George Skelton, LA Times columnist and generally a ‘progressive,’ admits, that the California state income tax is too top-heavy on the few and the rich. A welcome insight from someone on his side of the political spectrum. Note that Mark Paul, a close associate of Joe Mathews, one of my favorites, disagrees. Evidently Skelton has been sounding this alarm before. Paul argues that the overdependence on the rich was a consequence of the Internet bubble of 2000 and the resulting crash, and that outside of the rich nowadays, nobody has any money anyhow; the top-heaviness of the tax is only reflective of the top-heaviness of California incomes. But I looked at the date of Mr. Paul’s essay, and it was May 2008, before the Great Recession became serious, and the conditions of the Internet bubble repeated themselves. So, sometimes the rich don’t have that much money either, and then what do we do?
And apparently, Thomas Piketty, that Frenchman of neo-Marxist fame, might like Proposition 13! According to Matt Yglesias, one of my favorites, Piketty declares that the property tax [at least in those states that do not have a Proposition 13 limitation on them, of which good old Texas is one] is a major redistributor of wealth, though the rich often avoid it by having a lot of their money in stocks and bonds rather than real estate.
To remind the readers of Blue Kennel’s position: Blue Kennel favors keeping the famous part of Prop 13, the part where homeowners’ taxes are frozen at the time of purchase. We refuse to take the Norquistian position of raising no taxes whatsoever, but taxes that must be paid in cash on a non-liquid, non-income-producing asset, like property taxes and death taxes, are disruptive, forcing people to sell out and liquidate their assets. We are okay with doing away with the Prop 13 limitations on commercial and rental property, because in that case the ‘value’ of the property is determined by its income, and the property tax is really sort of an income tax.
At the federal level, we see little need to raise the income tax rates on the rich, but we do favor making the capital gains tax perhaps even lower than it is now for the first $1 million of capital gains income, but capital gains income over $1 million per year should be taxed at the same rate as ordinary income. And the payroll tax, rather than being as regressive as it is, should be a fixed percentage [maybe 100%, given the needs of those areas of Federal activity that the payroll tax supports, in an aging society] of the income tax for all taxpayers. Another way to accomplish this might be to have a nearly flat income tax but make the payroll tax a 100% tax credit against the income tax.
So you can see that I do not qualify as a Norquistite, or even a ‘conservative’ by many definitions of the word.