As States Move To Tax Wealth, Where's California?

by: Robert Cruickshank

Thu Apr 09, 2009 at 15:05:33 PM PDT

Millionaires pay a 1% surcharge - effectively a 10.3% rate - as the result of Prop 63 in 2004, which Prop 1E on the May 19 ballot would redirect away from mental health funding for the general fund.

The lack of middle brackets is one reason (among many) for the overall regressivity of taxation in California. New York state had a similar problem, which is resolved to a degree by the state's plan to create tax brackets at the $300K and $500K level for married couples. It's estimated to bring in at least $4 billion a year - won't totally close NY's $10 billion gap, but it's a huge help.

Following New York's lead, several other states are considering wealth taxes, as Progressive States Network notes (list is below the fold).

Would Californians support it? While the media might reflexively pander to anti-tax sentiment, recent national polling suggests this would be a popular move:

Almost three-quarters of Americans [74%] think it is a good idea to raise taxes on people making more than $250,000 per year, according to the latest CBS News/New York Times poll.

There is the not-so-small matter of the conservative veto - the 2/3 requirement to pass a tax. It strikes me as unlikely that Republicans will vote for it this year (surprise surprise). But that doesn't mean it's not worth supporting.

Republicans have used anti-tax rhetoric to split Democrats and maintain their control on the governor's office and sustain the conservative veto for the last 30 years. It's time we took their tax policies and shoved it down their fucking throats. What better way to show how the 2/3 rule works to protect the wealthy and screw everyone else, or to show who Republicans truly care about, than to bring a wealth tax bill to the floor of both houses for a vote?

The public does not support Republican tax policies, which are designed to let the wealthy escape paying their fair share and then force everyone else to either make up the difference themselves, or to sacrifice the very public services they need to remain prosperous and content.

It's time for progressive Democrats to step up and push hard to raise tax rates on those making more than $250,000. President Obama is leading the way and the public has shown they will follow. What's Sacramento waiting for?

•  Wisconsin: Wisconsin's governor has proposed a new tax bracket for individuals making more than $225,000 a year or couples making $300,000.

• Connecticut: The Assembly's Finance Committee approved adding four new income tax brackets, with rates ranging from 6% to 7.95%, for married Connecticut residents with incomes over $250,000 annually (and single taxpayers with incomes above $132,500).

• New Jersey:  New Jersey is considering a one year increase in the tax on the highest end income earners to 10.25% from 8.97% and suspending the property tax deduction for better-off New Jersey residents. The proposal would raise an estimated $620 million to help close a $7 billion shortfall.

• Iowa:  Iowa legislators are discussing a far-ranging proposal to reform and simplify their income tax code, including eliminating state income tax deductions for federal income taxes paid, which would increase income taxes paid by high-income taxpayers while the rest of the reforms would lower tax rates for low- and moderate-income taxpayers.  House Speaker Pat Murphy recently voiced his support for the changes and the Senate seems poised to act as well.

• Delaware: Governor Jack Merkell has put forward a broad-ranging budget plan that would take the constructive step of raising Delaware's top income tax rate from 5.95% to 6.95% for residents making more than $60,000 per year, the first income tax increase since 1974.

• Oregon: Among the proposals to address budget shortfalls before the House Revenue Committee is one to increase income tax brackets for individuals making $125,000 a year.

• Washington: In a state that doesn't have an income tax, Senate Majority Leader Lisa Brown has raised the possibility of an income tax on high-income residents to close the state budget gap, potentially taking the issue to the ballot.