San Francisco Chronicle cites Scott Drenkard on property taxes

October 24, 2012



California residents paid 11.2 percent of their income in state and local taxes in 2010, the fourth-highest tax burden of any state, according to an annual ranking by the Tax Foundation, a nonpartisan research group in Washington, D.C.


That is up slightly from 2009, when California ranked fifth, with an average tax burden of 11 percent.


Nationwide, the average state and local tax burden was 9.9 percent in 2010, unchanged from the previous year.


The only states with higher 2010 burdens were New York (12.8 percent), New Jersey (12.4 percent) and Connecticut (12.3 percent).

The report adds up all state and local taxes paid by a state's residents - including income, property and sales tax.


It also includes taxes residents paid to other states, such as hotel and sales taxes paid when visiting other states and excise taxes paid on oil and minerals imported from other states. It divides this sum by the state's personal income to come up with an average tax burden.


If you exclude taxes residents paid to other states and look only at state and local taxes paid to the home state as a percent of income, California ranks third, at 9 percent, trailing New York and New Jersey.


The mix of taxes varies by state. California's top income tax rate (10.3 percent, including the 1 percent mental health surcharge on income over $1 million) is second only to Hawaii's (11 percent on taxable income above $200,000/single or $400,000/married).


But Proposition 13 helps keep California's property taxes in check. In terms of property taxes collected, California ranks 15th among the states with $1,465 in collections per capita, based on 2009 data, says Scott Drenkard, an economist with the Tax Foundation.

If you look at the average property tax paid on owner-occupied homes as a percent of median home value, California ranked 34th, at 0.78 percent, based on 2010 data, Drenkard adds.


Tennessee had the highest sales tax rate as of July - 9.43 percent, which includes the statewide rate plus an average of local rates. In California, the comparable sales tax rate - 8.13 percent - was the 12th highest among the states, Drenkard says.


The report comes on the eve of an election that could catapult California's top income tax rate to the highest in the nation.


-- Prop. 30, Gov. Jerry Brown's proposal, would increase the marginal rate on taxable income that exceeds $250,000/single or $500,000/joint returns in several steps.


It would take the top rate, on income above $500,000/single or $1 million/joint, to 13.3 percent. (Prop. 30 would also increase the sales tax rate by a quarter of a percentage point.)


-- Prop. 38, spearheaded by attorney Molly Munger, would increase marginal income tax rates on singles with more than $7,316 in taxable income and couples with more than $14,632.


The top rate - on taxable income above $2.5 million (single) or $5 million (joint) - would be 12.5 percent.

The Tax Foundation's study differs from one by the Federation of Tax Administrators, which takes taxes collected from residents and nonresidents and divides by residents' income. Using this methodology for 2010, the Tax Foundation estimates that California ranked 13th highest among the states.

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