| I have an idea that I've been kicking around for years -- I don't think it was entirely my idea, originally, but I've honestly forgotten where I first got it from -- that perhaps could cut the Gordian knot of the California budget process. I suspect it would have to be passed through an initiative process (because of the supermajority thing in the leg), and the actual numbers to balance the budget would need to be filled in by some very talented finance folks.
If you're curious, read the full post. And let me know what you think. |
| I posted about this in comments on a (somewhat wingnutty) diary about Prop 86. I am probably going to vote for the tobacco tax, but I have to admit that I dislike our habit, in California, of tying specific revenue streams to specific programs.
JSW points out (rightly) that the reason we do this (and indeed, the reason I'll vote for 86) is that we can't let the perfect be the enemy of the good. A sane tax structure is not on the table, in California, because of Prop 13 and the huge supermajority requirement to do anything serious to reform the tax code.
So. How about we abolish property taxes entirely? That would make Prop 13 a dead letter. We can replace the revenue stream with a zoning-based land tax (a low per-sqft rate on residences, a small credit for maintaining inspected public green space, and a higher rate for commercial and industrial space) plus a fairly steep real-estate capital-gains tax (to discourage speculation and capture the state's share of the increase in value of the state's land -- land increases in value because of the society around it, not because of anything inherent to the soil! -- which previously was captured through periodic assessment for property taxes).
This change would need to be phased in (having the property tax base rate continuing to rise at the Prop 13 rate, but with a falling multiplier discounting it away, while the new taxes were phased in at the same linear rate, and with the multipliers for the two tax systems always adding up to 100%). This perhaps should be done over as much as 30 years (the life of a typical mortgage). The point is to avoid creating windfall profits and losses, like Prop 13 did -- it gave a huge benefit to older people who already owned homes, and disadvantaged younger people who wanted to buy later. It continues to operate as a punishment to families that want to move, or that are first-time home-buyers. If you've bought a house in CA since the early '80s, you're a victim of Prop 13, not a beneficiary. Possibly you could do the phase-in somewhat faster, maybe as little as ten years. In any ten-year period, there's very likely to be a period where advantageous refinancing is available (due to standard cycles in interest rates), and that probably will help people deal with any change in expectations about the cash flows associated with real estate ownership. In any case, as I said to begin with, there are details to nail down.
I haven't ever applied any sort of rigorous legal or financial analysis to this. But I figure, maybe it's time I try to get it in front of people who actually know more about the tax code. Any takers? |
