Do you hear those wedding bells?
Everyone who cared about them – and there are so many of us – knew that they would be a hundred times better and stronger together. And this was even during their Taming of the Shrew-like courtship, when it often seemed like they were both trying to kill each other. But who is Petruchio here, and who is Kate? Well, let’s look at the details of the nuptials. No, let’s ditch this distasteful metaphor.
Sorry, it’s just the euphoria, the euphoria of knowing that one big obstacle to restoring the greatness that used to be California is suddenly out of the way. I was – and my co-Occupiers are – big fans of the CFT’s’ Millionaires Tax initiative, finding it much more progressive than Jerry Brown’s revenue plan. But I also knew that Jerry’s plan wasn’t so bad, that it would sure be better than NO revenue measure passing, and nothing passing is exactly what would have happened if both measures went onto the ballot. So I was also a big advocate for achieving a compromise between the two measures – and now that has happened, almost exactly as I’d envisioned! Let’s look at the details:
Sales Tax?
- Jerry Brown’s original plan included a 1/2% sales tax, to last 5 years (till the end of 2017.)
- Our Millionaires Tax plan had no sales tax, as we consider that unfair to the middle class and poor who bear the brunt of sales taxes.
- The new deal cuts Brown’s tax in half – exactly what I’d suggested – for a 1/4% sales tax. That’s not SO bad. An extra nickel on a $20 purchase; an extra 25 cents when you shell out $100. I think we can handle that, for a few years, to get California’s house back in order. Don’t you?
Income Tax Hike on the Wealthy?
- The way WE saw it, the folks who have benefited so spectacularly these last couple decades can afford to pay some more in income taxes like they did in the booming 50s, 60s and 70s, when California had an education system and infrastructure that was the envy of the nation – and the rest of us struggling folks shouldn’t have to pay more at all. So we proposed our “Millionaires Tax” which would have raised taxes on income over a million by 3%, and on income over two million by 5%. No tax hikes on anyone else. Naturally this was wildly popular with most people; and even some millionaires didn’t mind much.
- Governor Brown, always an advocate for “paddling a little to the left, a little to the right,” and “spreading the pain evenly,” as well as not wanting to alienate the all-important business community, preferred a sales tax along with a tax hike on income over $250,000.
- In this new compromise version, marginal personal income tax rates for individuals would be raised as follows: $250,000-300,000 by 1% (to 10.3%) … $300,000-$500,000 by 2% … and $500,000+ by 3%. That’s somewhat more progressive than what Brown originally had. One of Brown’s criticisms of us is the volatility of depending on millionaires, whose numbers rise and fall with the economy; this is probably better.
And for how long?
- Brown’s original tax hike and sales tax were intended to last only five years.
- Our Millionaires Tax was, like diamonds, intended to last forever. Or at least until some future legislature or citizenry changed its mind. We were kind of thinking, we don’t want to have to go through this all over again any time soon.
- We convinced the Governor to extend his tax hike on the wealthy from five to eight years (till the end of 2019) – the small sales tax on the rest of us will remain for only five.
Allocation of the New Revenue
- The Governor, with his overriding focus on balancing California’s budget and financial health, planned to direct the new revenue toward paying down our debt, so that NO NEW “TRIGGER” CUTS will be necessary to education etc.
- We had said “to hell with that, we want to REVERSE the cuts that have already happened, and reverse them now!” 60% of the money we would have raised would have gone directly to K-14, CSU and UC, with the rest to local governments to restore cuts, BYPASSING Sacramento.
- Well, Brown won on this, so maybe he is Petruccio and we are Kate. But many serious economists – ones I trust – say he is right about prioritizing our fiscal health first – restoring cuts can come after – and we all know that “ballot box budgeting” as this state’s voters have engaged in for decades just ties the process up in even more knots. Hopefully we can add an oil extraction fee into the mix soon, to reverse education cuts.
“Fairness”
Everyone, along with wanting great services and not wanting to pay more (the Two Santa Claus Theory) at least wants things to seem “FAIR.” And there are those of us who think it’s fair for those who have benefited most in recent decades to pay to get us out of this ravine, and not fair to ask those who are suffering to pay more. Then there are those (like our commenter TJLocalSA, and Governor Brown himself) who sincerely think that it’s only fair for EVERYBODY to chip in at least a little.
Those two groups of people need to find their common ground, because don’t forget – there’s a third, HUGE group of people off to the right, in a sort of bubble, who religiously believe that the only problem the state and nation have is over-spending and over-borrowing, and what we really need is NOT new revenue, but EVEN MORE CUTS! Come on, we outnumber them, but we have to work together.
