Higher taxes, Californians are told, will improve education, reduce traffic, and even fight climate change.
Instead, we face more and more taxes, like an insanely tall layer cake on some crazed reality-TV cooking show.
Start at the bottom, with the state’s wildly high income tax.
The top tax rate is 12.3% on income and capital gains, plus a 1% “millionaire tax” surcharge, and a payroll tax with no wage cap. Together, those can push the top rate to 14.4%.
The 9.3% bracket starts at a taxable income of $72,724, and even Californians with taxable income below $11,080 owe 1% of it in state income tax.
Next, there is a layer of property taxes. These were only partially restrained by Proposition 13, which voters passed in 1978 to slow the rate of increase.
Renters and consumers pay property taxes, too, as owners pass the cost through in the form of higher rents and prices.
Want to get out? The sale of a property may trigger a real estate transfer tax — up to 5.5% in LA, for properties worth more than $5.3 million, thanks to Measure ULA, a 2022 ballot initiative.
(A new referendum to repeal or restrict local transfer taxes is headed for the November statewide ballot, thanks to the Howard Jarvis Taxpayers Association, which defends Prop 13.)
The next layer of tax burdens comes in the form of sales tax hikes at the local level. They’re soaring above 10% and beyond 11% in some cities, despite a taxpayer protection in state law that caps total local sales taxes at 2% above the state’s 7.25% rate.
Cities and counties get around the cap by asking the state legislature to pass special laws giving them a exemption. Assembly Bill 1768, a special statute to enable LA to raise the county sales tax from 9.75% to 10.25%, is pending in Sacramento right now.
Local tax increases in California must go on the ballot for voter approval, but fooling the voters and gaming the system has become an art form.
LA County’s proposed half-cent sales tax increase this year is supposedly for the purpose of filling gaps in health care funding, but the fine print reveals that it’s a general tax. The money can be spent on anything.
This bait-and-switch is motivated by provisions in California’s constitution.
If a tax would be earmarked for a specific purpose — say, health care or public safety — then it requires support from two-thirds of voters to become law.
But if a tax would go toward general spending, then it can pass with the backing of a simple majority of voters instead: a far lower threshold.
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Also, a court-created legal loophole has allowed special interest groups to write their own tax increases and propose them as “citizens initiatives.”
According to state courts, a “citizens initiative tax increase” doesn’t need a two-thirds vote to pass, but merely a simple majority.
Right now a “citizens initiative” circulating for signatures in the Bay Area would add another 1% to the sales tax in San Francisco, and 0.5% to the tax rate in four neighboring counties, for transit.
It never ends. The firefighters union in the city of Los Angeles is collecting signatures for another 0.5% increase in LA’s sales tax — a year after firefighters struggled to contain the devastating Palisades Fire.
California’s gas taxes skyrocketed after Gov. Jerry Brown pushed legislation in 2017 to raise the gasoline excise tax by 12 cents per gallon, the diesel fuel excise tax by 20 cents per gallon, and the diesel sales tax from 5.75% to 9.75%.
The new law also jacked up vehicle registration fees by as much as $175, charged electric vehicle owners a new $100 annual fee, and added automatic tax increases for inflation.
Californians are currently paying 61.2 cents in taxes per gallon of gasoline and 46.6 cents per gallon of diesel fuel. That doesn’t count the hidden taxes from the state’s climate change policies, including the sale of carbon permits under cap-and-trade, and the Low Carbon Fuel Standard.
State lawmakers say those fuel taxes are not enough. They’re studying a plan to tax drivers by the mile, taxing electric vehicle drivers as well.
It’s rare that a tax in California is ever repealed, reduced or allowed to expire. The last major tax cut was Proposition 13 — nearly 50 years ago.
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More often, taxes that are sold to voters as “temporary” are made permanent by waiting a few election cycles and selling a new measure to the voters that slips the extension through.
All those taxes produce a lot of revenue — but not enough to keep up with spending.
Unions representing health care workers and teachers now want a “billionaire tax” that will confiscate 5% of the assets of the super-rich, who are leaving in droves.
All these taxes raise the cost of living, and California has the nation’s highest poverty rate, when the cost of living is considered.
Susan Shelley is a columnist for the Southern California News Group and VP of Communications for the Howard Jarvis Taxpayers Association.
