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Fighting taxes…

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I’ve been stewing over the latest property and sales tax hikes. I don’t understand why Arnold Schwarzenegger thought raising taxes substantially – in this economy – was a good idea.

But then again…

This is the same guy whose ‘sound judgment’ created the likes of Junior and Jingle All the Way.

And now, he wants to prolong it for several years through a special statewide ballot?

When I make less, I have to spend less. I can’t demand more money. Why can my state live financially irresponsible in a way that I can’t?

I didn’t give my approval on May 19th. I have to figure out how to survive on my new tiny salary; can’t I demand the same for my taxes?

Is this just a California thing or are you spending a couple extra Benjamin Franklin’s a month on taxes?


23 Comments

  • Reply Juliana |

    First of all, I want to tell you that I enjoy reading this blog. I do not have debt right now, but am working on improving our personal finances. Your story is inspirational. Thank you.

    I also live in California, and just got my car registration on our 1995 vehicle. It is usually $67 but the bill was for $98. I think this is temporary (since 1A was defeated), but besides the sales tax, this is the first time it has been so directly apparent to me.

    I don’t look too closely at what is taken out of my paycheck – it gets depressing. My hours vary, too, so it isn’t as noticeable.

  • Reply Eddie |

    Don’t get me started: I’m in Massachusetts where our uber-liberal Senate just voted to raise the sales tax….increaded state payroll (again, but what else is new), and the promised reforms are like vapor from my mom’s old Vaporizer.

    Time for another revolt across the land, me thinks.

  • Reply Lynn |

    Oh coming from NJ I can sympathize. I will be one of those voters voting out our current Governor come November. I didn’t think my taxes could go any higher but boy was I wrong. Our sales tax is still only 7% but other taxes are ridiculous.

  • Reply Joy Smith |

    Nope. It’s not just Arnold’s fault. We live in Kansas and the taxes here keeping getting higher and higher and higher. One of the biggest reasons I think was because of the major flood we had several years back. Right after that was when everything skyrocketed. And it isn’t just the taxes either. Our cost of living has gone up here. Where we could once get a 3 bedroom house for around $400 now costs well over $1000, yet our paychecks haven’t gone up!!!

  • Reply Mrs. Modern Tightwad |

    It is unfortunately the same here in Vegas. Here the current plan is to increase the sales tax, double the annual state business license fee, changing it from a business fee to a storefront fee (could be a real problem with multiple locations), double payroll tax, and raise motor vehicle registration fees.

    The problem I see for governments is once your population reaches a certain point it does limit what you can cut. For example, in some places I believe there’s a mandatory minimum response time for firefighters and paramedics which means there has to be a station no more than x miles from the last one. Gone are the days of volunteer groups that handled a lot of township or rural affairs.

    The other problem is in economies such as ours the demand for services actually increases as people lose jobs, homes, and medical care. While our federal government can print money and throw it at whatever they want, states have to balance their budget, which means cut spending or increase taxes, usually a combination of both. Technically they are doing what an individual has to: cutting what they feel they can and increasing the only real revenue stream they have (taxes).

    It’s a catch-22 for all sides and I’m glad I’m not making the decisions.

  • Reply Honey |

    This is why the republicans have it all wrong…if they’d kept taxes at decent levels when the economy was good, there would be a surplus and they could dip into that instead of raising taxes now.

    The same thing happened in Arizona…as soon as they got a surplus they suspended property taxes indefinitely. Guess who’s now in the hole, with one of the highest foreclosure rates in the nation so even if the DO reinstitute property tax it won’t raise any money?

    That’s right, Arizona.

    Stupid Republicans.

  • Reply Amy |

    I love your blog, because it gives insight into things I am just beginning to learn about and I have learned MANY things here.

  • Reply Jennifer |

    The problem is that the same voters (blindly driven by union propoganda) voted against spending cuts!!

    If California doesn’t want to spend less, it has to increase revenue if it doesn’t want to go further in debt.

  • Reply Dan |

    California is about to go bankrupt! Y’all need to cut services or raise taxes.

    It sucks when taxes go up, but there ain’t no such thing as a free lunch.

  • Reply Beks |

    Thanks all for your comments! I’m sorry to hear the high taxes are limited to California. I wish the rest of the country had a break!

    I’m big on cutting spending rather than raising taxes. California has a HUGE waste problem. As someone who has worked with the government or for the government for years… there are plenty of ways to save.

  • Reply Jen |

    I expect my property taxes to go up here in MA. They keep dropping the assessments, but raising the rates… But, the state cut local aid – cash from the state to the cities and towns – so my town has to try to make up the shortfall. At least in MA we have Prop 2.5, which means a city or town needs a voter override in order to raise the property taxes more than 2.5% (it’s a little more complicated than that, but that’s the jist of it).

    On the one hand, it gives residents some control over the taxes they pay, but it can also mean that big, useful projects or necessary initiatives may not get funded, e.g., new school building to replace one that’s falling apart, supplementing budgets for schools, firecighters, and police that would otherwise get deep cuts with a severe loss of service, etc. There’s always the argument that cutting of the supply of money to governments will force them to spend wisely, but I’m skeptical about that. I think spending wisely is a habit that those in charge and the voters just need to have, whether or not their town/city is flush.

  • Reply Nicole |

    I too voted no on all of the measures. I thought it interesting that he threatened us CA’s with more taxes if we didn’t vote for the tax increases. Isn’t that the same thing?

  • Reply emmi |

    Ours seem to be the same. But our state doesn’t let voters insist on new services by a 50% +1 vote, while only allowing for additional funding by a 2/3 vote of the legislator. Our state is hurting but it isn’t bankrupt as far as the eye can see, is what I’m saying. I’m sure we’ll see some increase to make up the gap. Hasn’t happened yet.