Supporters
- The Millionaires Tax was put together by the California Federation of Teachers (CFT) which is the more progressive of the two big teachers’ unions, along with the Courage Campaign. It was quickly joined by the feisty and effective CNA (nurses’ union), and I got Occupy Orange County to sign on – in fact it looks like most of the Occupy movement in California has gotten behind it. Duh. 1% vs 99% and all!
- Governor Brown’s measure won the support of the SEIU and the California Teachers’ Association (although many of their members preferred our plan instead.) It also got the support of a lot of business interests, who hate taxes but want a healthy economy to work in, and feared our measure more than Jerry’s, and it won the promise of the Chamber of Commerce that they would attack us and not Jerry.
- Now, with the compromise, I believe we still have all those unions. Who are we going to lose on the right and the left? Hopefully not too much, it’s yet to be seen? Will businesses ditch this more progressive version, and attack it? Will I lose some of my Occupy friends’ support, now that it’s no longer exclusively a “Millionaires Tax,” and all of us will have to pay a little sales tax? Probably yes, oh well…
Other, remaining Questions
- How much revenue can be expected with this new improved Brown plan? The old Brown plan was estimated to bring in $4.8 to $6.9 billion a year; the Millionaires Tax woulda done better at $6 to $9.5 billion. Will the new plan get more, or less, or the same? We wait with bated breath for the report from the Legislative Analyst’s Office on this burning question.
- And finally, how will the new thing poll? The “Millionaires Tax” polled from 60 to 70%, Jerry’s was at 62% and then sunk down to a little above 50%. People liked the sound of a “Millionaires Tax,” but it’s not really going to be accurate to call it that any more. But still the combining of the two will remove confusion from voters’ minds. We shall see…
What To Do Now
I and some Occupy friends of mine, and hundreds of other UNPAID VOLUNTEERS across the state, worked our asses off this past month getting thousands of signatures for the Millionaires Tax. Those signatures will now go in the trash. Did we waste our time? DOUBLE HELL NO! The demonstration of popular support and volunteer enthusiasm dragged Jerry to the table to improve his plan.
Now we’re waiting for early April for the new improved measure to qualify and be ready for signature-gathering. NOW the window will be very tight, to get the 807,615 signatures we’ll need by early May. But now we have MONEY behind us – listen to me, Occupiers – now we’ll get over $2 per signature – the highest pay out there for sig-gathering. No longer will we need to sacrifice our days to do the right thing, for free!
Good Golly Miss Munger!
Meanwhile, STILL mucking up the works is a THIRD SECOND revenue measure aiming for the November ballot, the “Molly Munger” initiative, backed by the state PTA and the eponymous billionaire-heiress civil rights attorney, which would raise EVERYONE’s income tax a little and put the money directly into reversing education cuts. Molly’s measure has consistently polled badly, as most people don’t feel like paying more income taxes, but she continues to pour millions of her own money into qualifying it, and its presence on the ballot will muddy the waters and make it harder for us.
When will she get out? How can we force her out? She is endlessly wealthy and stubborn. She’ll be able to qualify it with paid signature gatherers, and then we’ll have to put our money into a “YES on this, NO on that” campaign but it will still be confusing and make things more difficult.
Hey … wait a second.
WE got concessions from Jerry Brown by standing firm, WE got him to make his plan a lot more progressive, didn’t we? What if Molly … hm … what if Molly agrees to get out, in return for a percentage of the new revenue going directly to reversing some education cuts?
Hey. WE could get behind that. You go, girl! (Time’s running out though…)
“to restoring the greatness that used to be California is suddenly out of the way”…….. Hmmmmm
You such an idiot Gröfaz!
California was destroyed by then hippie Brown.
And now he wants to restore it?
So called millionaire tax increase starts at $45,000 and sales tax start at panhandler level that is not millionaire tax.
I just hope that people are not so stupid this time as they were when they elected the idiot.
You the idiot, Stanislav. The so-called Millionaires Tax, which we’rr not calling that anymore, starts now at $250,000. Learn to read!
“So called millionaire tax increase starts at $45,000″….can you explain? It starts at $45K of what? Income? Tax? or…? Sorry if I am missing something obvious.
It’s just Stanley babbling, pay him no mind.
“Sorry if I am missing something obvious.”…….. Hmmmm
Obviously you do live up to the level of communists, stupid as door knob, I knew for 22 years from the old CSSR.
