Sacramento — Californians last week poured billions more into a warped state tax system that badly needs restructuring but leery political leaders won't touch.
Democrats are afraid to go near the apparatus for fear of being labeled tax-and-spenders. Republicans are prone to pander to the populace by advocating tax cuts, even while the state is spending billions more than it's taking in.
During a four-day period starting last Monday, Californians mailed in roughly $3.2 billion to the state Franchise Tax Board. Around $2 billion of that was personal income taxes, the rest corporation taxes.
The take from the personal income tax was down significantly from the same four-day deadline period last year, in the 20% range, sources say. That indicates more budget trouble. And it's illustrative of one huge problem with California's tax structure.
The personal income tax is a volatile roller coaster. It's top heavy, leaning too much on rich folks whose taxable incomes tend to reflect -- if not exaggerate -- the ups and downs of the economy.
Meanwhile, we've got a sales tax that was designed for the mid-20th century. It ignores the fact that California's economy increasingly has been relying on sales of tax-exempt services.
The property tax is blatantly inequitable.
The corporation tax is riddled with loopholes.
The entire system should have been redesigned 29 years ago, immediately after voters drastically cut their property taxes with the landmark Proposition 13. But then-Gov. Jerry Brown and the Legislature put it off. And their successors have been sidestepping ever since.
Back in 1978, Brown & Co. merely shoveled out $4.4 billion in state surplus to schools and local governments as "bailout" money to cover their property tax losses. The state still is paying, in one way or another. And because Sacramento pays, it also calls the tune and the locals lose control.
But let's take one flawed tax at a time:
* The income tax. The rich pay. The lower middle-class and poor skate.
The top-earning 1% of taxpayers paid more than 40% of personal income taxes in 2004, the last year for which there are solid figures, according to the Public Policy Institute of California. The nonpartisan legislative analyst says in that same year, taxpayers earning at least $200,000 accounted for only 5% of the tax returns, but more than 55% of the taxes.
