[quote=EconProf]
Now back to where CA Renter and I agree on the facts but come to different conclusions.
I buy the claim that the accumulated surplus would be $10 billion from 1970 to 1978 had Prop 13 not passed. But voters were angry that government was piling up surpluses, profiting from the massive inflation and even faster rise in property values during the 1970s, while widows were being taxed out of their houses. They rightly suspected governments should rein in their spending instead of hiking tax revenues by 10 – 20% per house per year. So they flocked to Jarvis’ crude instrument of Prop 13, however imperfect it was.
CA Renter also stated that 28% of voters believed government could cut 40% of tax revenues without cutting services. I can accept that statement because 1) Many examples of government waste were cited by Jarvis, as well as government surpluses as they couldn’t spend it fast enough, and 2) 28% is not that high a number (72%, after all, do not agree).
In sum, Prop 13 passed because of voters’ anger, by a nearly 2 to 1 ratio. Then-governor Brown was solidly against it, but afterward embraced it, even claimed some credit for it. The huge drop in property tax revenues was offset by the state taking over the financing of many local functions, especially in education. Local school districts lost much of their autonomy and surrendered to state controls, to their detriment. That’s why our income and sales taxes remain so high, while our property taxes paid per homeowner are roughly at the national average (CA homes are higher in value than the national average).[/quote]
EconProf,
Those who thought that a 40% decrease in revenues wouldn’t affect services…38% of the population(!), not 28%. And the decrease in property tax revenues was actually much greater than that. Sorry, but that is insanely idiotic.
And I fully understand the history of, and events leading up to, Prop 13. That’s never been in question.
What you, and others, don’t seem to understand is that surpluses are NECESSARY in govt finance. The problem is that people view surpluses as an open invitation to stake a claim. Everyone from taxpayers who think they’re taxed too much, to unions, developers, and other special interests want a piece of that pie. But when the surpluses inevitably run low or, more likely, we end up with deficits at some point; everyone wants to point fingers at everybody else.
People need to get over the idea that surpluses are bad…all while claiming that deficits are bad, too.
I agree that people should not be “taxed out of their homes,” but we also should not subsidize the profits of landlords and owners of commercial/industrial properties and owners of large (or small?) tracts of land. Again, I don’t have as much of a problem with business owners who own their own building/land (within certain size constraints), but taxpayers should not, under any circumstances, be subsidizing landlords, developers, and other wealthy individuals who are using the subsidy for anything other than a single, primary residence (with the possible exemption for small businesses who own their building).
