The Chairman's Report December 4, 2020

THE CALIFORNIA TAX REVOLT

California is one of 18 states that allow its citizens to propose constitutional amendments that are then voted on by the people. In California, it only takes a 50% vote to make such an amendment the law of the land.

On June 6,1978, over 66% of the voters passed Proposition 13. Because of a rapid increase in property values, some property owners saw their appraisals and resulting property taxes jump 50 or even 100% in just one year.

Homes purchased in the 1950’s for around $20,000 were now assessed at a value of $400,000.  Prior to the passage of Prop 13, the average property tax rate was about 3% of the assessed value, so these homeowners were being hit with property tax bills of around $12,000 per year. Many older homeowners retired and could not afford to pay the skyrocketing property taxes on homes for which the mortgage had long since been paid off.

Proposition 13 froze the assessed value of all residential and commercial property at 1976 levels and limited any increases in the amount of property tax to no more than 2% per year.   When a property was sold, its value was reassessed to current market levels and the property tax was 1% of the sale price. After that, the 2% per year limit applied to how much the property tax amount could be increased.

Upon passage of Prop 13, many elected officials in California were predicting that the amendment would have dire consequences.  Schools would be forced to close and other essential services would be cut back. None of that happened.  In fact, California’s economy boomed.

The California elite were confused and upset when, on November 3, 2020, California voters rejected one constitutional amendment, Proposition 15, but passed another one, Proposition 19, dealing with property taxes.

Proposition 15 would have required non-residential property to be reassessed to current market value every three years and not be subject to the Proposition 13 limits. This was rejected by 52% of the voters.

Proposition 19 was passed by 51% of the voters. It allows homeowners who are 55 and older, are disabled or are wildfire victims to transfer a primary residence’s tax base to a replacement home, allowing them in many cases to keep their property tax payment at the same or lower level.

The difference is that Proposition 15 would have raised property taxes and Proposition 19 protects certain people from big tax increases.

The Berkeley Institute of Governmental Studies’ latest poll of California voters, taken after the November  election, sends a strong message to the politicians who want to confiscate more of their constituents’ money. Some of the key findings were:

California now has the highest gasoline tax in the nation--$.62 per gallon—nearly double the national average.  Add the federal excise tax of $.18 per gallon and Californians are paying $.80 per gallon in gas taxes. AAA said that as of December 1, 2020, the average price across the nation for a gallon of regular gas was $2.14.  In California, it’s $3.18—over a dollar a gallon more. California is a state where most of its residents have to drive a substantial distance and there is little real public transportation in most areas.

Consequently, the great majority of California residents are beginning to question why they are paying so much more than the rest of the country. More and more of them are realizing that a big part of the reason is their state’s gasoline tax.

According to an editorial in the Riverside County Press-Enterprise:

CONCLUSION

It is interesting that California voters continue to elect politicians who think that they are smarter than everyone else and that they know best what the people need.  These politicians are constantly proposing new and higher taxes in order to fund more and more government programs.

However, when these same voters are asked to vote on tax increases, the answer is often a resounding “no”.  Instead, they passed a proposition protecting another group of people from higher property taxes.

This is particularly disturbing to the “smart” people because only about 2/3 of the voters actually owned real property, and a much smaller percentage owned property that would have been directly affected by the property tax increases provided for in the rejected Proposition 15.

The “smart” people are also concerned that 78 percent of voters agreed that taxes in California were already so high that they were driving many people and businesses out of the state. That kind of thinking is offensive to the “smart” people who believe that the little people should just meekly submit to having more and more of their income and assets confiscated. After all, the “smart” people know what is best.

Of course, this doesn’t mean that the “smart” people in California will stop trying to confiscate more of the people’s money. No, they will just try to hide it better to make it harder for the voters who are not as “smart” as they are to see what they’re doing. Then, they can just keep right on in their belief that people can’t be trusted to make their own spending decisions. They might do it wrong. They might make the selfish decision to spend money on things like home improvements, clothes for their children and even a vacation for their family instead of spending it on the common good.

The people are waking up and beginning to understand the Winston Churchill statement:

There is nothing government can give you that it hasn’t taken from you in the first place.

Of course, the high cost of California’s taxes are hidden the prices of items that Californians purchase. They’re also directly reducing wages because every dollar a business pays in taxes is a dollar that can’t go toward higher wages and benefits.

However, it is even worse if California businesses have to move to other less “tax-happy” states. Then their former employees will not be worried about a pay increase but a job. Because the number of new businesses created in California is down, these former employees will have a much harder time finding a new job.

When the FAIRtax is adopted at the federal level, the people can decide if the benefits they receive are worth the taxes they are paying. If the FAIRtax is adopted by the states, then the costs of government become even more transparent.

IT IS TIME FOR GOVERNMENTS TO TELL US THE TRUTH ABOUT HOW MUCH THEIR SERVICES ARE REALLY COSTING US!

If you have friends who don’t know about the FAIRtax, send them to FAIRtax.org. Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.

Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.

Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future:

“If you want a picture of the future, imagine a boot stamping on a human face—forever.”

Is it hopeless?  When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?”  But I dream things that never were; and I say “Why not?”

Isn’t it time for us to ask, “Why not?”