Is there anything local voters can do about skyrocketing taxes in California? (1/3)
Despite taxpayer protections enshrined in Proposition 13, the state has ramped up all kinds of taxes through legal loopholes and questionable court rulings. So says Howard Jarvis Taxpayer Assn’s Susan Shelley, who points out that Californians—especially Silicon Valley residents—pay some of the highest sales tax in the nation. An Opp Now exclusive Q&A.
Opportunity Now: Why does it seem local sales taxes keep getting higher in California?
Susan Shelley: Well, the state sales tax is 7.25% which makes it the highest in the country. On top of that, local governments can add 2%.
ON: So, the max tax should be 9.25%. But in San Jose the sales tax is 9.375%, and many other local sales taxes are also higher than 9.25%. If Santa Clara County’s Measure A passes, the sales tax in Campbell will jump to 10.5%.
SS: That’s right, in Lancaster and Palmdale it's 11.25%, the highest local sales tax in the country.
ON: How did that happen?
SS: State Assembly Bill 1679 was passed to allow a specific tax increase, L.A. County’s Measure A, to get on the local ballot because they were already above the 9.25% sales tax cap in Los Angeles County.
ON: So, the state legislature can pass laws that let certain localities raise their taxes even higher than the 2% cap?
SS: That’s right.
ON: Wow. Is there an upper limit to that? Could they start just passing more initiatives and then just bump it up to 12% or 13%, where does that end?
SS: For each sales tax increase above the cap, there would have to be another bill in the legislature to allow them to go over the increments. So yes, they can, if they pass a bill in the state legislature, then get over 50% of the local vote on the citizens’ initiative.
ON: So first, the state legislature gives an exception to a city or county. Then that city or county can put a measure on the ballot that raises the sales tax if the local voters approve it.
But isn’t it true that up until recently, a tax increase like this needed two-thirds of the local vote to get approved?
SS: Measure A in L.A. County was a special tax for a special purpose, and because it was a citizens’ initiative, didn't need a two-thirds vote, only a simple majority, and it passed with 57.78% of the vote.
It’s going to cost taxpayers a billion dollars a year.
ON: When we talked last year, you were telling me that these citizens’ initiatives came about because of the Upland loophole?
SS: Yes, Prop 13 requires a two-thirds vote of a local electorate for special taxes. But in 2017, ambiguous language from the California Supreme Court, on another subject entirely, created the precedent that if something was a citizens’ initiative tax increase, instead of coming from the city council or the county board of supervisors or special district, the constitution did not apply, and it didn't need a two-thirds vote.
ON: Is it just sales taxes? What about other taxes that could pass with a simple majority, that wouldn’t even need permission from the legislature?
SS: That’s the additional danger. You could raise business taxes, transfer taxes, parcel taxes, all kinds of taxes that normally would require a two-thirds majority vote. If they’re slipped in with a citizens’ initiative, they only require a simple majority to pass.
ON: And even though it’s a “citizens’ initiative,” you were saying the government is often involved in pushing these measures. You said AB 1679 was sponsored by the L.A. County Board of Supervisors, to get Measure A on the ballot. What sort of boxes do they have to check to still be able to call it a citizens’ initiative?
SS: This is all really evolving in the appellate courts, and it's evolving because it's based on nothing. It’s based on the air.
What's in the constitution says ‘no’: two-thirds means two-thirds. But what we're finding is that the courts are not upholding the intention of the voters who passed Prop 13.
ON: And you’re trying to get a taxpayer protection act on the ballot again?
SS: Yes. It’s called the Local Taxpayer Protection Act to Save Proposition 13.
ON: So, a new proposition will be named after an old proposition. It’s almost like voters have to vote on a proposition they already voted on.
SS: This initiative will close the Upland loophole, and clarify that a special tax that requires a two-thirds vote still requires a two-thirds vote no matter how it gets on the ballot.
Whether it's from the County Board of Supervisors, or the city council, or a citizens’ initiative, or if Elon Musk shoots it onto the ballot with a rocket, no matter how it gets on the ballot, it still needs a two-thirds vote.
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