“Individual taxpayers earning more than $45,000 a year and couples filing jointly with income of $90,000 or more pay the state’s top rate of 9.3 percent.”……. read it you idiots!
http://www.californiascapitol.com/blog/2011/12/not-just-millionaires-affected-by-governors-tax-increase-plan/
You are almost correct on the $45K and $90K (it is actually $3K & $6K higher in just 2011 before annual increases, but not worth arguing against) being the point to where currently we start paying the current highest rate of 9.3% (there is a higher rate with the 1% mental health surcharge on $1MM+ but it is not a bracket)…BUT someone earning between those figures and the $250K for Single and $500K for Married would NOT see an increase to their income tax so I don’t see how your comment “So called millionaire tax increase starts at $45,000 and sales tax start at panhandler level that is not millionaire tax” would be correct.
You can give me the math if you please…maybe use $200K of taxable income for a married couple. That family would not see their income tax go up at all…please prove me wrong. The new tax would only be on income ABOVE $500K…if you read the same link you provided you would see that.
The link you provided does not indicate that someone who makes between the current high bracket and the proposed new brackets would pay a dollar more of income tax…sales tax, yes, but not income tax. Not sure who the idiot is here. The tax does not start with a single person earning $46K for example…not a dollar more of income tax.
I am not going to be splitting a bean with you!
You are an idiot!
“split a bean”? The $45K versus $49K is splitting a bean and I am fine with letting that go as you just copied and pasted from another source…OK.
However, the fact of the matter remains that someone who does not make over $250K would not see their income tax go up due to this proposal. Sheesh…
If you believe that someone who makes the the current high bracket but under $250K will see their tax go up under the proposal being discussed, which is what you seem to be implying, you are wrong! If that is not what you are implying, obviously something is lost in my interpretation of your post.
Point is that the ballot is misleading (as always bolsheviks do) because a voter believes that it will effect only Millionaires when in fact the so-called Millionaires Tax will effect individual taxpayers earning more than $45,000 a year and couples filing jointly with income of $90,000 or more pay the state’s top rate of 9.3 percent.
So you and Gröfaz are both liars.
TJ, Stanislav is apparently under the impression that the revised initiative will necessarily still be called “The Millionaires Tax.” Honestly, he could be giving Orly Taitz demagoguery lessons.
“…when in fact the so-called Millionaires Tax will effect individual taxpayers earning more than $45,000 a year and couples filing jointly with income of $90,000 or more pay the state’s top rate of 9.3 percent.”…..Hmmmm
Not sure to think if you are playing word games by saying that the tax will effect those who earn more than $45K/$90K or if you just don’t get it. Yes, it will impact those who have taxable income more than 45/90 but ONLY once they get above $250K/$500K. Then, each dollar above that will be taxed at the higher rate- it will NOT impact the dollars that are earned in the lower bracket (i.e below $250K/$500K) due to tax bracket system. Between $45K and $250K for singles and $90K and $500K there is NO tax increase. The word game here is that someone who earns $1MM per year is above $45K so he may be right albeit deceivingly so….I guess at least you did not say “ALL taxpayers above $45K…”.
Your (From the Exile) posts are very misleading or you are misinformed…one or the other but only you know. Your post implies that if a single person makes for example $100K (i.e. above your $45K) that there tax will go up under this proposal when it will not.
If the bill is still dubbed the “Millionaire’s Tax” then yes, it too, would be misleading. Hopefully those who support it will not purposely mislead others. Hopefully you too will not purposely mislead others by implying that those who make under $250K (single; $500K for married) would see their income taxes go up…sales tax, yes, but not income tax.
Since Stan I. Slav is apparently back for good after huffing off in the wake of Willis, I decided to look up Gröfaz so you, the Reader, need not. It was a derogatory abbreviation for “Größter Feldherr aller Zeiten,” originally a Nazi propaganda phrase for Adolf Hitler meaning “Greatest field commander of all time,” later used by Nazi soldiers and commanders to derogate Hitler behind his back before that sort of thing became a career-killer.
So congratulations to our pal Stan for, as usual, classin’ up the jernt.
What took you so long?
I should add that I am out since I have set straight some of your crapola!
I’ll be back!
Why so long? I had believed you when you said that you would never come back here.
It is a step in the right direction I believe IF we have to have a tax increase. Everyone contributes- some more than others obviously. Top income tax rate in CA would be 13.3% if it passes when including the 1% true millionaire’s tax (Mental Health Surcharge).
Someone who spends $10K in taxable purchases will have $25K of additional taxes per year prior to any “pass through” of possible increase of income taxes which would likely be minimal.
