We Should Raise Taxes on These 3 Things to Pay for Healthcare and Parks
In last week's cover story, we highlighted 20 ideas to make Los Angeles a better place. Some of them were, um, expensive, such as capping our freeways with parks. And there are many other obvious ideas out there, like paving our damn streets already, which also would require a bit of cash.
Not to mention there's this looming issue of Republicans trying to dismantle Obamacare — which means we might soon need more cash than ever.
So we thought we'd point out how to generate some funds: three things we should raise taxes on to pay for nice things like parks and health care.
1. Golf courses
As Malcolm Gladwell recently pointed out in his podcast series Revisionist History, country clubs enjoy enormous tax breaks in California. Gladwell estimates the land for the Los Angeles Country Club, for example, to be worth between $6 billion and $9 billion. That means the L.A. Country Club should be paying between $60 million and $90 million in property taxes — revenue that could be funding public education and local infrastructure. Instead, the L.A. Country Club pays only about $200,000 a year.
Two laws have conspired to give golf courses such generous subsidies. A 1960 ballot measure passed by voters (and lobbied for by Bob Hope!) lowered the value at which officials were allowed to assess nonprofit golf courses. And don't be thrown by the term "nonprofit" — the Bel Air Country Club, Brentwood Country Club, Los Angeles Country Club and Wilshire Country Club are all nonprofit 501(c)(7)s. The clubs are owned by their members.
Then there was Proposition 13. Passed by voters in 1978, Proposition 13 rolled back the assessed value of land to its 1975 level and more or less froze that value in time. Even if the market value of land triples in value (assuming the land didn't change hands), the property's assessed value can grow by only 2 percent a year or the rate of inflation, whichever is lower. Proposition 13 also capped property taxes at 1 percent of assessed value (whereas before it had averaged 2.67 percent). To make matters worse, the courts ruled that when members of country clubs die and new members are brought it, the clubs are not considered to have changed ownership. So the country clubs are treated as if they've been owned by the same people for the last half-century, even though many of the actual members haven't been around that long.
Los Angeles is littered with private golf courses, especially on the Westside. As Gladwell points out, a city as park-poor as Los Angeles is effectively subsidizing thousands of acres of gorgeous open space that is fenced off from the general public.
The first step toward forcing country clubs to pay their fair share is reforming Proposition 13. A coalition calling itself Make It Fair wants to limit Proposition 13 to residential properties only. The group is still fine-tuning its proposal, which it hopes will be ready for the 2018 ballot. But the proposal would, essentially, exempt commercial and industrial properties from some of Proposition 13's protections. That would mean the assessed value of golf courses would be much higher (though not at market value, thanks to the Bob Hope law), and would therefore generate more tax revenue.
"In Los Angeles, you have country clubs that are paying 1975 real estate values — 1 cent a square foot," says Alberto Renata, the CEO of Community Coalition, a social justice group that's part of Make It Fair. "By not taxing these corporations and wealthy investors, we end up reducing the amount of revenue we have for our community in South Los Angeles."
Los Angeles has nearly 6,000 billboard structures, many of which are double-sided, and they hog our field of vision when we're driving or walking down the street. Normally when we're forced to view an advertisement, we're getting something for it. For example, advertising helps subsidize television shows, magazines, even local newspapers. This story you're reading right now is being paid for with advertising! Hooray advertising!
But what do we get in exchange for being forced to stare at hulking metal signs blocking L.A.'s bright blue sky? Absolutely nothing.
"That space from which you view a billboard, that belongs to the public," says Dennis Hathaway, the recently retired president of the Coalition to Ban Billboard Blight. "If they’re going to use that space, they ought to pay for the privilege of doing so."
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Currently, billboard companies pay a business tax. And billboards themselves add to a site's assessed property value, which increases its property tax. But there is no tax levied against the air space the signs take up. Adding one would raise revenue for the city and could be the first step toward getting rid of some these signs. The city could even use some of the tax revenue to pay for the dismantling of signs that companies didn't want to pay taxes on.
Hathaway has tried to get the City Council to put a billboard tax measure on the ballot but says the billboard companies, prodigious donors to City Council candidates, fought the proposal and threatened to sue over it.
Taxes serve a number of functions. They raise revenue. But they also discourage things that aren't good for us — like smoking, for example. Raising taxes on alcohol by even a modest amount would have a myriad of public health benefits. According to Duke University professor Philip Cook:
Economists now estimate that an increase in a state’s alcohol excise tax by 10 cents per ounce can reduce sales of ethanol by 12 percent and bring down deaths from injuries and liver-cirrhosis disease. Deaths in motor accidents would also fall by around 7 percent. Many more Americans would enjoy better health and live longer.
Other research suggests that raising the alcohol tax would lower crime. Economist Sara Markowitz writes:
A single percent increase in the beer tax decreases the probability of assault by 0.45 percent. Furthermore, a 1 percent decrease in the number of outlets that sell alcohol decreases the probability of rape by 1.75 percent.
And NYU professor Mark Kleiman says: "If we tripled the alcohol tax it would reduce homicide by 6 percent." Six percent!
California's new cigarette tax just went into effect this year, raising the price by $2 a pack. But the booze tax hasn't been raised in three decades, and relative to the rest of the country it's pretty low — we're No. 39. Assembly member Cristina Garcia wants to change that. She's proposed a law that would raise the tax-per-gallon on hard alcohol (under 100-proof) by $1.20 — or about 1.5 cents a serving. That's a modest increase that would get California down to No. 34 in alcohol taxes by state.
Garcia's proposal, which failed to make its way out of committee this year, would use the money raised by the alcohol tax to cover the cost of eliminating the tax on diapers and feminine hygiene products. She blames the alcohol industry for the bill's defeat but says she'll try again next year.
"I think that looking at how we tax items like alcohol can really help solve problems like how we can have better health care, especially if Covered California goes away," Garcia says, referring to California's health care marketplace, set up in accordance with the Affordable Care Act. "There's the benefit of of what [the tax] would pay for, but it would also hopefully reduce consumption and make people healthier in the long run."
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