Can the business community afford lower taxes, particularly state and local taxes? The answer is yes only if it and the public at large are willing to give up many free services and forego the often hefty subsidies they now enjoy in the form of below-cost charges for the use of many public facilities. While consumption of local and state government services has doubled in the past decade, tax revenues have not. Where is the money coming from? Federal subsidies, also derived from taxes, are one answer. Another, outlined here, is to make the public, including business, pay for services it gets from government.
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References
1.
StockfischJ. A., “Fees and Service Charges as a Source of City Revenues: A Case Study of Los Angeles,”The National Tax Journal (June 1959), pp. 97–121.
2.
These estimates are conservative. For example, no allowance was made for the fact that those who pay property taxes in Los Angeles pay $7,000,000 to the Metropolitan Water District. Since this tax load benefits water users, the Water Department should raise its prices and contribute an equal amount to the City to lower its property tax rate.
3.
See HirshleiferJackDe HavenJames C.MillimanJerome W., Water Supply: Economics, Technology, and Policy (Chicago: University of Chicago Press, 1960), pp. 32–52, for a discussion of the use of pricing principles in the management of water resources; and pp. 289–351 for a critical evaluation of California policies, with special reference to the Feather River project.
4.
StockfischJ. A., A Study of California's Tax Treatment of Manufacturing Industry (State of California Printing Division: Sacramento, 1961).
5.
The exception is Bureau of Light and Power property owned outside Los Angeles County on which was paid, in 1957, $776,000 property taxes. It should be noted that a move is underway in California to pass legislation, by a constitutional amendment, which would eliminate the taxes the Los Angeles Bureau of Power presently pays to other counties. Such a step would be completely opposite to the one recommended here.
6.
The Los Angeles Bureau of Light and Power, in 1957, however, did contribute $3,607,000 to the City. If it were run like a private utility, however, it could earn an estimated $40,000,000 which would include a going rate of profit and an amount to cover the Federal and State corporate income taxes which a comparable private firm would have to pay. The other city enterprises could perform similarly.