A married couple with taxable income of $600K would see a $1K increase if my math and understanding is correct (1% of the amount over $500K) plus their sales tax increase.
A single person making $2MM would see an increase of $50K plus their sales tax increase. For all of the sports fans out there wanting the Lakers, Clippers, 49ers, Chargers, Angels, Dodgers, etc… to pull the best talent, it is one more hurdle. Not the end all, but it is a consideration for someone thinking of signing a contract in CA. Not sure how much the newly rich benefited from the past, but…not the majorities concern.
“It is a step in the right direction I believe IF we have to have a tax increase.”……. Hmmmmm
The minute ago it was “Stanley babbling” and now it is “a step in the right direction”?
Same like Gröfaz, you know a shit about taxes, economy and money an here you are making moronic opinions jut because you are bored due to Palin refusal to pay for your Viagra…. Huh?
I never said you were “babbling”…that was someone else so if you want to point your comment in a different direction you may. I do think it is a better proposal than the Millionaire’s Tax that Vern originally supported. I probably am still not a supporter of this one, but it is at least moving towards sharing the pain of the tax increases. Can’t say I really agree with the increases though…I see the impact of taxes, and the bureaucracy that comes along with it, to all types of businesses, residents, and foreigners daily, although I also experience the benefits of taxes each day through public services.
My professional experience and others’ testimonials would indicate that your comment about my knowledge is off base….if it makes you feel better about your own knowledge to downgrade others, so be it. If you would like to dispute any of my calculations to show your superior intellect, you should do so. I reserve the right to get smarter every day, and I am humble enough to know that I, as so many others, make mistakes- please show me how your tax increases start at the low end of the highest bracket (your $45K and $90K). I am a big boy and can take it… full disclosure, I had a typo on my sales tax increase for someone making $10K, their sales tax would go up $25 not $25K; sorry about that.
I can assure you that I am not bored, I live this stuff every day. Funny thing is, and I hate to say this, when we get down to the core fiscal concepts, you and I may not be that far apart, we just have a different way of saying it.
I have for years questioned why the “small business” guy who owns the Olive Pit resturaunt (can you even call it that??) writes off his Ford Excursion, his Costco run’s for his kids little league Brewers team, and basiclly rooks the system, meanwhile the single female CFO at a mid sized winery in San luis Obispo, who has NO kids pays a SHIT LOAD.
I guess it depends on honesty.
The small business guys bitching about taxes, are projectionists. Pure and simple. Don’t get me started about the “business” operated from garages and Suite C.
What happened to honesty and fairness????? not when it comes to Johnny’s money.
TAX MILK! Problem Solved.
Not all small business guys are dishonest and tax evaders. There are plenty who play by the rules. There are also plenty of advisers who rightfully set those who want to go down a slippery slope, onto the right path. There are many who play by the rules, but will also bitch and complain about it and do everything they legally can to pay the right amount of tax- nothing wrong with being frustrated yet still playing within the rules that policymakers have set out for everyone.
Tax Milk…what does that mean? Is it an implication that the sales tax is going to be applicable to milk? I don’t think it is unless it is consumed in a restaurant…same with other groceries I believe. Tax clothes, cars, supplies, dinners out, other goods, yes but groceries, I don’t think so- not yet, although I don’t think our state will go there.
Our system is based upon honesty. It is a voluntary system in that we voluntarily report our income and deductions not voluntary as in we can choose to participate or not. Selective enforcement assists in keeping those who stray too far off the path on the right side…unfortunately for those of us who play by the rules and hence pay more because of others’ lack of compliance, the risk of cheating is often rewarded by not getting caught or only getting caught every so often. Not getting caught does not make it right, but unfortunately we all pay for it. Additionally, non-compliance increases as tax rates increase, so this is a catch 22- that is another concern of mine with any tax increase especially ones of this magnitude.
Our system also, unfortunately IMO, is based upon selective favoritism: kids, marital status, home ownership, investment income, education (only if you don’t make too much), retirement savings, charity, income level, etc…
In fact, one reason for (at least judicious) regulation is to keep people who do play by the rules from being unfairly outcompeted from those who don’t.
Although, unless the gov’t really starts examining more returns, then it is often still a calculated risk that many will continue to take as the risk is worth the reward unfortunately.
