Are Californians overtaxed, undertaxed or, to crib from the fable about Goldilocks and the three bears, taxed just right?
We’re already being inundated with claims and counterclaims about tax burdens as Gov. Jerry Brown and the Legislature weigh whether to place about $9 billion a year in tax extensions on a June ballot to cover budget deficits.
Sorting through the tax rhetoric is not easy. Reliable, up-to-date numbers are hard to find, and there’s no universal agreement on how data should be interpreted. But here’s a shot.
The most comprehensive data on state and local tax burdens — you have to combine the two to make meaningful comparisons — are maintained by the Washington-based Tax Foundation. And it uses the most commonly accepted measure: taxation as a percentage of personal income, which takes into account the wide state-to-state income variations.
The Tax Foundation calculated Californians’ state-local taxes in 2008 at 10.5 percent of personal income. That translated into about $170 billion in revenue and the nation’s sixth-highest percentage.
That was in 2008. In 2009, however, then-Gov. Arnold Schwarzenegger and the Legislature enacted about $9 billion a year in temporary income, sales and car taxes.
They wanted the taxes to remain for several years, but voters short-circuited them in May 2009 by rejecting a package of budget-related ballot measures.
That’s why those taxes are now expiring and why Brown is seeking a five-year extension. And as long as they are in effect, they add roughly a half-percent to Californians’ tax load, pushing it to about 11 percent of personal income.
Whether that increase would change the state’s relative ranking is unclear, however. At the moment, the most accurate summary is that California has one of the nation’s highest state-local tax burdens.
More specific data from the Tax Foundation and other sources indicate that California’s income and sales taxes are particularly high, compared with those of other states, while overall corporate taxes are a bit below average and property taxes fall somewhere in the middle.
While Proposition 13, enacted in 1978, strictly limits property-tax rates, the state’s relatively high property values push property-tax bills into the upper ranks. In 2009, the Tax Foundation says, California property taxes as a percentage of value on owner-occupied houses were 44th in the country, while the median tax bill of $2,839 was 10th-highest, nearly $1,000 above the national average.
Those are the facts. Keep them handy as political rhetoric escalates.
Dan Walters’ Sacramento Bee columns on state politics are syndicated by the Scripps Howard News Service.