TRUMP SHOWS HOW IGNORANT HE IS ABOUT CALIFORNIA

 

…The Trump Organization owns 30% of the Bank of America Building, in S.F.

 Once more, President Trump doesn’t know what he’s talking about

 

 

Well, how about that!  President Trump almost told the truth!

 

When I say “almost”, what I mean is that when Trump made the following statement, The Post’s Fact Checkers only awarded his statement with 2 Pinocchio’s, instead of his usual 4 Pinocchio’s, or his worse-case, “Pants-on-Fire”, falsehood rating.

 

Per the president: “I think Governor [Jerry] Brown’s done a very poor job running California. They have the highest taxes in the United States. … Hey, I have property in California, I will say. I don’t think too much about my property anymore but I have great property in California. The taxes are way, way out of whack and people are going to start to move pretty soon …. [T]he taxes are double and triple what they should be. And everybody that lives in California, they know it.”

Now, I have lived in California for more decades than I want to admit, and I have to say, as a number of other Californians have said about the president’s remarks, that due to our Proposition 13, we have some of the most reasonable property tax rates in the country.   I would love to compare our property tax on the land Trump owns in California and compare it to a similar property in New York or some other state on the East Coast.  

 

As with most of what Trump had to say, a number of California residents have written to express their outrage at the president’s remarks about the state’s taxes. In particular, they noted that he mentioned property that he owns in the California, but he complained that, “the taxes are way, way out of whack … double and triple what they should be.”  Some of them said that they had lived in other East Coast states and the taxes versus the value of the property were way out of line when compared to many properties in California.

 

One individual even wrote in with his actual numbers to show that the president was wrong.

 

 

The writer said: ”For one of my homes, in Claremont, Calif., with a value of $542,584, I pay about $2,492 in taxes a year, compared with $7,528 for an equivalent home in Chicago.  This is according to Zillow. My other home, which is in Winchester, Calif., and is valued at $421,866, the taxes of $4,493, are compared with $10,412 for one of equivalent value in Westbury, N.Y.”

 

That sure doesn’t sound like they are “way out of whack” to me.

 

Now, it wasn’t clear from the president’s remarks whether he was talking about property taxes or California taxes overall. However, the White House says he was not.  

 

But Trump always criticizes Governor Brown for doing a “very poor job”. However, the governor actually has been lauded by many for turning around the state’s fiscal condition. The state had a $27 billion budget deficit when Brown took office eight years ago and California is now on track for a $6 billion surplus.

 

On the other hand, since Trump took office, the country's dependence on foreign investors to finance its growing debt has raised questions over the US economy's vulnerability to foreign governments.  And now with Trump’s tariff’s, that just increased the nation’s economic vulnerability.

 

There are several ways to slice this California tax data, so let’s take a look.

 

In 1978, California voters approved Proposition 13, which rolled back most local real estate assessments to 1975 market-value levels and limited future property tax increases. In essence, the property tax is only substantially adjusted when there is a change in ownership or new construction.  (I am personally under California's Prop 13 and my taxes are much lower than an equivalent home in Dallas or New York.)

 

Even today, after adjustments over the years, California has relatively low property taxes. The nonpartisan Tax Foundation, which tends to lean to the right, says the mean effective property taxes for owner-occupied housing shows the state ranks 34^th in the nation.  This is well behind New York, which ranked in 11^th place.

 

The San Francisco Chronicle ran an article titled, “Trump complains about California taxes, but in SF, he’s got a sweet deal.”

 

The article noted that the Trump Organization owns 30% of the historic Bank of America building, for which annual property taxes come to $14.4 million on an assessed value of more than $1.2 billion. By contrast, a similarly valued building in Miami would face property taxes of $25.4 million.

 

White House officials, however, say Trump was not referring to property taxes but state income taxes. An article in Forbes magazine highlighted California’s recent increase in its top income tax rate to 13.3% making it the highest rate in the nation and suggested that it could lead people to leave for lower-taxed states.

 

But hold on, this marginal rate applies only to incomes over $1 million. California has one of the most progressive tax systems in the country, and with incomes below $30,000 facing marginal tax rates of between only 1% and 6%. The same conservative Tax Foundation ranks California as the most progressive tax system in the United States, and even more progressive than any nation in the Organization for Economic Cooperation and Development.  That includes both France or Portugal.

 

Moreover, we should note that while New York state’s top income tax rate is 8.82%, New York City adds 3.876% to it, for a total of almost 12.7%. So California’s rate should not seem so out of line for a wealthy Manhattan resident like Donald J. Trump.

 

There is a proposal in the California State Assembly to boost the corporate income tax rate to 18.84%, up from 8.84%.  If passed, this would make up the lost revenue from Trump’s latest federal tax-cut bill. The proposed rate would be three times the median rate of other states, but this proposal is given very little chance of passage.

 

The president claimed that “everybody that lives in California knows their taxes are too high”. But California readers beg to differ, especially when it comes to property taxes. When they first saw Trump’s remarks, they were inclined to agree that he was talking about property taxes, given his context.

 

But the White House officials still says he was talking about income tax rates….?  If so, why did he mentioned his properties to indicate being knowledgeable about the states taxes?

 

Trump’s continued use of imprecise language makes it difficult to come to a real conclusion. California does have the highest marginal state income tax rate, but it’s within a very progressive system and it is among the lowest property tax burdens.

 

In other tax areas, it is definitely “not the worst”, as Trump suggests.

 

So for that reason, the Fact Checkers at The Post decided to only award Trump with 2 Pinocchio’s.

 

Copyright G.Ater  2018