It is spread all across the board from an income perspective. Those make a lot want to pay less and those who actually pay zero in income tax will want to get more back in assistance. As rates increase, it will put more of a reward for those who actually pay taxes and are impacted thereby to skirt the rules. Tough system we have when some people are not honest and ethical in their thinking.
calif was once a great state . the dems got a hold of it and destroyed it . welfare state , handouts to illegals , tax , tax tax , no wonder every busniness is leaving here and you cant blame the reps they dont have power here , the unions do and until the people get out of their stranglehold this state will keep sinking . every year moonbean tries this HE GOT SHOT DOWN 2 YEARS AGO .. AND HE WILL AGAIN .. SO STOP SPENDING AND START CUTTING .. especially public employees who whore out our tax dollars ..
“Tax, tax tax”: It’s like no one ever informed you when Prop 13 passed in 1978.
yeah diamond i bet you would like to roll that back too wouldnt you . there are what a zillion taxes in this state and you pick one .. nice try
It’s a federal tax, Grate Juan, not a state one, so what you said makes no sense. I think that the federal government is acting in bad faith by refusing to index the AMT. That doesn’t make me a conservative, it makes me a not-a-jerk.
Within the state, I’m interested in an oil severance tax, a split-roll approach to Prop 13, and I expect to support whatever it is Brown eventually comes up with to keep the state from falling apart, because I’m finding the biannual budget drama really boring and the paralysis of the state and local government really inconvenient.
How is property tax/Prop 13 a federal tax (i.e. referring to your posts at 1:22 and 7:49)? AMT (my issue) yes, but not Prop 13. Technically CA also has an AMT although it is rarely applicable, which IMO is what it should be. I believe you are mixing up your streams: your comment to TGO is on ppty tax while your comments on my streams are federal AMT.
What is a split-roll approach to Prop 13?
Another unintended consequence of the increased income tax on the higher income taxpayers is that federal revenue will decrease. This is due to the fact that state taxes are deductible for federal tax purposes.
As state taxes go up, federal income revenue will go down. Those who are in AMT are not generally impacted on the state tax deduction portion though as state taxes are not deductible for AMT purposes. This will impact those who are on the low end of the proposed tax increase (i.e. those who are probably somewhere around $250K to around $1MM depending on there own situation) the most. So those who make make more are less likely to be impacted. as the more income someone makes, the less impact AMT has on them- counter intuitive but true.
Crazy system we have.
Ha ha, that’s okay. California needs and deserves the money more than the other states do. Do you realize what a donor state we are, and have been forever, to loser states like the Deep South? States that consistently make BAD CHOICES I might add.
Now that we have some facts straight and Exile seems to have conceded his argument (or maybe he is just in exile again for a bit)…Of course I realize what a donor state CA is although I am unsure as to whether we need the money more than other states. Just as there seems to be tax redistribution from those who pay more than they receive to those who receive more than they pay at the personal level, the same is true at the Federal-State level. I also realize what a donor individual I and others who will be impacted by the income tax portion of the proposed bill. I hope to always be a donor taxpayer by the way as that means I am doing just fine. I hope that more and more people strive to be donor taxpayers as well. Now some time for fund wordplay with a reword of you comment (I would strikethrough but the site does not seem to support it):
“Taxpayers impacted by the income tax increase deserves to keep their money as much as others who are not impacted by the increase. Do you realize what a donor taxpayer those impacted are and have been almost forever, to loser (your word not mine) taxpayers like those who don’t make as much as we do? Individuals that consistently make BAD CHOICES I might add.”
Obviously over the top and no I don’t agree with all of it (especially the loser part- those who don’t make a lot of income are definitely not losers), but it does bring to light that you seem to think that it is OK to help a state like CA out who pays more than it receives yet you are OK in not keeping the same rationale at the personal level.
I guess the big difference based on your original posting would be whether a state like CA has benefited more than other states in the past years which I suppose it debatable and probably has statistical support on both sides of the argument.
Dude, we need it because we are the most in debt.
And the states I called “loser states” are states with the lowest taxes, by choice, who have very poor services and economies because of that choice, who elect politicians who strive to keep it that way, and hence constantly need a hand up.
The parallel you’re trying to draw doesn’t stand up, in too many places.
If CA is the most in debt, which state is making the bad choices?
In my mind the parallel, albeit not exact, is not too terrible…but of course I would agree with myself- well, most of the time at least.
You think that CA needs and deserves it more b/c Californians are tax donors instead of tax takers at the federal level and also b/c CA is most in debt. That is what your last two posts state/imply. I may agree with the first part but probably not the last. I don’t think that a state should be helped simply because they have amassed a mountain of debt. You get into it, you can get out of it.
