Dan Walters

Opinion: Tax boosts would also affect poor

It’s fairly certain that the 2016 California ballot will include at least one, and perhaps several, tax increase measures.

It will be a presidential election with a relatively high turnout of voters, which would increase the odds of passing new taxes.

The centerpiece of what some have dubbed “taxapalooza” is likely to be an extension of the surtax on high-income Californians that was imposed by voters in 2012 via Proposition 30 and is due to expire in 2018.

The surtax generates more than $6 billion a year, and public employee unions and other budget stakeholders want to keep the money rolling in.

It’s very uncertain whether Proposition 30’s other element, a quarter-percent boost in sales taxes due to expire next year, would be included in an extension measure. It doesn’t generate much money, relatively speaking, and could be a campaign negative.

However, extending Proposition 30 is not the only tax hike kicking around.

Health groups want to boost cigarette taxes, both to raise revenue and discourage smoking. A new severance tax on oil production is another possibility. And some unions want to modify Proposition 13, California’s iconic property tax limit, creating a “split roll” to increase taxes on commercial property.

While impacts of extending the Proposition 30 income surtax would be confined to those at the top of the economic ladder, other looming tax hikes would have a much broader effect and could hit the poor particularly hard, as a new report from the left-leaning California Budget and Policy Center implies.

It concludes that California’s least-affluent families, the bottom fifth averaging $13,900 per year, carry the highest relative state and local tax burden at 10.5 percent of their incomes, while those in the top 1 percent, averaging $2 million, pay just 8.7 percent.

The poor pay almost no income taxes, the report notes, but are hit with excise taxes on retail goods, cigarettes and gasoline, and while rarely homeowners with property tax bills, they pay the latter indirectly through rents.

California’s housing costs are already among the nation’s highest and hit poor renters particularly hard, as multiple studies have confirmed. In larger California cities, rents approach 50 percent of income.

So would a split property tax roll measure, aimed at increasing revenues to schools and local governments, include rental property, thus pushing housing costs for low-income renters even higher?

Some split-roll advocates want to exempt rental housing, but that would depress revenue gains and give a break to large corporations owning apartment complexes. Others want to include rental units as commercial property that should be taxed higher.

It’s an unsettled issue that frames the inherent dilemma of increasing non-income taxes: The poor are also taxpayers.

Call The Bee’s Dan Walters, (916) 321-1195. Back columns, sacbee.com/dan-walters. Follow him on Twitter @WaltersBee.