Saturday, March 26, 2011

Taxing and Spending

I came across an irate letter in the LA Times this morning complaining about the burden of being asked to pay sales tax on online purchases.  It turns out, though, that paying sales taxes for online purchases is not really this guy's beef, and I don't have anything to say about that issue either. What really steamed the letter writer was that he is already paying $4979 in state income taxes, and all he gets in return is "a broken government that refuses to make hard choices."

Is that really all he gets in return? In the very next paragraph we find out that this guy has two kids in school, so it turns out that what is REALLY getting him steamed is that his kids are going to have to put up with more crowded classrooms because we can't afford to hire more teachers. And he is certainly right to be unhappy about this.  But he seems to be missing a connection here. Somehow this guy does not see that that one reason he might be dissatisfied with the level of services his kids are getting, is that he is only paying $4979 in state income taxes (even granting that he also has to pay property taxes and sales taxes), and that all these taxes have to cover not only educating his two kids, but also courts, prisons, roads, parks, fire and police protection, and every other service that state and local governments provide.

I wonder whether someone in this person's situation, complaining that taxes are too high and services are too low, is aware that it actually costs the state about $7500 per student annually to educate each child (so the cost of his kids' education even at this inadequate level is more than triple what this letter writer's family is paying in state income tax).  Is he aware that California is now 47th in the nation in per pupil expenditures? When I see a statistic like that, it makes me think that anyone who suggests that our state government should be spending even less on education is acting in a highly irresponsible way. Parents unhappy about the condition of the schools should realize that they might still be a gigantic bargain compared to what most people pay in taxes, and that one reason schools are so shoddy is that taxes are too low. Maybe they ought to wonder whether their kids' education is being subsidized to an extent by other taxpayers. Now I don't have a problem with subsidizing other peoples' education, because we all benefit from an educated workforce. What I do have a problem understanding is the kind of thinking shown even by somebody with two kids in school: the common attitude that taxes are too high, government spending is all going to some wasteful projects that don't benefit me, and the level of services I am getting from government is too low.

We ought instead to consider the possibility that in fact, taxes are too low, government spending is also too low, and that if we tax and spend more, we might actually be more satisfied with the level of services we are getting. We need to get beyond the stale debate that just sees all taxes and all government spending as bad. We need to re-frame the debate, as the Obama administration seems to be attempting, into one over the kinds of investments in our future we need to make, whether that is education or infrastructure or anything else we think is important. Once we recognize that we need to invest in things like good teachers and less crowded schools, then we need to be grown up enough to realize we have to pay for them.

(LA Times photo of Fairfax High School, Los Angeles)

11 comments:

  1. It might cost the state $7,500 per pupil but there are plenty of people who don't have kids in public school.

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  2. I think you are okay with paying more taxes at the pump in hopes we alter behavior. We don't agree. However, I am for paying more taxes toward education to fund charter schools (not failed policy or special interest). I want to fund something that rewards merit and actually works over the long term. I am all for more taxes if the money were spent productively. It isn't.

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  3. I think about 10% of all students do not go to public school, but I'm not sure why that is relevant to the discussion. That means 90% of our workforce is a product of our public education system. If we want a more competitive workforce, we need to improve public education. As for charter schools, there are some great ones, but there are also some awful ones, and overall their record is not any better than public schools.

    My point is that California is 47th in per pupil expenditures. That means we are now spending less per student that 46 other states. So I would ask those who think we are spending too much on education, do you want us to shoot for 48th or maybe aim all the way for last place?

    Both of you just sound like you are making excuses for not spending more money on public education. That ignores the fact that California is now at the back of the pack instead of leading the charge on public education, and we desperately need to do better.

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  4. Joe, we pay enough taxes. California is the state with the highest sales tax in the nation at 8.25%. Californians pay some of the highest income taxes in the U.S. State and local sales taxes can reach 10.5% in some cities and towns. The money is coming in. Do you have any issues with state pensions? Maybe we can shift some of that cash cow around to the students.

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  5. California is an above average state as far as sales and income taxes go, but not all that much above average. The real problem, as Steve Lopez's column in this morning's LA Times points out, is Prop 13, which allows people living in million dollar homes, as well as businesses that have owned commercial property for many years, to pay virtually nothing in property taxes. And that has forced the state to assume a much larger share of education expenses than most states, and that is what has driven down the quality of education in California.

    But politically Prop 13 is untouchable, so we are facing the choice of raising other kinds of taxes or cutting services even more drastically. Both options will cost us. We have only the choice between accepting slightly higher rates for certain kinds of taxes or throwing millions of people into deeper poverty by firing thousands of workers, jacking up fees for community college students and the like, and cutting services for the poor and elderly. They would say they already pay enough also.

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  6. We are not faced with only either firing workers or cuttiung services. We might also consider that the writer pays plenty in Cali state taxes and that the state appears inept at running an efficient budget. As well, that the California Teachers Association heads ought to look in the mirror. There is an enormous credibility gap in how funds are applied. My dad and mom were both teachers/educators. I know the effort put in by most teachers; but union heads are a different matter. I no longer believe they are friends of the teacher or the students -- emphasis on students.

    The financial mess at the university level is a whole separate can of worms. I know, I have had at least one child in university for eight straight years. The state and federal government do a tremendous job with finacial aid to needy students. But each year universities jack up fees above and beyond the cost of living increase (nearly twice that level in the last twenty years). Each year the Feds raise the Pell grants in an effort to keep pace and all that does is allow the universities to raise cost even more. Congress sits there and does nothing! The kids with greatest need are being pushed out by the universities themselves. Nobody in the college administrations or faculty members are rolling back their bennies. No chance of that.

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  7. On raising property taxes: about 20% of homes in California are upside down. It would be higher if they counted forclosed homes. They don't. How many of these families are living month to month trying to survive? Your solution would increase forclosures. Where are these people going to go? What would happen to the housing market? Why would you put the screws to the dwindling middle class with gas and property taxe hikes?

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  8. If there were a pain free solution to California's budget problems, I think even our dim politicians in Sacramento would have found it. But there isn't one. So don't accuse me of putting the screws to anyone. I'm just trying to exploreif what is fair. If we're talking about the status quo of our property tax system, it's hard to argue that it is fair. Say you have two identical houses next door to each other. One was purchased 30 years ago for say $100,000. The other one was last bought in 2007 for $500,000. Today they are both worth $400,000. Under our system the guy who is under water and who is also having to make much larger house payments is also paying maybe 5 or 10 times as much in property taxes. I don't want to put the screws to that guy. I want to make the system more fair.

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  9. I am not accusing you of putting the screws to anyone. Implementing a gas tax and doing away with Prop 13 will not come to pass anytime soon. I just questioned the wisdom of such policy suggestions and pointed out my personal concerns.

    To be clear, I know zero about your finances and don’t care to. But I would value your views: It seems the vast majority of people in favor of tax hikes are those who either pay no income tax and/or are accepting money either directly or in terms of defined pension benefits from the government -- and those that can afford a tax increase. I understand the first group. The rest of us are just trying to get-it-done month to month and are frustrated by some on the right and the left. How do you see it?

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  10. You make solid points about the inequity in the way that some parts of Prop 13 are executed. Agreed.

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  11. WAshington, D.C. (where I grew up) spends more than almost any other city in the nation on education and they have one of the very worst school systems in the country. As a result, I attended private school. I wouldn't send my dog to a D.C. public school. Spending does not equal quality education.

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