Press Release

"Getting Our Fair Share of Taxes"

A compelling study by New York City's Independent Budget Office (IBO), “ Comparing State and Local Taxes in Large U.S. Cities,” recently came across my desk. It answered an important question – why do San Diegans feel burdened by high taxes and a government with a seemingly rapacious appetite for more money and yet, when we examine the City of San Diego ’s revenue sources, it is apparent that our city does not have taxes that other municipalities routinely impose? The standard answer by City Hall insiders and old-style liberals is that we are “cheap.” Indeed, a left-leaning think tank in town released a study a few years ago that purported to show that local citizens are “undertaxed.”

While that report was filled with errors of omission and commission it did highlight certain “facts” which have become a common mantra by the tax-and-spend crowd: that San Diego has a comparatively low hotel tax rate, that single family homeowners don’t pay for trash pickup, and that San Diego does not charge taxes on electricity, natural gas, or phone service.

But if that was the end of the story San Diegans should feel flush with cash this tax season. That isn’t what most of my neighbors feel. Most are harried and frustrated and I think that if I told them that we were, to coin a favorite phrase from local liberals, citizens in “’s Cheapest City ” they would strongly disagree. 

The report from New York City 's  IBO helps explain this seeming paradox. Using data from the U.S. Census Department and Bureau of Economic Analysis, the report estimates the total “taxable resources” in large  cities.  It then goes on to examine the total non-federal tax burden imposed upon those resources as well as how those taxes are distributed between various levels of government.  

This approach makes tremendous sense. Most citizens don’t care (or know) to which government they pay taxes.   Rather, they watch sales tax get rung up at the register, pay property tax bills, file Form 540 with the California Franchise Tax Board and pay a myriad of other small fees and taxes through the course of a year. It is an artificial construct to ask the question of what San Diego ’s “bottom line” is because, for most citizens, they rightly see taxes as all going to “the government.” 

The researchers at NYC's IBO found results that might surprise those that advocate higher taxes. 

According to the report, San Diego’s state and localtax burden, at 6.1% of gross taxable resources, is right in the middle of the pack when compared to eight other large cities. Five municipalities (NYC, Philadelphia, Los Angeles, San Antonio and Phoenix) impose higher tax burdens and three cities (Chicago, Houston and Dallas) impose a tax burden lower than San Diego ’s.

Where the City of San Diego suffers tremendously is the distribution of those taxes between local and state government. While Chicago receives 27% of all state and local taxes and Los Angeles 13.4%, San Diego receives only 4.8% of state and local taxes collected!  The rest goes to the state, the county, schools and special districts.    No wonder San Diegans feel like they are paying more than their fair share of taxes and getting less – the giant sucking sound in Sacramento results in a massive transfer of wealth from our community to the state and county. 

Here is a movement that a broad local coalition could get behind - getting San Diego a fairer share of its tax dollars.   San Diego elected officials need to start playing hardball with state politicians until a more equitable distribution formula is enacted. No more endorsement of ballot measures or campaigning for new bonds until we have an honest and open discussion of fixing California ’s broken tax distribution system. 

While that might anger the tax-and-spend crowd in Sacramento,  a fairer distribution of the overall tax burden that citizens pay is a goal that every San Diegan – conservative, liberal or independent – should be interested in achieving.

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