Is this a "Good" tax or a "Bad" tax? Here's how to decide.
The Coalition of Sensible Taxpayers has just released its list of Sensible Tax Principles (see below). These principles define what taxes/fees are fair and affordable to taxpayers, while recognizing and supporting the importance of essential taxpayer-funded services to our collective well-being.
We will be encouraging local government, agencies, and districts to abide by CO$T's Sensible Tax Principles. We hope that engaged citizens will also demand the same.
CO$T's Sensible Tax Principles also serve as a scorecard for voter-taxpayers to use when considering proposed tax measures on the ballot or whether to protest (or support) rate hikes for essential services not subject to a vote.
CO$T will also, from time-to-time, evaluate a proposed tax measure with a recommendation (endorsement) of vote NO; vote YES; or no position. To reach that recommendation, CO$T relies on our Sensible Tax Principles, while giving weight to the parameters that are most important relative to the specific tax or fee. It's not a rigid system. It's sensible.
CO$T’s Criteria for Supporting or Opposing Specific Taxes and Fees:
At CO$T, we support sensible taxes and essential service fees – ones that are necessary, equitable, transparent, affordable, approved by popular vote, and expire at some reasonable time point. Appropriate taxes and fees contribute to our collective well-being. We work with elected officials in an effort to ensure all new/renewed taxes/fees meet a sensible standard.
CO$T evaluates proposed taxes and fees on the following specific criteria – and encourages voters and elected officials to do the same.
- Necessary. Additional taxes/fees should enable important projects and essential services, preferably improving upon them – e.g., adding new teachers to lower class sizes.
- Affordable. In order for people (both homeowners and renters) and businesses to afford to stay put, taxes/fees shouldn’t escalate faster than incomes. Currently, that means increases not to exceed 3% annually.
- Alternatives exhausted. Our local governments should tap cost efficiencies and the multitude of newly passed state and local tax sources before seeking additional local taxes and fees to cover those same services. Schools and social service programs should maximize grant opportunities.
- Not duplicative. Taxpayers should not have to pay over and over again for the same project or service.
- Equitable. New and renewed taxes and fees should be structured to spread the burden as fairly as California law permits. Parcel taxes, for example, hurt small property owners and low income residents; this can be minimized via exemptions for seniors and the disabled (and perhaps those below some income threshold).
- Transparent. Voters deserve to be told the truth about a tax or fee’s proposed use. If more money is needed just to maintain current services or forestall cuts, say so! If the money will be spent on large maintenance or construction programs, voters deserve a detailed project list.
- Accurately represented. Ballot language and promotional materials should clearly say what the money is for. If the tax/fee is promoted for a particular use, what are the guarantees? Words like “cost of living increase” should be clearly tied to a specific index — and not be used to describe annual increases of a predetermined percentage (e.g., 5%).
- Reasonable sunset. Every tax should have a sunset date — and one that’s tied to the projects it funds. For most sales and parcel taxes, 8-10 years is a reasonable maximum term; voters then have the opportunity to renew or cancel these taxes. Bond measures typically fund longer-lived construction; but to avoid unfairly passing these costs on to the next generation, new bond measures should not exceed 25-30 years.
- Democratic vote as provided by California law. New and renewed taxes should conform with the intent of Propositions 13 and 218. Revenues from tax measures promising to fund special purposes – e.g., road maintenance – shouldn’t flow through the general fund in order to avoid prop 218’s requirement for approval by 2/3 of voters. CO$T opposes the use of “citizen” tax initiatives to end-run proposition 218’s requirements. CO$T opposes the use of a legislative super-majority to end-run the public’s right to a direct vote on new taxes. And, CO$T opposes expanding which fees are exempt from prop 218’s restrictions.
CO$T looks forward to working cooperatively with local jurisdictions, agencies, elected officials and community members toward sensible approaches to taxes and fees.