{"id":9402,"date":"2009-07-17T17:30:00","date_gmt":"2009-07-17T17:30:00","guid":{"rendered":""},"modified":"2009-07-17T17:20:47","modified_gmt":"2009-07-17T17:20:47","slug":"there-is-no-such-thing-as-a-nonvolatile-tax","status":"publish","type":"post","link":"https:\/\/calitics.com\/index.php\/2009\/07\/17\/there-is-no-such-thing-as-a-nonvolatile-tax\/","title":{"rendered":"There Is No Such Thing As A Non-Volatile Tax"},"content":{"rendered":"

The Parsky Commission is asking for another delay<\/a> in presenting its final report, now to come some time between July 31 and September 15, in order to “reconcile” the progressive and regressive solutions. Fred Keeley and Chris Edley’s “blue plan” and progressive criticism<\/a>, including that of Calitics<\/a> has succeeded in killing the worst, most regressive proposals:<\/p>\n

The new approach rejects further consideration of a flat income tax rate that would apply across all income brackets. The effect of such a change, critics charged, would have been to increase the share of taxes paid by middle-income taxpayers while lowering taxes on the wealthy.<\/p>\n

“Concerns about increasing the burden on the middle class at the expense of the higher-income group need to be taken into account,” Parsky said.<\/p>\n

He recommended instead that commissioners consider changes that would include at least three graduated tax brackets and perhaps maintain all six existing brackets, “but under the condition that all brackets get a reduction.”<\/p><\/blockquote>\n

So obviously Parsky wants to maintain the basic concept of moving away from income taxes, an effective method of raising revenue, and shift the burden toward the middle and working classes through higher taxes on services that are more frequently used by those groups than by the rich.<\/p>\n

Dan Walters takes a look<\/a> at a possible compromise:<\/p>\n

Finally, after several hours of discussion, the commission agreed to consider elements of both, including a simpler income tax, a “split roll” that would eliminate Proposition 13’s property tax limits for commercial property, a “rainy-day” reserve similar to Schwarzenegger’s oft-rejected proposal, a new “carbon tax” on fuel of as much as 18 cents a gallon and either a net receipts tax or a revised sales tax that would apply to services as well as hard goods.<\/p><\/blockquote>\n

Depending on the details this could be rather interesting. The main flaw with this commission, of course, is its mandate to be “revenue-neutral”, which is nonsensical given the state’s desperate need for new revenue to prevent lasting economic and human damage.<\/p>\n

Of course, the right is still peddling the discredited “volatility” argument – that relying on wealthy people to pay income taxes makes California’s revenue go in a boom-and-bust cycle. Dan Walters is an especially prominent purveyor of this theory:<\/p>\n

The volatility of California’s tax revenue – booming one year, plummeting the next – plagues the state budget.<\/p>\n

The volatility, born of the state’s reliance on personal income taxes from a relative handful of high-income Californians, is the underlying factor in revising the current state budget to close a whopping deficit.<\/p><\/blockquote>\n

Walters later on admits that the recession plays a role in shaping tax revenues, but he doesn’t pursue this to its logical end – for if he had it might undermine the overall volatility argument.<\/p>\n

The fact is that there is no<\/strong> tax that is not volatile. All taxes we have today are dependent on economic activity. If there is an economic boom, then all forms of taxes will boom as well. If there is a bust, all forms of taxes will fall too. And while the state’s personal income tax has fallen off a cliff, so too have sales tax receipts, as tends to happen in a consumer-led downturn.<\/p>\n

Further proof that this isn’t actually about volatility is the fact that neither Walters nor Parsky are willing to revisit the residential property tax protections of Prop 13. Property taxes are volatile too, but usually much less so than income or sales taxes. The present collapse in real estate values is producing volatility there, but this collapse is not a normal phenomenon, and comes after nearly 20 years of uninterrupted growth in land values.<\/p>\n

