Property Taxes

Property taxes are the most stable way to fund government, and they cause less drag on gross domestic product than sales and income taxes. (Mark Shaver / New York Times)

Dan Walters

By Dan Walters
October 4, 2015

  • Californians shell out $250 billion a year in taxes
  • That’s one of nation’s highest tax burdens
  • Still, talk of tax increases continues

The political kvetching over California taxes mimics the famous porridge passage in “Goldilocks and the Three Bears.”

Some Californians – those on the right – believe taxes are too high. Others to the left believe they are too low. The rest, quantity unknown, believe they are just right.

It’s not that simple, of course, because reactions to taxes also depend on what kind of taxes and, most importantly, who’s paying them.

Over the next year, we are likely to hear a lot of debate about taxes. Not only are Gov. Jerry Brown and the Legislature noodling over new taxes for highway repairs and medical care, but tax proposals are vying for places on the 2016 ballot, including extensions of the big hikes that voters temporarily approved in 2012 and boosts in taxes on cigarettes and perhaps marijuana.

Given that politicians and voters will likely decide what’s “just right,” it’s time for a primer on Golden State taxes:

California is a high-tax state – relative not only to what’s happening elsewhere but to our own economy. But how high is not easy to figure out because we not only pay a lot of taxes that are obvious, such as those on income, retail sales and automotive fuel, but many that are virtually hidden.

Nor is there any central repository of data on taxes, because they are levied by thousands of state and local government entities and often commingled with fees for particular services.

The difference between a tax and a fee can be difficult to discern because the former often masquerades as the latter. The $2.3 billion “vehicle license fee,” for example, is actually a property tax on cars and trucks, based on their value.

For purposes of this treatise, any “fee” that is extracted involuntarily and not tied to a specific service for the payer is considered a tax. So the vehicle license fee is a tax, but college tuition or entrance fees to a state park are not.

There are several ways to measure tax burden, including per capita. But the fairest and most accurate way is to include state and local taxes and compare them to personal income. It automatically adjusts for wide variances across the nation in income and in how taxes and services are divvied up between state and local governments.

To read expanded column, click here.