California is a blue state, and one of the manifestations of its political orientation has been a tolerance for one of the nation’s highest levels of taxation.
The state’s tax rates on retail sales and personal and corporate incomes are among the highest of any state. Although tax rates on real estate are relatively moderate, high property values still translate into high bills for their owners.
Specific taxes, such as those on fuel, utilities, cigarettes, liquor, medical care, gambling, guns and ammunition, contribute even more. Overall, state and local governments and school districts collect around $400 billion in taxes every year, more than $10,000 per Californian, according to the Tax Foundation. That’s the fifth-highest per capita burden nationwide.
The state budget now being hammered out behind closed doors contains a raft of relatively minor taxes, such as a new one on managed health care services, and another on software.
Meanwhile, dozens of local governments are seeking voter approval of new sales and parcel taxes. The November ballot could contain several tax-related measures, some that would increase levies, and some that would curb tax hikes.
Collectively, they test the appetite of California voters for raising the state’s tax burden, and there’s some evidence that their tolerance is waning.
In May, the Public Policy Institute of California asked a sample of the state’s voters how they would address the state’s chronic budget deficits and was told that 55% of them they “want to pay lower taxes and have a state government that provides fewer services,” as researcher Dean Bonner put it. Even among Democrats, solving the state’s deficits mostly through taxes drew only 10% support.
A couple of weeks after the poll was taken, California had a primary election that included 92 local measures that would either increase taxes directly or approve bond issues that would automatically increase local property taxes to repay them. Only 57.5% of them were approved, the California Taxpayers Association calculated, a sharp drop from the 70% increase level of other recent elections.
Interestingly — and perhaps importantly — voters’ sourer attitude about taxes was even evident in notoriously progressive San Francisco. Its voters rejected Proposition D, which would have increased the city’s tax on large corporations whose executives are paid 100 times or more of rank-and-file employees, and Proposition C, which would have boosted the city’s gross receipts tax on businesses.
Tax increases in two other Democratic regions also bit the dust: a new tax on vacant residential properties in San Diego and a sales tax hike in Contra Costa County. Voters in Los Angeles County passed a sales tax increase for healthcare, but only by a paper-thin margin.
So what’s behind what appears to be a shift among California’s voters, who are overwhelmingly Democrats? It’s probably a reaction to the state’s ever-increasing costs of living.
The same revelatory PPIC poll about taxes also found that Californians are worried about inflation.
“More than four in ten Californians (44%) identified the cost of living and the economy as the most important issue facing the state; the second most commonly chosen issue was housing costs and availability (14%),” the pollsters revealed. “Economic anxiety has continued to grow in recent years; today, three in four Californians expect difficult economic times ahead for the state. About seven in ten or more across parties, regions, and demographic groups are pessimistic.”
Pessimistic voters tend to reject measures that would increase their living costs. We’ll find out much they dislike taxes in November.
Dan Walters is a CalMatters columnist.