Congratulations, California lawmakers. Because of you, we're now the least tax friendly state in the country.
Or shall we say, California is the most hostile state with taxes.
In August Kiplinger released its ranking of the best and worst states for taxes. Not surprisingly, the three least tax-friendly states are blue states, meaning they tend to vote Democratic. The least taxpayer-friendly states and their governors are: 1). California, Democrat Jerry Brown; 2). Hawaii, Democrat Gov. David Ige; 3). Connecticut; Democrat Gov. Dannel Malloy.
The five states that are listed by Kiplinger as the friendliest to taxpayers are (not surprisingly mostly red states): 1). Wyoming, Republican Gov. Mark Mead; 2). Alaska, Independent Gov. Bill Walker; 3). Florida, Republican Gov. Rick Scott; 4). Nevada, Republican Gov. Brian Sandoval; and 5). Arizona; Republican Gov. Doug Ducey.
If you're rich, California is especially hostile to you and is about to get worse. According to state data, the top one percent of Californians account for nearly half of the state's income taxes, which in turn accounts for two thirds of general fund taxes. Capital gains have represented approximately 10 percent of California's general fund revenues.
California's reliance on the wealthiest Californians is not only bad tax policy, it is a weak way to prepare for the predicted coming recession.
Have no fear, the tax-hungry teacher and other labor unions and their Democrat pimps in Sacramento have worked to put on the ballot Prop. 55. It is a 12-year extension of Proposition 30, a "temporary" tax increase originally passed by voters in 2012. The 2012 ballot measure was a "soak the rich" act to raise income taxes on the wealthiest Californians for four years and also put into place a temporary one-quarter cent increase on the state's sales tax.
Brown lied, of course, when he said Proposition 30 was only going to be temporary. With the veracity of a snake oil salesman, Brown says now says it's needed to fund education and healthcare, which resonates well in government-dependent liberal cities where the real cluster of blue voters live. The truth is, the state budget is now running a surplus and the governor and Legislature have been stashing money in a "rainy day" reserve. The Legislative Analyst says Proposition 55 is not needed.
The ballot measure argues that Proposition 55 prevents billions in budget cuts without raising taxes by ensuring the wealthiest Californians continue to pay their share. Notice the word "fair" is not preceding "share." What is fair about one percent of Californians paying nearly 50 percent of all income taxes.
By definition of Prop. 55, you are "wealthy" if you make over $250,000 per year, or at least a joint income filing of at least $500,000 per year. The measure would impact 1.5 percent of Californians with a top marginal rate of13.3 percent - the highest in the nation. Remember, in California's lopsided tax system, the top one percent of Californians is already paying half of all income taxes.
No doubt, with California being a solidly blue state and heavily populated with Bernie Sanders millennials who believe in such concepts as "free" college at the expense of everybody else, Prop. 55 will pass. In June the governor admitted, and I quote, "There's a reason why we tax the 1% -- it's because that's a tax people have shown they are willing to vote for."
How noble of you, voters of California who are so quick to throw the rich under the bus while walking away whistling and quietly saying, "Glad it wasn't me."
Prop. 55 is nothing but legalized theft.
The California Chamber of Commerce is against Prop. 55. No wonder. Jon Coupal of the Howard Jarvis Taxpayers Association sees the measure as a tax on small business owners, sole proprietors and job creators. It's not just a tax on the wealthy but affects small businesses, which account for 80 percent of the state's economy.
Some of the wealthiest Californians who decided to "suck it up" for four years under Prop. 30's higher taxes may decide to move permanently to other states with passage of the 12-year Prop. 30. Coupal believes there has been "gross miscalculation" among Prop. 55 proponents about how the wealthy will respond to passage, saying, "already the accelerated flight of capital out of the state of California will reach a crescendo if this thing passes."
With top marginal rates at 13.3 percent, moving to Nevada, Texas and Florida - where they are 0 percent - is something rich Californians will have to seriously consider for considerable tax savings. Especially since at the end of 12 years the tax will just be extended again.
Check out the list of supporters of Prop. 55 and you'll notice that there is not a single Republican among them. They are all Democrats - people like Schools Superintendent Tom Torlakson and Lt. Gov. Gavin Newsome - and there are a number of labor unions behind it as well.
It's clear that the education problems in California are not lack of money but using that money effectively and reforming the system to cut out wasteful programs. Programs such as the Willie Brown reduced workload for teachers aged 55. They work less but yet the District has to contribution to their state retirement and medical and dental benefits equal to what a district contributes when a teacher works full time. When you consider that legislative attempts to empower schools to fire unworthy individuals as teachers have been slayed by the powerful unions, no wonder we can't get Xanding charter schools.
Prop. 55 is just a horrible idea that will have horrible consequences. California already has draconian tax burdens and causing more jobs to leave the state will be devastating to places like the Central Valley, which is already suffering with higher unemployment and poverty rates.
How do you feel? Let Jeff know by emailing him at firstname.lastname@example.org.