How will Measure M tax hike impact low-income communities?
A measure on the Los Angeles County ballot to generate billions for road and transit projects would hit the pocketbooks of low-income people at a time when the community already faces an affordability crisis, a panel of transportation experts was told Tuesday.
The panel gathered at University of Southern California's Sol Price School of Public Policy to discuss Measure M, the proposal from the Metropolitan Transportation Authority to add a half-cent sales tax in the county for highway and transit improvements.
Sales taxes are generally considered regressive, meaning they cost poorer people a larger portion of their incomes than wealthier people.
But Professor Mark Phillips, who teaches tax policy at USC, said that assessment can be misleading.
"We think of sales tax as what you pay on everything you buy. But, in fact, you only pay sales tax on a minority of things that you buy," said Phillips.
He said only about a third of incomes in California are spent on taxable goods, as the state doesn't tax food or services. He also stressed that because people's incomes fluctuate over many years, the average lifetime exposure to sales tax is more flat than regressive.
Increases in housing costs have far outdistanced wage hikes and many people are paying 50 percent or more of their incomes on rent, he said. Thirty percent of income is the general rule of thumb for housing expenses.
"So there’s something that’s taking place now that’s made the economic environment for those who are low-income very difficult just for them to live in Los Angeles County," said Goodmon, an opponent of Measure M.
Metro estimates the new half-cent sales tax increase would cost each person $25 more a year, but the independent firm Beacon Economics estimates the increase would be $35 to $65 more per person annually.
Measure M would also extend the existing Measure R half-cent sales tax passed by voters in 2008. If approved in November by two-thirds of county voters, both tax increases would go on forever or until voters act to repeal them.