  • Reply Rob in Madrid |

    unfortunately it is going to get a whole lot worse before it gets better. Its not just the crisis but all those state workers (aka those wonderful baby boomers)begin to retire and need health care. I can’t provide the link but many states and ´cities are looking at budget busting numbers to provide retiree health care.

    Even if Rush the mouth Limbaugh won taxes would still go up

  • Reply Ryan |

    I think a lot of people miss the no-win situation that states are in, and especially the situation that California is in. People demand a lot of services from the government. As a health care lobbyist I know that medicaid is bankrupting quite a few states. These services are demanded, but no one wants to pay for them. Everyone thinks that there is some unlimited supply of rich people to tax, and it is just not true. The only way to balance the budget is to either cut services, which no one is willing to accept, or raise taxes, which everyone likes to complain about. The situation gets even worse in places like California with the proposition system. The public can collectively create mandates for the state with out figuring out how to fund those mandates… then they complain when their taxes get higher.

    Not trying to pick on anyone, but this sort of complaining about taxes while expecting services is hypocritical. What are you willing to give up in order to balance the budget?

  • Reply Rob in Madrid |

    @ morrision

    vs borrow and spend republicans unfortunately

    The latest issue of Fortune had an excellent article about the next ticking time bomb, State Pensions. Their conclusion, expect the feeds to bail them out. And I would add Obama will halve the deficit in 4 years using the same method every congress did, moving it off the books.

    It’s going to take a bit of getting used to not seeing Trica post any more

  • Reply Tricia |

    Hi Rob – You’ll still hear from me. I have an update I’m working on that will be posted Friday! 🙂

  • Reply Debt-free Dan |

    I’m not feeling it here in Texas. My property tax bill has gone down for the last several years. Property values have remained mostly steady and my tax rate has gone down. However, I think that’s due to lots of growth in my county. Once your county is saturated, I guess the government has fewer options.

    I have not specifically noted other taxes rising or services being cut. There is no state income tax in Texas.

    I agree that it’s easy to blame politicians for spending money they don’t have. There are a few problems I see.

    1. I don’t think there is a concise way to who is voting for what. It’s buried in bills, but at least is accessible.

    2. Fewer people are willing to sacrifice their stuff than are willing to demand that others sacrifice. This leads to a stalemate.

    3. Because of 1 & 2, people don’t seem willing to punish incumbents for spending by voting them out.

    4. I think people who struggle with running their own finances and have a hard time with the concepts of living on their income can’t, won’t or don’t hold politicians accountable.

    I don’t know where this country is going to get the money for everything it wants. The longer it waits, the bigger the hole will be.

  • Reply Ryan |

    @ Debt-free Dan
    There is an interesting phenomenon when you talk to people about congress. When asked, the majority of people do not like and do not approve of congress. However, when you change the question to ask about their own congressman or congresswoman they like that person and think they are doing a great job.

  • Reply Jenn |

    Very interesting to follow this discussion from the Canadian viewpoint.

    We too constantly complain about rising property, sales and income taxes while watching services stagnate or be cut.

    I live in a rural area that was recently merged into the large urban area nearby. This translates to paying higher property taxes without the accompanying services available in the city. For $5000/yr I get city-esque services like garbage/recycling pick up, police, ambulance, snow plowing etc. I don’t get city transit services out where I live and I have a volunteer fire department to protect my $600k+ house… We’re also on well & septic so that property tax fee doesn’t include water or sewer charges. Our federal sales tax has been reduced from 7% to 5% in the past few years, but the provincial tax in Ontario remains at 8%. Our income is taxed at 1 of 4 rates the lowest at 21% the highest 46%.

    The balance to all of this is that we have free universal healthcare, 1yr maternity leave, and quality public schools which are not seen as the last resort for your kids if you can’t afford private school.

    Years ago when working for a software company which sold reading and math programs to schools, I seemed to spend a disproportionate amount of time doing teacher training in states with low tax rates. They seemed to acccept it as normal that student success rates were abysmal as a result of poor school funding due to low taxes. It may have been an over-simplication of the situation, but I was always stunned to see the situation in American schools compared to the funding my kids schools receive as a result of our higher tax rates. Some states were spending huge amounts on state licensing fees to buy software to improve scores. Perhaps a higher taxation up front would have reduced the need to fix a problem down the road. I imagine the same theory holds for healthcare. Prevention is usually far cheaper than treatment once a condition progresses. Here if we don’t feel well we go to the doctor. Show our healthcards and in we go. Free. No talk of copays, no accessing whether we have the money to get something looked at. If we need treatment or surgery, it’s all free. See a specialist – free.

    I know there are pros and cons with every system. If any country ever gets it perfect we can all copy that. In the meantime we can all just try to make sure our policy makers are well aware of what OUR priorities are. In an effort to please the voters they often react to the sqeakiest wheel. Let them know what services aren’t that important and what you’re unwilling to see cut.

  • Reply Ryan |

    @Jenn

    School performance has very little to do with funding or tax rates actually. In the book Freak-onomics Steven Levitt actually does a very good examination on student performance in comparison with funding. Ironically, the school district which spends the most money per student in the USA is also the worst performing, Washington DC. Lets just take a second to read that one more time….

    The school district which spends the most money per student in the USA is also the worst performing, Washington DC.

    Now an important caveat to that is that just because they spend the most per student, does not mean they are spending it on students. Levitt found that these school districts also had the highest support staff (an employee who has no contact with students) per student ratio. His conclusion was that there was quite a lot of inefficiency in these school districts.

    So I think there is a case to be made for examining more than just budget line items and taking a critical look at how efficiently our school systems are being run.

So, what do you think ?