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OP-ED: California gas tax the highest in state's history


California braces for the enactment of the highest gasoline tax in the state’s history; a combined 0.32 cents per gallon (12 cents on gasoline and 20 cents on diesel gas) on November 1, 2017, making California’s gas prices the second highest in the nation.

November 1 is also the date that the seasonal surcharge for California’s reformulated gasoline summer blend ends, which would have amounted to a saving of several extra cents per gallon for Californians. As such, we will not feel the full impact of this increase right away. However, like a ton of bricks, the new gas tax increase will eventually work out to approximately $1,200 less discretionary income per family.

In addition to the current annual vehicle licensing fee, Californians will also see a new transportation improvement fee, ranging from $25 to $175 effective January 1, 2018. Also, zero-emission vehicles will be accessed an additional $100 road improvement fee, effective July 1, 2020.

These taxes could not come at a worst time as President Trump proposes to cut California Community Block Grant Funds for housing, job training, education, pre-disaster mitigation, and counterterrorism funding to California, placing an even greater strain on California’s volatile revenues, disproportionate spending growth, mounting debts, and inadequate infrastructure, such as water.

Moreover, these regressive taxes contribute to poverty and the economic, academic, and health disparities between wealthy, middle income, and poor Californians. A Federal Reserve Board of Governors’ 2015 report found that state excise and sales taxes on gas and goods increase income inequality because even though these are consumed by the rich and poor alike, poorer households tend to pay greater shares of their income on these taxes.

Is there no end? Over the past eight years California has enacted $244 billion in new taxes and fees according to Board of Equalization Member Jerome Horton. A Tax Foundation study that compared the 50 states across the major tax types that make up a state tax burden found that California is first in the nation for:

· The highest marginal individual income tax rate at 13.3%,

· The highest tax rate for the middle class at 9.3%, and

· The highest statewide sales tax rate at 7.25%.

Because California has the highest income and sales taxes in the nation, the proposed elimination of federal deductions for state and local taxes (SALT) will hit California’s middle income and poor the hardest. Not to mention the proposed federal reductions to Medicaid and Medicare, Community Development Block Grant funds, and other job creation and poverty prevention programs, all to fund a tax cut for the wealthiest Californians.

Because Californians are not aware of the cumulative effect of these allegedly well-meaning tax increases, voters often lose sight of the devastating impacts they have. At the local level, in November 2016, voters passed 80% of the unprecedented 452 tax increases and 97% of the 184 bond measures placed on the ballot by California local governments and special districts. The high taxes in California are causing an exodus of the middle class and a perpetuation of poverty as 1 in 4 Californians live below the poverty line and California is second only to Hawaii in the number of people living paycheck to paycheck, according to GOBankingRates.com.

California Department of Finance statistics show that more middle income people are exiting California than are moving to the state. According to the IRS, there is a larger net exodus of people in the 35 to 54 age group and among those making between $100,000 and $200,000 annually. California is quickly becoming the state of the “haves and have nots.”

Housing alone absorbs up to 70% of the income for the poor and middle class Californians and the 405 freeway, which spans over 72 miles of Los Angeles and Orange Counties, remains crowded because more people are working two jobs; and both parents and children often have to work to maintain a household in California. This makes the unemployment numbers 5.0% in California and 4.6 % in Los Angeles look good until you realize that unemployment among Blacks is 7.5%, for Latinos it is 6.3 %, and among Asians it is 3.3%. Additionally, income for California’s middle class and poor is declining. A 24/7 Wall Street study on “States Where the Middle Class Is Dying,” found that of the average pre-tax income earned by the middle 20% of earners in each state, California ranked first in the country for middle class income that declined the most, 7% between 2009 and 2013. A subsequent analysis between 2010 and 2014 showed that the income among middle class California households continued to fall while the state’s top 20% of state earners grew by 5.6%. The middle class is moving closer to the bottom, not the middle.

Sure, California taxes the richest 1%, but the impact on them is not as severe as it is on the health and welfare of the middle income and poor. Taxes are necessary for a safe community, quality schools, and a clean environment, and should be used to stimulate sustainable jobs. However, the majority of California’s new taxes and the proposed federal cuts will disproportionately affect California’s poor and middle class, whose communities are often impacted the most by crime, pollution, educational challenges, and unemployment.

While the more affluent may benefit from the proposed state and federal tax policies; they will cause the vast majority of women and people of color, especially African Americans, to continue to suffer with less discretionary income, higher unemployment, excessive health disparities, substandard educational opportunities; greater homelessness, poor housing opportunities, excessive crime and more pollutants in our communities. Clearly these excessive taxes should not be placed on the shoulders of poor people.

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