I have never read so much about taxes in my life!
From what I understand Benjamin Franklin said, “Nothing is certain but death and taxes.” After reading about California’s tax system I’m in agreement and see the value of having a better understanding of it.
As an educator it is important to gain an understanding the taxes that are best for education. There are many different criteria that economists use to evaluate tax systems. I’m going to evaluate the California tax system using five criteria that is from the Legislative Analyst’s Office and Brimley, Verstegen, & Garfield and determine its value for education (2011).
- Broad Bases with low rates
This describes the process of collecting taxes from a broad base of citizens in order to fund public services. The broad base paired with low rates ensures everyone pays a fair share that contributes to the public services.
- Economic Neutrality
Neutrality refers to when taxes used to fund public services do not impact the private sectors spending patterns.
This means that all taxing devices are constructed in a way that everyone fairly pays what they have the ability to pay.
Feasibility means the tax system is efficient and can be carried out uniformly with minimal compliance cost.
- Adequacy, Stability and Reliability
This refers to a system that can be consistently counted on to generate revenue by applying taxes to reliable, productive sources in order to adequately fund public services.
Personal Income tax, Sales and Use Tax, Property Tax, and Lottery are the most commonly referred to when discussing education funding. According to the Legislative Analyst’s Office, Personal Income Tax (PIT) is the states single largest revenue source. It is a progressive tax based on a person’s income over the course of a year. In California we have seven tax brackets based on income. The higher the income, the percent taxes increases. This tax system rates high in that it covers all five criteria. Additionally, this progressive tax ensures both equity and adequacy in that the revenue contributes to the general fund. Sales tax is not a equitable as income tax in that only those who choose to spend contribute. However, it is a critical tax for education. Property tax is another example of a tax this is not necessarily equitable. Property tax revenue stays local and therefore funds the local districts. Depending on the demographics of a community the property taxes can vary greatly. This being said, property taxes are very important to the the funding of public education. According to Jeff Camp, of Ed100, about half of all California property taxes are distributed to districts for the purpose of funding K-14 education. The lottery is what I would rank as the lowest. Lottery revenue is only collected from people that choose to participate in it. I can count on one hand the times I’ve participated in the lottery and still have fingers to spare. As someone who clearly believes in the importance and value of education, I see the lottery as a bonus and not something the state should necessarily rely on for funding public education. In fact, the lottery only contributed about two percent of the funding sources for California.
Brimley, V. R., Verstegen, D. A., & Garfield, R. R. (2011). Financing Education in a Climate of Change (11 edition.). Boston: Pearson.