How much does California value public education?

According to Brimely, Verstegen and Garfield, “Because of taxpayer revolts against taxes, court or legislative action, or even voter indifference, the financial well-being of public institutions is determined by the attitude of those who provide its financial support through a system of taxation” (2016, p. 114). Considering taxation as the means to move money from the private sector to the public sector, it is reasonable that taxation is distributed with fairness and in an equitable manner. So how does California rate?

In California, funds for public education are distributed by the state with only 12% coming from federal funds. As part of the state’s equalization efforts income from various tax sources: income, property, sales, corporate, bank, lottery income and is distributed both vertically and horizontally. The Local Control Funding Formula allows for both horizontal and vertical distribution. The base rate is an example of horizontal equity as all districts receive the same amount of funds per student within subgroups, K-3, 4-6, 7-8, and 9-12. Vertical equity, responding the needs of certain groups, k-3, 9-12, and demographic groups such as low-income, English learner, and/or foster youth receive additional funds. Additionally, accountability measures have been put into place required districts to submit their plan (Local Control Accountability Plan) of how they will be using the funds for target groups specifically toward improving student outcomes.

Re-imagining High School

A recent special presented by the Entertainment Industry Foundation aired lived on 9/8/17. The presentation inspires America to re-invest in education and how we prepare our children for the Twenty-first Century.

Equity and ability to pay

Taking a closer look at California’s taxation practices using Brimley et. al’s characteristics of a good tax system is a valid way of evaluating California’s practices. First to consider is equity and ability to pay. Generally speaking, income tax is a fairly reliable means for determining an individual’s ability to pay. Of course, their may be mitigating factors such as number in a household, health factors, disability factors, etc., which can be monitored through regulation and collection of income taxes. In contrast, property taxes are less equitable. Current legislation, Proposition 13, limits property tax increases per year. Thus, homeowner’s who purchase their home ten to fifteen years ago, or longer, pay considerably less in taxes than their neighbors, yet costs for education and overall cost of living is increasing with an unequal distribution of responsibility. Therefore “new” homeowners are carrying the burden of responsibility in providing property tax revenues. Sales tax, although is unreliable and often reflects current economic levels, does provide equity in responsibility as those who are making purchases show the capacity to do so. However, there are some expenses that are needed for survival and if those items are taxed we are increasing burden to a population that is already struggling to make ends meet.

Adequacy of Yield and Costs of Collection

According to Brimley et al., “taxes be applied to productive sources” (p. 117). The rationale is that the administrative costs should not outweigh the potential for income. “To the extent possible, taxes should have relatively low collection and administrative costs for both the government and the individual” (p. 117). In considering the expenses and time needed to administrate the collection of taxes, property taxes appear to be more labor intensive as compared to income and sales taxes. Citizens are already required to file federal income taxes, so adding a state income tax is fairly reasonable in administrative expenses. Sales tax seems to be a fairly doable system as well. In contrast, property tax collection is more labor intensive in the collection and administrative oversight due to the regulations in place that create a different paying scale based on the date of purchase.

Tax Shifting: Impact and Incidence

Property taxes have the potential for shifting the impact of a tax to the incidence of that tax. An example of this is a property owner who increases rent to residents to offset his costs and/or responsibilities. Considering that property ownership should be an indicator of ability to pay, shifting the tax burden to renter may increase costs to an individual who may not have the ability to pay.

Predictability

A stable revenue source is important when funding public service. According to Brimley et al., “Sources of funds that change with the economy are elastic; in good times, when the economy is robust, funding from these sources increases” (p. 118). The downside is when the economy is struggling, funds from these sources decreases. According to Brimley et al., “Taxation is fairer and more dependable for financing education than the previously used rate bills, tuition charges, and student fees” (p. 142). Additionally, “e-commerce and value-added taxes” currently being used internationally, have the potential to increase revenue for the state.

Yes, to re-imagining high school and investing in California

California will need to come together in prioritizing education and investing in today’s youth. By investing in them we are investing in our future.

Resources:

Brimley, V., Verstegen, D. A., & Garfield, R. R. (2014). Financing education in a climate of change. Harlow, Essex: Pearson.

chiangvideos (Publised 9/9/17). XQ Super School Live (Condensed to 30 Minutes). Retrieved from https://www.youtube.com/watch?v=hJwmpKfcd-8.

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