The first thing a democrat will say is Cal is not the poorest sate. That’s because they are told the federal poverty rate actually defines who’s poor and they may not have the critical thinking skills to understand how the cost of living effects the poverty rate.
Simply put it would take away the tax break that all businesses got on Prop 13 back in 1978. For those not familiar, Prop 13 froze property tax rates. And as long as you didn’t sell your house or business the tax rate was the same every year. For example my Mom’s house in Silicon Valley had a yearly property tax of $2,400.00. When she passed and her home was sold for $1.2M the new owners got the new tax rate of $13.341.00 per year.
As the article points out, there are major corporations like Intel and IBM and many movie studios that are paying property taxes at that 1978 rate. And as we all know, property taxes primarily go to supporting school districts. It seems to me that businesses that have had the advantage of paying really low property taxes for 42 years should be able to pony up a current tax rate.
In reality, they’re talking about a tax hike in the 20k-100k range from 4.5% to 5% from 1991 to today. Yeah, .5% is 11% of 4.5%, but for a family earning 75k a year (CT median household income), we are talking about the following.
1991: 4.5% of 75k = $3450
2020: 3% of 20k + 5% of 55k = $3375
Virtually a wash, so no difference to the middle class family as a result of today’s tax bracket versus 1991.
The issue in Connecticut vis a vis taxes is that property taxes have shot up but home values have not, the result (or cause?) of a population decline. Their issue is not in income tax progressiveness, which has very little impact on middle class take home pay, but in the property tax increase.
The exodus of big corporations from California started in the early 1970’s. Prop. 13 was passed in the hope that freezing business property taxes would help. But there were some corporations that had their home base there but manufactured outside California. And they were able to find other states that were more tax friendly. However large tech companies did stay there. When Prop. 13 was passed there was much nervousness because the space race was ending and there was no clear sign that there was going to be new technologies to fill the gaps. And then the demand for integrated circuits kicked in and Silicon Valley went nuts.
The poverty rate in California has been going down. In 2014 it was 15.5% and in 2018 it was down to 12.8%.
And California did not create the majority of the homeless folks there. They are from other states and went to California because of the nice winter weather.
And for your information a lot of the tax laws that were put in place in the 1970’s that proved harmful for the state were done by then Governor Ronald Reagan.