Under your “choice” philosophy for the states, it can easily be applied to a married couple who chooses to work at a job that pays $35K per year with three kids so they can stay home with them (i.e. they could make more money but they choose not to and they had a choice to get married and have kids)…that seems to be a choice. Yet, in our current system that family would not only pay zero Fed/CA net income tax they would be getting paid to work and even still get paid to work after FICA/SDI.
OK OK California has also been making bad choices – at least with Prop 13, 2/3 etc.
Quick response to your first paragraph – I’ll read the others a little later – gotta run
bad choices vern no that is iwhat the people of this state do year in year out sending the same sad people to gov
@TJ — well, it is an “Alternative Minimum” tax, after all. When someone makes enough so that you don’t need an alternative to meet the minimum they should offer, it’s no surprise that they “graduate” out of being affected by the AMT.
There really should not be any surprise to any of it as it is all in black and white tax code. Although the AMT is not so much tied to a minimum dollar amount of tax as much as a complicated formula with certain exclusions and adjustments. In a high tax state such as CA, there is a high likelihood of getting hit with the AMT at a lower level of income.
The initial concept of AMT was to ensure that the highest earners were paying a minimum level of tax. It has migrated so that the majority of who it hits is now $200K to around $800K income people- especially here in CA. The initiators of the AMT I believe would be very surprised that it has turned into what we have today. Their concept of the AMT would be more in line with the Buffet Rule to make sure that those who make a lot pay a minimum.
I’m for indexing the AMT at a level at or near where it was when it was first established, period, but Congress seems to like holding it back so that every year people will feel grateful for its giving out another year’s portion.
There is pretty much no indexing right now…some “patches” to the exemption amount but even that is not indexed. If it were indexed back to a comparable level it was when initially established it would not be impacting nearly the number of taxpayers it is now. Unfortunately, it is now a large source of revenue which cannot just be eliminated without other concessions. Although, the increase/expiration of rates for next year will automatically decrease the number of people impacted by the AMT soley by how it is calculated.
IMO, if they want to implement some sort of Buffet rule, they should essentially just tweak (well, actually more than a tweak- an overhaul) the AMT so that it ensure a minimum level of tax for the ultra wealthy.
It’s really easy, TJ: index the AMT, calculate the revenue lost, raise marginal tax rates to make up with it. There should still be an AMT; it should not reach down to hit even people who can’t afford houses in West LA.
It may sound easy to do just that, but do you really want to raise taxes on someone who makes say $200K per year who may currently not be in AMT and give someone else who makes the same amount but is in AMT an automatic tax decrease? By increasing the AMT and increasing it with an overall tax rate increase, that is what would happen. The AMT is another “picking winners and loser” proposition. The winner in AMT right now is someone who lives in a low or non-tax state such as WA while the loser is someone in a high tax state such as CA. Hopefully that makes sense, although it probably does not unless you are intimately familiar with the workings of the AMT.
All taxation is a “picking winners and losers” proposition to some extent. With progressive taxation, such as what I favor, the “winners” are not likely to get getting rich over society’s decisions and the “losers” will generally continue to be quite well off despite them.
I would agree that our current tax system is picking winners and losers. I just don’t agree with it.
Our current federal personal income tax system seems to be quite progressive from my point of view, but apparently not progressive enough for some, including yourself.
The federal personal income tax is embedded in a larger and generally regressive system of taxation and revenue. It’s not fair to evaluate it on its own and say that it’s “progressive enough”; it has to make up for, among other things, sales taxes and flat-fee assessments.
Each tax is regressive, progressive, or neutral but in my mind (which can be crazy sometimes), it should be judged upon its own tax base and not upon income level. Your regressive view point comes from the perspective of viewing everything in comparison to income levels, which I fully understand how you arrive there but do not agree with it. It does not seem appropriate to judge a consumption tax based upon income level as they are on opposite sides of the equation.
Sales Tax- Based upon spending. Very neutral as it is a flat rate regardless how much you spend as long as you purchase all of your “stuff” in the same county.
Income Tax- Based upon income. Generally quite progressive- the more you make, the higher the rate then caps (the problem is all of the lower rates on investment income).
Soc Sec Tax- Based upon earned income (only up to a ceiling). Generally neutral and then switching on over to regressive and moving onto quite regressive depending on how much you make.
Medicare Tax- Based upon earned income. Generally quite neutral other than it has certain types of income which is excluded from the base…until 2013 at least and then it will become progressive in that more types of income will be taxed and if you over $XX amount, you pay a higher % than someone who makes less. No one seems to talk about that one…
Property Tax- Based upon assessed value (yes, I know see other Prop 13 stream going on). In theory, it is neutral.
