Unions Begin Campaign to Extend Prop. 30 Tax Hike

No matter how high taxes are increased, it’s never enough for public officials and bureaucrats who live off taxpayer funded paychecks.  According to these people, there is always one more dollar that is needed to make government “whole.”  And being made “whole” in California means maintaining the highest paid government employees in all 50 states.

So it should come as no surprise that the tax-and-spend interests have already begun banging the drum and shaking the tambourine on behalf of extending Proposition 30, the “temporary” tax increase approved by voters in 2012.  Proposition 30 imposed the highest income tax rate in America.  It also bumped up the sales tax – a tax that hits lower income families particularly hard — to tops in the nation.

The sales tax component of Proposition 30 is set to expire at the end of 2016 and the higher income tax rate will sunset in 2018, so those who feed off taxes are starting to panic.

During the last year, some lawmakers resisted putting Proposition 2 on the November ballot because it required the establishment of a rainy day fund to tide government over through lean times.   These Sacramento politicians were concerned that if it passed, and the state had money in the bank, it would be more difficult to make the case that the Proposition 30 taxes should be made permanent.

State schools chief Tom Torlakson came out for the extension of Proposition 30 long ago, and we are now seeing the head of one of the state’s two major teachers unions, the California Federation of Teachers, calling for its continuation while maintaining it is not enough.

Of course, it’s never enough.

Writing in the Sacramento Bee, teachers union president Joshua Pechthalt attempts to make the case that the temporary tax hike should be extended.  He justifies his position by claiming California is thriving and upper income individuals, unfazed by the higher taxes, are happy to stay and pay.

Not so fast.

While Pechthalt believes things are fine now that our economy is supposedly in a “recovery,” working families aren’t seeing it. Our unemployment rate is the third highest in the nation and the US Census puts our supplemental poverty ranking at worst in the country.

Pechthalt’s evidence that Proposition 30 has not impacted high income individuals seems to be that wealthier communities, like Beverly Hills, have not become ghost towns.

Objective real estate reports from Nevada and other low or no income tax states make it clear that California has indeed lost many upper income taxpayers because of Proposition 30.  The Wall Street Journal reported that “many Californians have arrived [in Nevada] in the wake of Proposition 30.  Passed at the end of 2012, the measure hiked personal income and sales taxes.”  The San Francisco Chronicle published a piece in January of this year entitled “State leaders closely watch migrating millionaires” noting that “whether you sympathize or not, millionaires’ migrating out of California has serious consequences to the state’s bottom line and is something state leaders are watching closely.”

The other problem with the union leader’s thesis is that we simply don’t know how many of California’s high earners decided to absorb the confiscatory tax rates for a couple of years knowing that they would eventually expire.  If made permanent, the existing millionaire out-migration could very well turn into a torrent.

So, instead of asking whether we should make Proposition 30’s temporary tax hikes permanent, a better question would be whether those tax hikes were needed at all or, better yet, did they inflict more harm than good?  There is compelling evidence that California would today be grabbing a bigger slice of the national economic recovery had it not passed Proposition 30 at all.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

2 replies
  1. Avatar
    Richard Rider says:

    Of course I concur that the Prop 30 taxes should be temporary — and be allowed to expire. But I’m fully confident that the Democrats WILL try to extend it.

    Without the 2/3 majorities in the state legislatures, Democrats (well, the public employee labor unions) will put it on the November, 2016 ballot — when legions of the clueless make their quadrennial trek to the polls. It takes only a simple majority to pass.

    I suspect one “refinement” will be the dropping of the Prop 30 quarter percent sales tax (which will expire before the vote) — seeking only to continue to stick it to the rich with the 13.3% state income tax. I would expect that “reform will further enhance the prospects of passage.

    Here’s my periodic reminder to Californians regarding the nature of our rapacious state income tax:

    Prior to Prop 30 passing in Nov. 2012, CA already had the 3rd worst state income tax rate in the nation. Our 9.3% tax bracket started at $48,942 for people filing as individuals. 10.3% started at $1 million.

    Now our “millionaires’ tax” rate is 13.3% – including capital gains (CA total CG rate now the 2nd highest in the world!). 10+% taxes now start at $250K.

    CA now has by far the nation’s highest state income tax rate. We are 21% higher than 2nd place Hawaii, 34% higher than Oregon, 48% higher than the next 2 states, and a heck of a lot higher than all the rest – including 7 states with zero state income tax – and 2 more that tax only dividends and interest income.

    CA is so bad, we also have the 2nd highest state income tax bracket. AND the 3rd. Plus the 5th and 7th.
    http://taxfoundation.org/sites/taxfoundation.org/files/docs/ff2013.pdf Table #12


  2. Avatar
    Douglas47 says:

    “when legions of the clueless make their quadrennial trek to the polls.”

    Classic elitism. The great unwashed masses who do not share the biases of Richard Ryder, yet have the temerity to think their vote counts as much as his.

    Here’s…MY……periodic reminder to Californians regarding the nature of our rapacious state income tax:

    “CA now has by far the nation’s highest state income tax rate.”
    “CA is so bad, we also have the 2nd highest state income tax bracket. AND the 3rd. Plus the 5th and 7th.”

    Buuuuuuuut, …….NOT the highest tax burden. The last time taxfoundation.org did a ranking, CA was rated 6th highest overall in state and local tax burden per capita. I believe that data was from when Gov. Schwarzenegger’s temporary taxes (higher than prop 30 taxes) were still in effect.

    “Tax Freedom Day” for CA in 2012 was April 11. The 11th ranked state, not the 1st. (That would be Connecticut, who didn’t pay off their taxes until May 5th. The earliest freedom day award goes to Tennessee, where residents paid off their taxes by March 31, eleven days sooner than we in CA.

    Before you contemplate moving to “low tax” Tennessee, however, keep in mind, if you earn less than $50,000 a year, you will pay HIGHER state and local taxes there than in CA.

    Up to the fourth quintile of income, CA state and local tax burden is lower than the national average.

    These things are true because, although our income tax rates are higher, the deductions and exclusions are also higher. A family of three with over $50,000 income often pays NO income tax.
    Our sales tax “rates” are arguably the highest, but we do not tax groceries or services, as some other states do.

    On the other hand, as I recall Richard saying, if you are in the upper 5% of income earners in California, you will pay dearly. (Comparative to the highest earners in other states)

    California is apparently an expensive place to be a millionaire.

    Still a bargain, I say.

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