Democrat tries again to raise taxes on wealthiest Californians

[Kadie]

Democrat tries again to raise taxes on wealthiest Californians
By STEVE LAWRENCE, Associated Press Writer

Sunday, March 6, 2005


(03-06) 13:00 PST SACRAMENTO, (AP) --


Ronald Reagan did it. So did Pete Wilson. Arnold Schwarzenegger probably won't, but Wilma Chan keeps trying.


The Oakland assemblywoman has reintroduced her bill to temporarily raise income taxes paid by California's wealthiest residents to help ease the state's budget woes. It's scheduled for a hearing Monday by the Assembly Revenue and Taxation Committee.


The measure would generate about $2 billion a year through 2009 by raising taxes for singles who make more than $142,000 and couples who take in more than $285,000 a year and by increasing the state's alternate minimum tax for those with big incomes and large deductions.


Reagan signed similar legislation in 1967 when he was governor. So did Wilson. But Republicans have refused to reinstate the higher tax brackets since they expired in 1995, and Chan couldn't muster the two-thirds majorities needed to pass her bill in 2003 and 2004.

more...
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2005/03/06/state/n130057S19.DTL

[realFedUp]

1. gee, there's a solution

especially when the median price of
a home in the SF area is $750,000.

[rinsd]

2. Not a bad idea....

...the highest bracket (9.3%) now starts around $39,000(minus standard deductions).

[AP]

3. CA has most progressive state inc tax code in US, and it's STILL REGRESS-

IVE!!!

CA taxes all income at the same rate, and the top rate (of about 10%) starts (IIRC) at 39K. That's crazy. There's no way a person making 40k has the same marginal valuation of an additional dollar that someone making 500k has, but they're taxes as if they value that dollar equally.

As a result, very wealthy people are able to pay lower effective tax rates than a lot of middle and upper middle class CA'ians.

Although I applaud Chan for trying to get a little more from the very wealthy, I really hate reading about making the AMT capture more individual income.

On some levels, I feel that If CA doesn't believe in the deductions it gives people, then get rid of the deductions or phase out the deductions at higher income levels. But don't try to create incentives for behavior which people comply with and then say that you don't get the benefits even though you engaged in the behaviour. On other levels, I agree with AMT. But what I really disagree with is an AMT on individuals, but not on corporate income. At the federal level, Individuals generally pay five or ten times the effective rate of taxation that coporations pay, but government tells individuals that if you make so much money, you get kicked up another 50%, but they don't tell corporations the same thing.

Another big problem for CA, that is unique is the property tax: valuations are determined by sale price. So corps that never sell their property and wealthy individuals who live in their mansions for decades can get away paying effective rates and absolute property taxes which are miniscule compared to a first time home buyer who makes 50K a year. That is not right. You can't shift so much of the tax burden on to the people who can least afford it and expect society to operate effectively.