Flat Fees- Based upon the actual item received. Seems neutral as everyone pays the same based upon what they receive.
Other Consumption Taxes (gas, liquor, tobacco)- Based upon the item purchased. Seems neutral as everyone pays the same base upon the item purchased.
I am sure that I am missing more. I know that you will disagree with me, which is fine, as I am enjoying the civil discussion. I just don’t think that everything should be judged based upon how much you make…judge it based upon the proper “tax base”. In totality, someone who makes more will in general pay more in total taxes when you add everything up…maybe or maybe not in comparison to %’s, but in raw dollars for sure. I believe in a good mix.
NEWS on this front, I copy and paste from Scott Lay’s NOONER:
In the fastest turnaround that I’ve seen, if not ever, the attorney general’s office granted the compromise tax measure a title and summary late Friday. The title is the same as the governor’s original plan: “Temporary Taxes to Fund Education. Guaranteed Local Public Safety Funding. Initiative Constitutional Amendment.” Here’s the estimated revenue from the LAO:
2012-13
Old: $4.8b-$6.9b
Compromise: $6.8b-$9b
2013-14 through 2015-16
Old: $5.5b-$6.9b
Compromise: $5.4b-$7.6b
2016-17
Old: $3.1b-$3.4b
Compromise: $5.4b-$7.6b
2017-18
Old: $0
Compromise: $5.4b-$7.6b
2018-19
Old: $0
Compromise: “lesser amounts”
The quick turnaround of the measure was a huge benefit for the governor and proponents. Ordinarily, a title and summary can take 40 days, and the AG’s office typically uses the entire window to avoid accusations of favoritism.
Even so, it is rumored that initiative petitions will hit the streets today at a bounty significantly higher than the $1-$1.50 paid for tax petitions just a couple of weeks ago. With only about six weeks to collect signatures, the price goes up.
Joe Mathews tweeted yesterday “should you quit your job to circulate petition for @JerryBrownGov & CFT initiative? It’s on street tomorrow at $3 per sig.”
Does the measure actually have an education and public safety funding guarantee? I thought that was the educational funding aspect of the Millionaire’s Tax was removed…if there is no guarantee to it, then it certainly feels like it is a severely misleading title to the measure.
That is an unfortunately good question.
GD- Fortunate title for those in favor as I have to imagine that something that has “its for the kids” label attached to it has a greater chance to pass than it just going into the budget abyss. From what I had read, I thought that the new one was going to go into the overall budget and not strictly funding (or restoring the funding) education.
I’ll try to have a better answer for you soon TJ. Generally the AG is painstakingly accurate with ballot descriptions. Offhand I’d say there’s more than one path to reversing education cuts – a direct one watering the leaves, vs. a slower but surer one watering the roots.
I know, I was the impatient one who preferred the former, but we take what we can get…
Greg, by the way, what is a split-roll approach to Prop 13…pardon my ignorance on the topic but I was not in CA when Prop 13 came to be. This was a question up stream a bit, but think it got lost in the shuffle.
I believe I’ve got that one – it’s been a crusading point for Villaraigosa lately, as he tries to raise his profile past LA Mayorship.
Prop 13 was passed when I was a highschool kid out here, with the ostensible purpose of keeping homeowners, especially elderly ones, from getting evicted when they couldn’t afford their ever-growing property taxes.
It shouldn’t have also applied to businesses, who would and should and could be paying a lot more in property taxes than they are now, if we “split the rolls.” They make out like bandits paying the same taxes they paid in the 1970s.
I THINK I’ve got that right?
Vern gets most of it right, but it’s much more insidious than that.
Remember, Prop 13 froze the rates of then-current property owners at their 1978 levels. It has not frozen the assessments of people who have moved; nor has given people who built new property since that time the same favorable tax treatment. And its unfair (I don’t have a better word for it) effect of favoring those who were in place 33.3 years go would, of course, wane over time as those people died off.
But there’s the rub: people die off. Corporate owners generally do not.
This has been a major problem as applied to commercial real estate. You have what might be a shell corporation (which can of course transmogrify over time) as the nominal owner of the property — and therefore entitled to the tax advantages of Prop 13 — that will sign a 50-year or 99-year lease (or whatever) to a company, locking in those tax advantages for it. And, if the company leaves, the corporate owner can just find another company to lease the property to under these same favorable terms.
I can’t blame the lawyers who dreamed up this scheme — it’s their job to think up things like this — or the lessees who take advantage of it, who may be held to have a fiduciary right under the corporate form to maximize profit even at public expense. But this is not the group that Prop 13 was enacted to help.
