The WSJ Takes A Look At Regressive Taxation

On Saturday Joe Mathews (who runs the excellent Blockbuster Democracy blog) had a very interesting article in the Wall Street Journal on Democratic and progressive reactions to the Parsky Commission proposals that, except for  the Fred Keeley/Chris Edley progressive proposals would embrace an overtly regressive tax structure. Mathews included this quote from yours truly:

Robert Cruickshank, a contributing editor at the progressive blog Calitics, says of the commission’s expected recommendations: “Most progressives are not going to support these kind of regressive solutions. You would see a fight if the Democratic legislature made a move to do this.”

Mathews also quoted Rick Jacobs of the Courage Campaign (who is my boss; I’m also the Public Policy Director at the Courage Campaign):

But supporters of the commission’s proposals are likely to get a fair hearing. Frustration with the California status quo crosses all ideological lines. Even those who disagree with the commission’s thrust are glad to have something new to discuss. “I’m really glad they’re trying something,” said Rick Jacobs, chairman of the Courage Campaign, a progressive Internet network with more than 700,000 members. He argues that the existing state tax system is too regressive. “It’s important to push the discussion out.”

I want to go into more depth on both of these points. As with any article, one tells the reporter much more than shows up in print. First, on my quote. I said that to Mathews before word of the Keeley/Edley effort to propose progressive solutions became known, but their efforts merely confirm the broader point, which is that progressives will never embrace regressive taxation as a “solution” to California’s budget mess.

California’s tax system is already regressive as the lowest 20% pay a much higher portion of their income in taxes than the wealthy. That has been a deliberate policy choice, going back to Prop 13. But it has never been discussed openly. (And I do wish it had been mentioned in the WSJ article.)

Which is why the Parsky Commission, in its own way, is doing California a service. Instead of back-room deals that regressivize the tax structure without any public input, the commission has undertaken a very open process and is embracing the goals of letting the rich evade their responsibilities.

In the end most Democrats and virtually all progressives will oppose any regressive tax proposals. It’s time we fixed the state’s tax structure, yes, but volatility isn’t actually a problem – the regressive and too-low nature of taxation in CA is, and if the Parsky Commission leads to a discussion and proposals to progressivize the system, then it will have been a useful exercise indeed.

15 thoughts on “The WSJ Takes A Look At Regressive Taxation”

  1. that Keeley is pushing to present a Blue Side, while Parsky presents a Red Side.  Keeley’s side would create a split roll with a slightly higher cap on commercial property tax rates.

    They’re meeting in SF on Thursday — I don’t suppose this would be a public meeting?

    FWIW, Walters wants to see One Big Purple Report.

  2. I spoke to a state legislator recently who told me that a family of three earning $40,000 annually pays no California income taxes yet a single individual earning $36,000 does.

    In fact he said to me that the problem is that there are too many exempt wage earners in the state which is the reason why California is broke and that he would in fact support a flat tax measure that gets all wage earners in the system and contributing.

    That legislator was a Los Angeles Democrat.

  3. 40,000 for a family of three is not much, Do it is not a surprise that they pay little in income taxes. What they pay is a very high percentage of their income in fees and sales taxes.  

  4. 40,000 for a family of three is not much, so it is not a surprise that they pay little in income taxes. What they pay is a very high percentage of their income in fees and sales taxes.  

  5. of California income and tax structures with other states?

    Our income distribution is so skewed – top 20% earn 50% of income, bottom 20% only 3% of income – that there needs to some drastic overhaul of the wage and tax structure.

    Wealthy would not be supporting so much of state expenses if the wage structure was more equitable. Still and all, the top quintile can’t be paying its fair share.

    Property tax is so horribly unfair – 40% of the 10 homeowners on my block pay less than $1000 per year in property tax. Of those, only 1 is a an original owner senior. Other 3 are children of original owners… Should their benefits be preserved  until the 3rd or 4th generation? Why are they more deserving of a very large subsidy than other retirees on the block (9 of 10 homeowners)?

    Whine, whine, whine. But equity is a primary standard for a tax system – and we sure don’t have it now.

  6. Basically, the state charges 1% of the homes market value.

    This would bring hundreds of millions in new revenue that will balance the budget in a way that’s fair and equitable.

    It’s obscene for someone to own a home in excess of $1M and pay about $90 a month in property taxes.

  7. California’s been on this regressive kick for more than 40 years, since Reagan was elected governor, and at this point, a majority of Californians have never known anything but regressivism. They take it as the norm.

    So of course the Parsky tax shift to the poor and middle classes from the rich makes “sense” to Californians who believe Reaganite regressivism is the path to the future, when in fact it is the path to the past. They can’t imagine a progressive future, and I doubt that many of them have any idea that California once epitomised the progressive future.

    Anyone who looks at taxation as punishment — as we hear all the time from the regressives — has lost any connection with civil society. They are effectively little more than feudalists and barbarians. Because they see taxation as punishment, rather than the cost of having a decent civil society, they are convinced that only the “losers” should really be taxed — that is punished — while the “winners” (they themselves) should be able to help themselves to the revenue that the “losers” are punished to provide, and they shouldn’t have to pay taxes in any substantial amount themselves.

    As it is, they’ve pretty much got their wish, so long as they can make money without being paid wages and they can hold property through the generations. Neat trick.

    We may be relying too much on the income tax for revenue, but that doesn’t mean the flat tax is the answer. We should be saying the income tax needs to be more progressive, not less, and we should be concentrating on developing other revenues that are also progressive.

    These times call for bold solutions. The regressives have once again seized the initiative, and they’re pushing their ultra regressive solution; as is typical, progressives and Dems are playing defense.

    Back in the day, California progressives decided what they wanted the public sector to accomplish and they developed an imperfect but workable taxation system to pay for it. Reaganite regressivism set out to destroy all that. Been pretty successful, I’d say. It’s brought us to this point.

    I’m dubious, however, that pushing the Parsky plan (whatever it turns out to be) “opens” the discussion for progressive solutions. Progressives have to seize the initiative, not wait for someone to offer them an opening.


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