SOUNDING OFF:

State Sen. Tom Harman calls for a flat tax, citing Illinois and Massachusetts as role models for California (“Flat tax is way to save economy,” Community Commentary, April 9). Well, Illinois’ tax is 3% of federal graduated income tax liability, hence it is not a flat tax. Similarly, while the Massachusetts tax take is 5.3%, there are substantial credits and deductions for lower-income individuals, and thus also is not a flat tax.

Harman further complains about tax complexity, but California closely tracks federal deductions and credits, so that once a federal tax form is completed, the remaining work on the California tax form is greatly simplified.

Finally, he ignores the huge role of property tax in funding education. As is well known, kindergarten-through-12th-grade schools eat up most of the budget, and a large part of that budget comes from property tax.

Meanwhile, our other elected leader, Assemblyman Jim Silva, reports that as a percentage of income, higher education funding in California falls into a middle grouping of states when compared to college funding by all other states. Incidentally, the same is true of California kindergarten-through-12th-grade funding. Not good, but it could be worse, considering the dire financial condition now existing in California.

Nonetheless, I wonder why Harman and Silva cannot find a way to augment educational funding. They might start by axing their own six-figure salaries, and by ridding the state of boards and commissions that eat into school funds, but, of course, the need for additional money directed to early childhood education as well as to fewer students per classroom far exceeds the savings to be gained through a reduction of salary expenses. Where, then, will money for added school funding come from? Keep in mind that California has the lowest bond rating of any state, thereby imposing a long-term tax on all of us in the form of higher interest charges.

If that isn’t bad enough, the real estate tax structure of California substantially worsens our educational shortfall. In this regard, there is a new kind of welfare “queen,” such as the guy bragging that he owns three houses and pays only a small amount of tax. Under the existing tax scheme, that is grossly dissimilar taxes for kindred commercial properties, there is a misallocation of tax incentives. It is well known that Proposition 13, no matter what the underlying land is worth, mandates lower taxes for properties that are kept unchanged under the same ownership.

This tax methodology increasingly has expensive consequences because redevelopment, even in prime areas, often requires subsidization by local governments. For example, despite the ocean-side merits of the Hyatt and Strand, a large bundle of our tax dollars were required for those projects. Unquestionably, property tax reform is needed for commercial properties.

At the same time, a reasonable complaint is made that California property and income taxes already are high, and that tax cuts are needed. That issue must be addressed, but it is worth noting that as a percentage of total income, California taxes, similar to school budgets, fall into the middle tier of the 50 states.

More to the point, commercial property tax reform should not result in higher taxes, but instead in a better overall tax base, along with better jobs and ultimately a lower percentage of tax versus income. It is necessary to realize that California will not stop growing but that there is an important choice to be made between either growing smart or growing dumb. Unfortunately, our state representatives are asked to sign a “Taxpayer Protection Pledge” by outside groups such as Americans for Tax Reform led by Grover Norquist, who is based in Washington, D.C., and has little interest in our well-being.

Strangely, though, Norquist maintains a substantial degree of control over Republican politics in California. He seeks to bludgeon elected officials with threats of expensive voter recall campaigns designed to oust them from office if they so much as consider any tax reform other than tax cuts for the rich. Mindlessly, similar or allied anti-tax groups even go so far as to seek the recall of Republican legislators who voted against the recent California tax increases, but were not strident enough in their opposition.

Beyond that, Norquist and his ilk view a flat tax only as a way station on the path to total elimination of income taxes. We can see the seeds of this in Harman’s proposal for a value-added tax, which essentially is a sales tax placed at the manufacturing or wholesale level. Just another way of shifting more of the tax burden to the poor.

Hopefully, our elected leaders will find the courage to break free from the grasp of Norquist and instead support enlightened commercial property tax reform.

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Paul Cross lives in Huntington Beach.