The fact that an intelligent and informed political observer like you is unaware of “split-roll” speaks to the failure of the media, the government, and both political parties — although in my party’s defense we do have a faction (the one that Vern and I are in) that has been trying to get it noticed.
After you both explained it, I have heard of it but just not the term “split roll”. This is obviously a very complicated issue with a lot of moving parts and even more “what if’s”. It seems to me that what you really are wanting is for Prop 13 to apply to single family residential instead of all property.
I am not entirely sure that I understand the position that Prop 13 is only helping those who were in place 33 years ago…I feel like I was definitely helped by Prop 13 during the real estate run up (remember that?) and I did not even know what real estate was 33 years ago. Doesn’t it help all property owners by essentially capping the rate at which the highest assessed value can go up by around 2% per year?
I definitely see the issue with the commercial real estate. Although, I believe that if there is over a 50% change of ownership on the entity side, then the county has the right to re-assess. Pretty sure that is true for partnerships and LLC’s which is where most non-Fortune 500 real estate is held (and even most of them).
Additionally, when people pass away, I believe that their heirs can inherit the low Prop 13 basis also as long as they are certain heirs (i.e. the kids for example).
I imagine that the solution would be going forward to remove the 2% increase per year going forward for all non-single family residential real estate. I can’t see that it would be good policy to increase the assessment exponentially for the past 33 years of ownership, but possibly moving forward it could happen. The harm is really for the small business owner occupied real estate which there is a TON of it out there. If the property taxes go up, then so will the cost of products being sold or services being provided although maybe that is not the worst thing as it levels the playing field for the new guy along with the old guy.
TJ, it caps the increase so long as there is a continuous owner. A new owner brings with it a new assessment at market rates. That is why the fiction of long-lasting corporate ownership disadvantages those of us of the flesh-and-blood persuasion.
I believe that if the property is passed from parent to child or grandparent to grandchild, the Prop 13 value is carried over (Revenue and Taxation Code, Section 63.1, Prop 58 & 193). I would post a link to the OC Assessors website but it is way too long, but pretty easily found.
I don’t believe you are correct on your statement that entity owned property essentially has Prop 13 protection forever. If there is more than a 50% change of ownership of the corporation/LLC/Pship, there is supposed to be a reassessment also. I believe that if the ownership lineage goes from parent to child the carryover Prop 13 stays with it. Ownership within a corporation or other legal structure won’t get forever Prop 13 assessment otherwise no one would ever sell the underlying property but instead would simply sell the LLC (again, most real property is in LLC’s these days) and adjust for the unknown liabilities associated with buying a company. The BOE runs its “Legal Entity Ownership Program” in conjunction with the counties and the FTB in order to help reassess commercial property owned by entities. This is why all CA legal entity tax returns ask questions about change of ownership now. Possibly it is not very well enforced, but the law is there I believe.
This does not change your underlying presumption that Prop 13 was not meant to benefit commercial property owners.
$3 per sig which is 2 to 3 times the “norm” which may or not be high already: I thought I remember hearing something about how a group of protesters thought that there was too much money in politics or something like that…
I’ll take the 2 or 3 bucks per signature proudly. I’ve already got dozens of them for free, I’m an idiot if I do for free what others get paid for.
I’d like to say, they couldn’t pay me to collect for something I didn’t believe in. Actually if it was a ridiculous amount they probably could, but I’d still figure out a way to sabotage it.
When we talk about too much money in politics, we’re talking about hundreds of millions, going to politician’s campaigns, and making sure the politicians don’t cross the donors. How is this that?
You’re starting to sound (no offense) like one of those Republicans who says that since President Obama would prefer there were no SuperPacs he’s a hypocrite not to unilaterally disarm and have none of his own. Weak. (If that’s where you’re coming from.)
I would not say one is an idiot for doing something others get paid for…I do it all the time as I am sure that you do also. I am always volunteering and providing my services to others who can’t afford it at free or reduced rates- I don’t make my living at giving it all away, but my living allows me to give some of it away.
I hear where you are coming from…and no, I don’t think that it would be a smart move for someone not to use SPAC money if others are- I would like to see no SPAC and no Union money being spent. It sure would make watching TV and opening the mail a lot more enjoyable yet alone knowing that there is a greater possibility that politicians would actually take care of their voters instead of their funders.
Eliminate SPAC, Corp $, and Union $ and implement a blind escrow system for funding of political campaigns- could work at the elected leader area although not sure how that would work on initiatives.