But because the goal here is to protect Prop 13 and to let the rich out from their obligations to society, things like higher property taxes aren’t on the menu. Volatility matters only until it clashes with the underlying purpose of shifting the burden of state taxes onto those least able to bear it.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Parsky Commission is asking for another delay<\/a> in presenting its final report, now to come some time between July 31 and September 15, in order to “reconcile” the progressive and regressive solutions. Fred Keeley and Chris Edley’s “blue plan” and progressive criticism<\/a>, including that of Calitics<\/a> has succeeded in killing the worst, most regressive proposals:<\/p>\n

The new approach rejects further consideration of a flat income tax rate that would apply across all income brackets. The effect of such a change, critics charged, would have been to increase the share of taxes paid by middle-income taxpayers while lowering taxes on the wealthy.<\/p>\n

“Concerns about increasing the burden on the middle class at the expense of the higher-income group need to be taken into account,” Parsky said.<\/p>\n

He recommended instead that commissioners consider changes that would include at least three graduated tax brackets and perhaps maintain all six existing brackets, “but under the condition that all brackets get a reduction.”<\/p><\/blockquote>\n

So obviously Parsky wants to maintain the basic concept of moving away from income taxes, an effective method of raising revenue, and shift the burden toward the middle and working classes through higher taxes on services that are more frequently used by those groups than by the rich.<\/p>\n

Dan Walters takes a look<\/a> at a possible compromise:<\/p>\n

Finally, after several hours of discussion, the commission agreed to consider elements of both, including a simpler income tax, a “split roll” that would eliminate Proposition 13’s property tax limits for commercial property, a “rainy-day” reserve similar to Schwarzenegger’s oft-rejected proposal, a new “carbon tax” on fuel of as much as 18 cents a gallon and either a net receipts tax or a revised sales tax that would apply to services as well as hard goods.<\/p><\/blockquote>\n

Depending on the details this could be rather interesting. The main flaw with this commission, of course, is its mandate to be “revenue-neutral”, which is nonsensical given the state’s desperate need for new revenue to prevent lasting economic and human damage.<\/p>\n

Of course, the right is still peddling the discredited “volatility” argument – that relying on wealthy people to pay income taxes makes California’s revenue go in a boom-and-bust cycle. Dan Walters is an especially prominent purveyor of this theory:<\/p>\n

The volatility of California’s tax revenue – booming one year, plummeting the next – plagues the state budget.<\/p>\n

The volatility, born of the state’s reliance on personal income taxes from a relative handful of high-income Californians, is the underlying factor in revising the current state budget to close a whopping deficit.<\/p><\/blockquote>\n

Walters later on admits that the recession plays a role in shaping tax revenues, but he doesn’t pursue this to its logical end – for if he had it might undermine the overall volatility argument.<\/p>\n

The fact is that there is no<\/strong> tax that is not volatile. All taxes we have today are dependent on economic activity. If there is an economic boom, then all forms of taxes will boom as well. If there is a bust, all forms of taxes will fall too. And while the state’s personal income tax has fallen off a cliff, so too have sales tax receipts, as tends to happen in a consumer-led downturn.<\/p>\n

Further proof that this isn’t actually about volatility is the fact that neither Walters nor Parsky are willing to revisit the residential property tax protections of Prop 13. Property taxes are volatile too, but usually much less so than income or sales taxes. The present collapse in real estate values is producing volatility there, but this collapse is not a normal phenomenon, and comes after nearly 20 years of uninterrupted growth in land values.<\/p>\n

But because the goal here is to protect Prop 13 and to let the rich out from their obligations to society, things like higher property taxes aren’t on the menu. Volatility matters only until it clashes with the underlying purpose of shifting the burden of state taxes onto those least able to bear it.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[117],"tags":[],"class_list":["post-9402","post","type-post","status-publish","format-standard","hentry","category-117"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack-related-posts":[],"jetpack_shortlink":"https:\/\/wp.me\/p6Pvhz-2rE","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/posts\/9402","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/comments?post=9402"}],"version-history":[{"count":0,"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/posts\/9402\/revisions"}],"wp:attachment":[{"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/media?parent=9402"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/categories?post=9402"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/calitics.com\/index.php\/wp-json\/wp\/v2\/tags?post=9402"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}