Sales Tax the Only State Tax to Decrease in 2017

Taxes“Four years ago, voters approved Proposition 30, which raised the income tax significantly on the wealthiest Californians and raised the sales tax a tiny bit on everyone,” Capital Public Radio recently recalled. “That quarter-of-a-cent increase equated to paying an additional $0.01 on a $4 coffee; $1 on a $400 television; and $100 on a $40,000 car.” But on Election Day 2016, that changed. “Voters extended Proposition 30’s income tax increases in [November’s] presidential election with Proposition 55 — but that initiative allowed the Prop. 30 sales tax hike to expire.”

The shift means California’s sales tax is the state’s only tax to be decreased this year, from 7.5 percent to 7.25 percent. As the U-T reported, “Some local jurisdictions tack on their own assessments, so residents in certain areas will still pay more than the statewide rate.” In certain parts of the state, like the San Francisco Bay Area, voters allowed substantial increases.

From spending to taxing

Prop. 30 ushered in the so-called Schools and Local Public Safety Protection Act of 2012, as California voters threw their support behind increased spending on state education and benefits. “The act increased sales tax and income tax rates to help maintain funding levels for public schools and colleges and pay for programs for seniors and low-income families,” U-T San Diego noted. “The additional revenue also provided local governments with a constitutional guarantee of funding to comply with a new state law that shifted lower-level offenders from state prisons to county jails.”

Some municipalities, particularly in parts of the state that joined a Democrat-led initiative to hike minimum wages, opted to raise more funds. “Bay Area voters this year generously approved taxing themselves in large numbers — and they’ll feel the pinch at the cash register in 2017 as local sales taxes across Silicon Valley take effect even as a state tax expires,” according to the San Jose Mercury News.

“As California cities struggle to fund basic city services like police, fire protection, libraries and parks, they’re increasingly turning to voters for help. And voters this year said ‘yes’ to tax hikes in at least eight Bay Area cities in exchange for fewer potholes, less traffic and more cops, including San Jose, Newark, Martinez and Pleasant Hill.”

Pension pinch

For years, public pension costs have steadily built pressure on Golden State cities. In some areas, the problem has become egregious: The city of El Monte, in Southern California, shelled out 28 percent of its general fund to pay retirement costs. “Among California’s 10 largest cities, only San Jose paid as much toward retirement costs relative to its general fund. Los Angeles spends 20 percent of its general fund on retirement costs,” the Los Angeles Times revealed. “El Monte’s outsize pension bill weighs heavily on the San Gabriel Valley city of 116,000, where half the residents were born outside the United States and a quarter live below the poverty line.”

Meanwhile, CalPERS, the nation’s largest public pension fund, has struggled with its own imbalanced budgets. “CalPERS has 65 cents for every dollar that it needs to provide pension benefits for almost two million people,” Fox Business recently recalled. “CalPERS pension debt is roughly $164 billion and mostly likely will grow larger in coming years.”

In an effort to come to grips with the problem, the fund reduced its forecasted return on investment from 7.5 to 7 percent. “It has been paying out $5 billion more a year in benefits than it’s receiving in contributions and investment returns, not a sustainable trend,” the Fresno Bee noted in an editorial. “With investment returns averaging 4.6 percent during the past decade, some experts urged CalPERS to reduce its forecast even more.” But that would risk pushing more California cities toward bankruptcy — or toward even higher local taxes.

This piece was originally published by CalWatchdog.com

Comments

  1. Only idiots, and Starbucks patrons (but, I repeat myself), pay $4 for a KuppaJoe.

  2. With, to me, the obvious irresponsible use of our tax money, my attitude is that, you in California government grossly failed in using our money efficiently, effectively, responsibly, and properly, such as vehicle and gas taxes for roads and nothing else, and showing yourselves to be wastrels, you and not us must make good on the deficits and misuse of the taxes we paid. There is clear evidence that there is an inverse relationship between the money spent on education, and the result. The more money spent , the worse the result. I’ve heard adults use English that should have blocked them from passing grade school.

  3. Gotta Gedada Displace says

    Enjoy your brief “tax holiday” however small (if even noticeable). I doubt this momentary oversight will enjoy anonymity for long, given our Majority party’s ability to overlook small things like ITS EXISTENCE in their compulsion to leave NO DOLLAR UNSPENT !

  4. J. Richards Garcia says

    The above article and most of Mr. Franks complaints involve the evils of socialism everywhere.
    We must identify and know our enemy to be able to ultimately defeat our enemy. Socialism is the opposite of capitalism. Socialism is the middle-stage between capitalism and totalitarian communism. Capitalism is maximum ownership of assets held by individuals with widespread individual freedoms. California is in the end-stage of socialism and about to leap into totalitarian communism: Consider that we have long been ruled (not governed) by one political party, and matters are PROGRESSIVELY getting much worse in California. Key visible symptoms are the social costs through government employee compensations and pension plans, and massive welfare payments to massive numbers of immigrants, whose purpose is to illegally stuff ballot boxes on behalf of our democrat rulers for the next century.
    Our enemy in California, the United States and most of the world is socialism. Unelected regional governments in California and throughout the USA are gathering strength and poised to remove longstanding constitutional freedoms and cause great losses of wealth (or seize wealth), visible now by use of massive environmental cudgels and false environmental theories such as Malthusianism.
    Most socialism is from the United Nations which covets total control of the United States. The United Nations is the primarily promoter of local and global environmentalism, which is fast becoming the primary source of planetary enslavement. Unfortunately, Pope Francis is a powerful progressive socialist and ardent environmentalist; Having been elected by senior priests, this clearly tells one controlling church leadership consists of socialists and environmentalists.
    Socialists purposefully perceive no limit in government spending to the point of economic collapse; The ensuing disorder serves their totalitarian ends.
    My friends, we live in a city, county, state, country and a world of socialists. Believe-or-not, we have a brief chance to survive through President Trump, but that is not at all assured.
    Gird up; it’s going to get rough in the years ahead.

  5. Californians have no clue who is counting the votes, and I for one do not believe my vote is being counted.

    “It is enough that the people know there was an election. The people who cast the votes decide nothing. The people who count the votes decide everything.”
    —-Joseph Stalin

    California is a one party State, Elite Republicans = Elite Democrats = Elite MEDIA. The Elites control who count the votes, and Californians votes no longer matter.

    • I don’t think their is such a thing as an Elite Republican. The Democrats have a super majority and don’t need the republicans for anything except someone to blame when it fails.

  6. Victor Rennes says

    California want to limit everything how many bullets one can but and everything California is control by people that hate the united state and what it stand for these evil invaders plan is to bring. The state into a place where life and happiness is bad.

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