education system, which has seen California fall from having the one of the highest per-pupil spending amounts in the nation to having one of the lowest. We have seen them in the disappearance of the arts and other non-academic programs from many schools, deficiencies in supplies of textbooks, and old, falling apart buildings (though this has started to turn around thanks to the fact that the threshold for passing bond measures was recently reduced to 55%). For those of us at Aragon, we're fortunate that we're not being negatively affected by many of these problems, because we live in a community that is relatively well-off (and thus, able to contribute to fundraising groups that help fill in vital services that the school system can't afford) and values its public education system enough to vote favorably on most bond measures (and to a lesser extent, parcel taxes). But that doesn't help much in many parts of the state where parents are poor, and are not able to contribute hundreds of thousands of dollars to parent organizations to help patch up the holes in our public education system.
Proposition 13 has also affected us in other ways. Unable to make enough revenue off of property taxes, many localities have had to raise sales taxes, a much less stable form of revenue, to make up for lost property taxes. Prop 13 has contributed to an inefficient housing market in California that provides dis-incentives for selling property. And of course, Prop 13 is likely a major factor for the budget crises that we have dealt with in the state over the past few years, and could very well have been a cause for the 2003 recall of Gray Davis. But yet, enough Californians are still overly protective of their newly-low property tax rates that the prospect of fixing (or simply repealing) Proposition 13 continues to be a politically suicidal maneuver.
What strikes me as odd during debates about taxation is that we seem to forget what the purpose of taxation is. We are all members of an organization known as the United States of America, and in our case, we are members of the California chapter of that big organization. Taxes are our membership dues, and we have to pay our dues to receive the benefits of being part of the organization. But we get a lot back from those benefits: we get a fire department, a police department, public libraries, public education, a court system, public colleges, social security, and so much more. These are all things that we as citizens take for granted, and we have them because we pay taxes. European countries pay far more taxes than we do, but they get a whole lot more back for it, such as a single-payer universal health care system that they can take advantage of for free, completely free public colleges, and even public childcare. (Don't believe me? Watch Sicko.) Oh, and of course, they're not in the middle of a war that has costed hundreds of billions of dollars. They pay higher taxes because they actually get something tangible back for the taxes that they pay, whether it be the fact that they don't have to pay health care premiums, don't have to take out huge loans to send their kids to college, etc.
We cannot continue to move forward into this twenty-first century with this ancient idea that taxes are bad and the government is bad. We are the government, and we aren't bad (although we sometimes have a tendency to elect bad people into the government, and that's what we need to change). We cannot continue to expect the government to educate our children, put out our fires, police our streets, and do all of the other social services that we take for granted, but still insist on keeping taxes lower than humanly possible. We need to change our way of thinking in California and in our country, or we're going to find ourselves dangerously trapped between a rock and a hard place very soon.
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7 comments:
How would you feel if every year I came to your house with a gun and took $50,000?
I never agreed to be taxed, and the "benefits" the government provides give me less utility than having my money back would. Mostly this is because a vast amount my taxes are wasted (inefficiency of the government) or spent on things that I do not benefit from and am extremely against (social security, war in iraq, medicare, medicaid, welfare, etc).
I'm not even going to go in to all the problems with public schools but if we eliminated wasteful spending, we would have more money for things like public schools.
I agree that we need to change our way of thinking, but in the other direction. The government needs to cut spending and get out of the lives of the people. It's too bad our tax system is already FUBAR. The government is simply too inefficient in spending for my taste, and all the things the government provides could be provided by the free market.
Taxes are not created equal. There are things which ought to be taxed, and things which ought not to be taxed.
Unfortunately, California's voters tied the state's hands back in 1978 and precluded the use of what is generally acknowledged to be the best tax we could possibly use. It meets, better than any other, the canons of taxation, as laid out by Adam Smith. Even Milton Friedman, famous for not liking any taxes, acknowledged that this one was the "least bad." (Why he never went beyond that "damning with faint praise" -- or rather "praising with faint damns," I guess -- I don't know. He made the statement in 1978, and again a few weeks before his death. (See the front page of http://www.wealthandwant.com/ for citations.)
Taxation of land value, as proposed by Henry George in his landmark and bestselling book "Progress and Poverty" (written in San Francisco about 130 years ago) is the only tax I know that doesn't take from someone who has produced something a portion of that which he created. Rather, it recaptures for the community value which the community has created -- and which the individual or corporate landholder couldn't possibly create.
Thomas Paine suggested something similar. Old Testament land laws are consistent with this. A wide range of wise people have arrived at the same place. (Google "quotable nobels" and "quotable notables" for the short list.)
You can read Progress and Poverty online at http://www.progressandpoverty.org/ or http://www.henrygeorge.org/.
And you can read about Land Value Taxation in a 21st century context at http://lvtfan.typepad.com/ -- a blog designed around my notion that land value taxation is the only tax worth a fan club.
And aside from its benefits as a method of gathering the revenue government needs efficiently and justly, land value taxation will also have very desirable effects on poverty, sprawl, housing affordability, wages and economic justice.
Any one of those is enough to make it worth looking into; the combination is unbeatable.
And to Anonymous (above), our tax system is not FUBAR. It needs serious reform. It needs radical reform. But it doesn't necessarily need new mechanisms; in California, we will need to put the assessors back to work, but I'm sure they would love to be doing what they trained to do, not creating the fictitious assessments mandated by Prop 13.
Eschew privilege! End Prop 13, and enact Land Value Taxation. California will blossom, and so will the rest of the US. You'll have a state where you can afford to live, and live well.
Good luck!
You might also appreciate http://www.answersanswers.com/
lvtfan made some good points, as did anonymous. A good democratic government should be able to work with its constituents like a two-way street. The idea of taxation is that the members of a community agree to give up a part of their personal wealth to the government, which is then supposed to use those taxes to support the community-at-large.
Now there's no doubt that our tax system was unfair to people in the seventies, but Prop 13 was the wrong way to go about fixing it. And it's quite obvious that we have a lot of wasteful spending that goes on today, and it's only fair to expect that our taxes should go to things that actually benefit us as a society, which unfortunately doesn't happen much these days.
Our whole tax system in this state and in this country needs an overhauling. But for that to happen, we need to start by reforming Prop 13 and by getting rid of this notion that taxes are inherently bad. We need to elect people to our government who will clean up our wasteful spending and start using our taxes to actually support good programs for us, and we need to demand that the rich have to pay the same tax rate as the rest of us, not a lower tax rate.
There is just about nothing the government can do that private companies would not do better (profit incentive, fairness etc). In my perfect world the government would only provide police, fire type services, courts, and national defense. I've heard proposals that even those types of things can be provided by the market, but i'm not sold on that yet.
To Anonymous -
When was the last time you successfully petitioned the CEO of a private corporation, protested in front of a private corporation's headquarters, or voted its board of directors out? Your taxes earn you the right to participate in your government. Too many citizens want to leave the responsibility for self-governance to private interests, which are more than happy to take away citizen's protections, rake in their profits until there are no more to be had, and leave the taxpayer holding the empty bag at the end of the day.
spectator,
The point is that competition would foster lower prices better products and more efficiency. You don't need to resort to protests, just take your money somewhere else, and convince others to do the same (just like people have done with businesses like restaurants, stores etc.)
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