In our modern, mobile society, many of our traditional political and economic borders, such as county lines, have little or no function. Assuming the tax rates, fees and rules were the same, what difference would it make to an operating entity, let’s say a manufacturing company, if the San Benito County line extended half way into Silicon Valley?
The communities surrounding Silicon Valley pour in the workers regardless of county lines and the employers care little or nothing about the source of the labor. Since bedroom communities supplying the labor absorb the enormous cost of that commuting population, shouldn’t they reap some of the benefits generated by their spending? It’s only fair that a portion of the locally returned sales taxes should be distributed statewide based on population, rather than where the taxes were generated.
This change would not increase taxes one penny and since the state’s sales tax collection system is already in place, the additional administrative costs would be almost zero. It would not be fair to redistribute all the locally returned sales taxes, so I propose redistributing half of that. Half of 1 percent local portion of the state sales tax would stay in the location where they were generated, while the other half would be distributed to the counties based on population.
Using this system the tax-generating location would receive two bites at the tax apple, the first 0.5 percent based on location and the rest a pro rata statewide share based on population. This differs from other wealth redistribution plans in one critical way – these are already public funds. This plan would allow the poorer counties to improve critical public services and infrastructure, rather than the have the richer counties use the extra funds for fluff, as they so often do. Too many plans propose the redistribution of private wealth while issues related to public wealth are ignored.
A related problem is that lopsided public wealth drives up the costs in the poor areas that can least afford it. One cannot blame a police officer, firefighter, or teacher for commuting 45 minutes to gain a huge increase in salary and related retirement benefits. Poor areas then have to pay more than they can afford to hire or retain qualified employees. Their only option for increasing pay is to reduce staff size dramatically, resulting in fewer, but higher-paid workers. The fewer workers then provide only limited service and increase overtime. The result is even higher unit costs.
Limited services, such as closing public offices one day a week, make the area less attractive for both residents and businesses, further reducing public revenue, and the vicious cycle continues. The obvious answer is to redistribute public wealth to the have-nots; they need it most and can make the best use of it.
Federal and state investments, such as major colleges, public institutions, highways and transportation hubs, generate much of that wealth in any case. Why should locations such as Santa Cruz and Monterey profit locally from the enormous economic impact of state and federal educational institutions that are owned, and paid for, by all of us?
The results of the current policies are to centralize both political and economic power. Rural areas are never going to have the votes to get fair treatment at the state or Federal level, losing economic influence just makes things worse.
