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Gary Horton: Don't mess with Texas

Full Speed to Port!

Posted: November 24, 2009 10:24 p.m.
Updated: November 25, 2009 4:55 a.m.
Last week, all-around good guy and Signal business columnist Frank Norton wrote that perhaps it's time we give up on our Golden State for the greener pasture "low tax" states of Texas, Nevada and locales further afield.

Pricked by Art Laffer's book, "Rich States, Poor States," Norton's contracted low-tax fever and now he's itching and scratching to move out on us.

But perhaps neither Norton nor we should rush the exits quite so fast.

"The grass always looks greener on the other side," and we observe that many folks ditching California return home short years later, mucho happy for the chance to get back in.

We're not the "Golden State" for nothing. And besides, we don't want Norton to go.

Still, he says lower income and corporate taxes equal more business and better living.

Yet one Art Laffer book does not tell a complete story.

Norton apparently missed The Economist a few months back with its own Texas versus California comparison.

The Economist observed that while both states have virtues and challenges, Texas runs risks of stagnation and mediocrity.

There's an anchor on Texas' no-income tax-economic rocket, and that anchor is illiteracy.

Texas is the nation's most illiterate state, a place where 11 percent of the populace can't read.

Low-funded, failing education drags down long-term business growth with low worker productivity and high social costs.

So while Texas has no personal income tax, it's failing to educate its people. While Texas has no corporate income tax, it boasts the highest illiteracy in the nation.

But wait - there's more to know before you buy a 10-gallon hat and pack up the U-Haul.

Norton only mentioned personal and corporate taxes.

While Texans skate on income taxes, homeowners there pay the highest property tax rates in the nation.

Texas assessments average 3.5 times higher than California.

Think your property tax bill in Santa Clarita is a chore? In Texas, your property taxes run as high as 2.5 percent of assessed value, and you're reassessed every year.

Don't mess with Texas - they can raise your property taxes up to 10 percent a year.

So no free lunches. You're taxed one way or another, and if that doesn't work, you're taxed with poor social services.

So are we really itching to be hitching for Texas just to be lassoed into the nation's highest property taxes, surrounded by illiterates?

Then there's Nevada.

Sure, it's a "no income tax" state, but you'll be getting a tax pass from a vice-funded state built on the backs of grannies bent over slot machines and deadbeat dads gambling away their kid's lunch money.

Sure, we could move to Nevada and savor 115-degree summers, freezing winters, city streets littered with prostitutes and sex fliers pasted to every telephone pole, phone booth and newspaper machine on the street.

We could all raise our kids in that homey heaven and one day they'll be able buy their own trailer like most of their newfound friends.

So maybe there's still no place like home.

Without doubt, California has its own incredibly irritating dysfunctions.

Still, we're the world's seventh-largest economy and the Pacific Rim gateway.

And we do advanced education and innovation like nowhere else.

The Academic Ranking of World Universities has our University of California system absolutely dominating its top 20 spots, with UC Berkeley placing third best in the world.

Where's Texas on this list?

Way down on slot 88, just above Afghanistan College.

And Nevada? Don't bother. You get what you pay for, and in a no-tax state you get your education in casinos, not in colleges.

Sure, everyone wants lower taxes. But what makes business succeed in our global economy is innovation derived from education.

Our crown jewels are the UC system and the Cal State system.

While Texas is remembered for the Alamo, the world remembers California for its universities.

It was education, not low taxes, that powered California to the top.

So while Norton frets taxes, he would be better fretting over our state's golden goose - education.

Because lately, California is raiding college coffers to pay prison bills.

Still, in the widest picture, Norton is right.

California's tax system is broken, dysfunctionally dependent on the wildly cyclical swings of income taxes.

While more prudent states enjoy steadier revenue derived from moderate income taxes combined with moderate property taxes, we're still stuck with the mistakes from Proposition 13.

Remember, while you and I get reassessed every time we move, big commercial landholders hardly ever sell and they pay their taxes based on decades-old valuations.

In California, personal and corporate incomes are unfairly taxed, subsidizing large apartment, commercial and farming landholders to the tune of billions and billions.

Before Norton leaves the Golden State, pushed out by taxes, he could repay this great state for his fine life here by launching a Reform Prop. 13 campaign.

With fair property taxes, we could lower our onerous income tax while steadying the state's finances.

And then maybe Norton wouldn't want to leave.

We never did want to see him go.

Gary Horton lives in Valencia. His column reflects his own views and not necessarily those of The Signal. "Full Speed to Port!" appears Wednesdays in The Signal.


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