In this podcast, I discuss the microeconomic incentives and the tax burden and economic incidence of the upcoming bailout of the California FAIR Plan. This plan will be insolvent soon and the California Tax Payers will be asked to pay the bill. Yes, California has a progressive tax system but middle class renters will be paying some the tax bill to compensate those whose homes have burned down in LA. What do middle class renters in Northern California owe to home owners in the Palisades? What efficiency and equity issues arise here?
For details about the California FAIR Plan (a public subsidized insurance plan) read this.
A free lunch for home owners in risky places in California? Who pays for “this lunch”?
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