Cut the state income and sales tax. (Sacramento: credit, hotels)

[jghall00]

I wanted to get everyone's opinions on helping the state economy by cutting income and sales taxes, paid for by an increase in the state gas tax. The state wants to reduce carbon emissions, and something like 60% of that is from transportation. Wouldn't it make sense to raise the gas tax slowly to encourage higher fuel efficiency, and simultaneously lower income and sales taxes?

[esmith143]

You would need to increase the state gas tax by $1/gallon just to close the existing 15B budget deficit. If you also want to cut income and sales taxes, gas tax of $2 or more per gallon may be needed. That would be a tough sell. It could be argued that the tax unfairly punishes businesses and anyone who drives a truck for a living.

[hsw]

Careful about law of unintended consequences

Much (~30-40%) of fuel consumption is discretionary...both via autos and planes...travel for pleasure, not commuting/business

Many travel-related jobs (airlines, hotels, restaurants, etc) are those of low-skill workers who can't get a job in an industry requiring greater reading/counting skills

CA has many travel-related jobs, e.g., City of SF

Really a strategic question of creating a tax structure to encourage certain industries and high-income jobs over others....would be smarter for CA to encourage migration of low-skill workers (who pay less taxes anyway, but consume many government services) to states like TX where many low-skill industries can accommodate low-skill workers in a lower tax, lower cost setting

Much waste/corruption exists in CA government spending w/inept schools and roads w/many potholes, etc....e.g., IL has a 3% state income tax, vs CA's 10% rate...aside from nasty weather/topography, Chic's NorthShore suburbs offer some of highest QOL in world...w/some of world's best public schools (NewTrier)....hmmm

[Jonotastic]

Sorry, but it's a bad idea.

Gas tax would have to be maybe $10 or $20 per gallon and the demand for gas would have to stay the same to offset income AND sales tax. California is already bankrupt, that would just bankrupt the lower middle class and the government.

[esmith143]

Originally Posted by hsw

Much waste/corruption exists in CA government spending w/inept schools and roads w/many potholes, etc....e.g., IL has a 3% state income tax, vs CA's 10% rate...aside from nasty weather/topography, Chic's NorthShore suburbs offer some of highest QOL in world...w/some of world's best public schools (NewTrier)....hmmm

It's really pointless to compare isolated state income tax figures. You should compare total state/municipal tax collections with state GDPs. CA has higher income tax, but it has low property tax rates, and there's prop 13 that makes effective tax rates even lower. According to one study, in 2005 CA had 5th lowest effective property tax rate in the country, 0.48%. Effective property tax rate in IL is 1.58%.

As much as a third of our budget is allocated for transfers to local K-12 systems, because property taxes alone are insufficient to provide adequate education.

And who can say objectively that IL schools are better than CA schools? CA has one of the highest numbers of English learners in the country. That hurts scores. If you compare CA whites vs. IL whites, CA whites are doing okay, especially considering how cash-strapped our schools are.

[jghall00]

Originally Posted by Jonotastic

Sorry, but it's a bad idea.

Gas tax would have to be maybe $10 or $20 per gallon and the demand for gas would have to stay the same to offset income AND sales tax. California is already bankrupt, that would just bankrupt the lower middle class and the government.

Where are you getting these numbers from?

[jghall00]

Originally Posted by esmith143

You would need to increase the state gas tax by $1/gallon just to close the existing 15B budget deficit. If you also want to cut income and sales taxes, gas tax of $2 or more per gallon may be needed. That would be a tough sell. It could be argued that the tax unfairly punishes businesses and anyone who drives a truck for a living.

Sorry I wasn't more clear. The idea wasn't to close the existing budget deficit. The tax change should be slightly revenue positive to revenue neutral. The idea is to encourage reduced carbon emissions and increased fuel efficiency, and to keep more money in the state.

[esmith143]

Originally Posted by jghall00

Sorry I wasn't more clear. The idea wasn't to close the existing budget deficit. The tax change should be slightly revenue positive to revenue neutral. The idea is to encourage reduced carbon emissions and increased fuel efficiency, and to keep more money in the state.

At the present time, carbon emissions and fuel efficiency rank pretty low on legislators' minds in Sacramento.

It's not a bad idea, but you'd have to add some kind of tax credit for businesses.

[nevergoingback]

Originally Posted by esmith143

If you compare CA whites vs. IL whites, CA whites are doing okay, especially considering how cash-strapped our schools are.

Link? Would that maybe be due to the fact that most/all rich white people in CA. either live in affluent areas or send their kid to private school?

I'd like to see income levels on that stat. I will guess poor white people get a better education in IL than in CA.

[jghall00]

I don't think there's anything wrong with the California public education system that throwing money at it will fix. The problem is with the parents, not the schools. There's a reason why schools in areas with higher average incomes score higher on state tests, and it's not the facilities.

Regarding the legislatures' concern with carbon emissions, the state just passed a landmark carbon emissions bill several years ago, and CARB is working to clear the air. Increasing fuel efficiency would go a long way towards helping with both goals.