California is under court order (Serrano vs. Priest) to revise the system of financing public elementary and secondary education. Initial analysis had predicted that a shift to state-wide taxation would result in greater educational resources at a lower tax cost for lower income families and fewer resources at a higher tax cost for wealthier families. However, that analysis overlooked the role of nonresidential property values in the tax base. This paper presents simulation results for California school districts of three alternatives: state-wide property taxation, district power equalizing property taxation, and state-wide income taxation for education. The results show that any alternative for taxation has the result of most families being “better off.” Property tax proposals shift the costs of education to industrial and commercial land uses, and the income tax alternative shifts the costs among families.
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