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Opinion, Columnist, Government

Parcel Tax Plans Promote Unfairest Of Levies

Thomas B. Elias, Columnist
Santa Monica Mirror Archives
Thomas B. Elias, Columnist

Posted Dec. 15, 2012, 12:40 am

Tom Elias / Mirror Columnist

No sooner had the new Democratic supermajorities in the state Legislature been sworn in than some of their members began pushing to make the least fair of all taxes easier to impose.

That's the parcel tax, the response of many California school districts to the 40-year-old Serrano v. Priest court decision that attempts to equalize per-student spending among all schools.

Serrano mandates that every time a property tax-increasing override for schools is approved by local voters, most of the money goes to Sacramento for redistribution to districts whose per-student spending is in the lower half within California. The bulk of that cash usually goes to poor rural schools.

For decades, this has discouraged school districts in wealthier areas from seeking tax overrides. Why exert the effort needed to get a two-thirds vote when you won’t see much of the money even if you win?

Their answer for much of the last 20 years has been the parcel tax, the least equitable levy in America today. Schools officials love parcel taxes, no matter how unfair, because all the money they produce stays home. The end, they’re in effect saying, justifies the means.

Why are parcel taxes unfair? Because they have nothing to do with the value or use of any particular property. Parcel taxes assess owners an identical sum for each property they possess. That means the tax on a small one- or two-bedroom cottage is identical to the levy on a luxury hotel or a large shopping mall. The owner of a 33,000 square foot mansion pays the same as the owner of a property one-twentieth as large.

While it’s true that some malls, car dealerships, factories, oil refineries and other large enterprises encompass more than one property parcel, that doesn’t make this tax fair. The few efforts to make things a tad more equitable by charging owners of commercial properties slightly more than residential have lately been rebuffed by a state appeals court.

What’s more, parcel taxes are unlike the other significant form of uniform tax per property, the assessment district. There, no levy can be charged without the consent of a majority of owners of affected properties. But with a parcel tax, ownership doesn’t matter. Voters who don’t own property and may never be owners can impose a tax on everyone who does own land or buildings. A tax they’ll never have to pay, but others must.

The irony today is that the lawmakers sponsoring plans to ease passage of these most regressive of taxes are Democrats who style themselves champions of fairness and equality.

The positive part of this is that legislators themselves can’t pass a parcel tax, other than a statewide one. Nor can they change the rules by themselves. But they can present voters with ballot propositions aimed at making passage of unfair taxes far easier.

Under terms of the 1978 Proposition 13, it takes a two-thirds majority to pass parcel taxes today. But state Sen. Mark Leno of San Francisco is working to put a proposition onto the November 2014 ballot that would lower that threshold to 55 percent of the vote. His idea is similar to the year-2000 Proposition 39, which lowered the margin needed for approval of school construction bonds from two-thirds to 55 percent. Before Proposition 39, about 60 percent of school bond proposals passed; since then, such plans have had an 80 percent success rate.

Similarly, state Sen. Lois Wolk of Davis says she will push for another proposition lowering the threshold for passage of parcel taxes and bonds for public libraries from two-thirds to 55 percent.

In both cases, there’s little doubt about the need. Schools have cut back programs from busing to college counseling, while many libraries have closed or reduced hours of service.

But need for a public service does not justify an unfair, inequitable method of taxation like parcel taxes. To be fair, any levy on property must take value and uses into account; parcel taxes do not.

Until Democrats won majorities of two-thirds or more in both legislative houses, it was impossible to get these proposals onto the ballot because of unified opposition from Republicans. That’s irrelevant today; the only real questions are whether Democrats will unify behind these planned propositions and whether Gov. Jerry Brown would okay them.

And if voters pass those propositions – a simple majority is all it would take – can lowered thresholds for other parcel taxes to pay for fire protection, police, sewers and more be far behind?

If the public believes all these types of services need more money, there are other ways to raise it, methods that are far more fair. No one forces a Serrano-like redistribution of ordinary property taxes earmarked for libraries or police, to name just two.

The bottom line is that financing of public services must be done fairly, without favoring the wealthy, as parcel taxes do. Even if finding a fair method is more difficult than passing a parcel tax.

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Comments

Dec. 18, 2012, 5:43:00 am

wolflen said...

ohh tom..CA is broke..taxes wont save it...until spending is under control...and that wont happen when you can just raise taxes...with a 55% threshold, more taxes will will be imposed to meet the spending frenzy...and it looks like the sharks are really in the water getting ready for 2013.. and tom..your definition of fair...isn't fair...

Dec. 26, 2012, 6:21:08 am

N.L. Neilson said...

The parcel tax is a violation of the U.S. Equal Protection Clause. Allegheny 488 U.S. 336, 346 (1989), But the fairness of one's allocable share of the total property tax burden can only be meaningfully evaluated by comparison with the share of others similarly situated relative to their property holdings First Case Neilson v. City of California City (2005), 133 Cal.App.4th 1296 Current Case 5th Appellate District F066007 N.L. Neilson

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