California taxed the rich. Will Biden? + Recall candidates mushroom + Early fire spending
- Oops!Something went wrong.Please try again later.
It’s Monday again. Happy belated Easter to all those who observed!
CALIFORNIA TAXES A MODEL FOR BIDEN RECOVERY?
California’s where the LeBron James and Elon Musks of the world face ultra-high state income tax rates that the government uses to provide money to help the homeless, the poor and the unemployed.
So is California, whose top rates are the nation’s highest, a good model for the rest of the country as President Joe Biden tries to increase tax rates while boosting social services spending?
State Controller Betty Yee has found California’s progressive tax system “has been effective at achieving its intended result—reducing the tax burden on those who can least afford to pay.”
Critics counter that higher rates will trigger an economic disaster. “A mortal wound on our still-recovering economy,” said T. W. Arrighi, spokesman for the National Republican Senatorial Committee, of Biden’s ideas.
The president proposed during his 2020 campaign to increase the federal income tax rate on people earning more than $400,000 to 39.6%, up from the current top rate of 37%. He also proposed a higher corporate tax rate.
California’s wealthiest residents also pay a top state income tax rate of 13.3% on earnings above $1 million.
Joshua Rauh, professor of finance at Stanford Graduate School of Business, co-authored an extensive study of the impact of California’s higher tax rates for the nonpartisan National Bureau of Economic Research.
The report found not only migration of the wealthy since California raised its income taxes in 2012, but less taxable income from those who stay. People change their financial behavior to adjust to the new tax laws.
“There was a pretty big erosion of taxable income relative to what would have happened had those people not changed their behavior,” Rauh said. “They’re reporting less taxable income. Maybe they’re shifting business activity to other states. Maybe earning less overall. Maybe they’re going offshore.”
Yet the state’s economy is recovering. California is on track to accumulate a budget surplus, giving Gov. Gavin Newsom and lawmakers room to spend on social services and direct assistance to people set back in the coronavirus pandemic.
“Texas says it’s getting California’s people, but they’re not getting all of them,” said Richard Auxier, senior policy associate at the Urban-Brookings Tax Policy Center in Washington. He and two of his colleagues published a study of California’s revenue system last year.
Of course, Musk last year announced his move to Texas.
Read more in David Lightman’s report today.
KEEPING AN EYE ON POTENTIAL RECALL CANDIDATES
The state has yet to certify and schedule a recall election for Gov. Gavin Newsom, though political watchers on both sides of the aisle, and the governor himself, expect it to qualify.
In the 2003 recall, 135 candidates signed up for the recall election. So far, the big contenders for a Newsom recall are Republicans Kevin Faulconer, John Cox and Doug Ose, but there are others who have their eyes on the governor’s seat.
According to state campaign filings records, more than a dozen candidates have opened 2022 campaign committees, most of them Republicans.
In the event a recall election is called, candidates have until 59 days prior to election day to file. The fee is about $4,000, or 7,000 signatures.
County election officials have until April 29 to verify signatures submitted in the recall, but it likely will be September before the Secretary of State certifies the election and a date is set.
Here’s who has declared their gubernatorial intents thus far, according to state records:
Jerry Brandt; Grover Coltharp; Brian Domingo, a Republican who also ran in 2018; Sam Gallucci; Steven Green; Tim Herode; Redding businesswoman Jenny Rae Le Roux; Diego Martinez; Laura Smith; Erroll Webber; Nickolas Wildstar and Major Williams.
A DRY YEAR COULD SPELL TROUBLE FOR CALIFORNIA
As temperatures begin to climb and spring is in full swing, the threat of another year of intense wildfires is looming.
California water officials on Thursday reported the statewide snowpack is just 59% of average for this time of year as the state continues to experience one of the driest years on record.
It’s the second straight year of low numbers, after the Department of Water Resources recorded a reading of 53% on April 1 a year ago. The back-to-back low measurements could mean the return of summer drought conditions and water-use restrictions for the first time since 2016.
“There is no doubt California is in a critically dry year,” Water Resources Director Karla Nemeth said in a statement. “State agencies, water suppliers and Californians are more prepared than ever to adapt to dry conditions and meet the challenges that might be ahead.”
Newsom, speaking at a vaccination site in San Diego Friday, said the state is preparing for wildfire challenges going into the next few months.
“I’m mindful of the looming challenges ahead as we now enter again into fire season, if we even left it in the last few months,” he said. “We are not in a drought formally but we are experiencing drought conditions, quite substantively... We are mindful as we now move into peak fire season that we have to do more and we have to do better to prepare vegetation management, forest management, reposition assets, reinforcing the work force.”
Last week, California directed $80 million in emergency funds to hire 1,400 additional firefighters ahead of peak fire season. In his 2021 budget proposal, announced in January, the governor asked the Legislature to approve $1 billion to support a coordinated forest health and fire prevention strategy including $39 million for remote sensing and research.
QUOTE OF THE DAY
“Honestly, slept like a baby. I feel great, no impact whatsoever. Honestly, I was trying to figure out, was it my left arm or my right arm? I can’t even feel where the vaccine was administered.”
- Gov. Gavin Newsom on Friday, 24 hours after getting his dose of the Johnson & Johnson vaccine.
BEST OF THE BEE
Before the pandemic, Gov. Gavin Newsom called homelessness “the most pernicious crisis in our midst.” COVID-19 gave him an opportunity to try something seemingly unprecedented. Did it work? via Hannah Wiley
A federal judge sanctioned a senior aide to Rep. Devin Nunes and his attorney last week, ordering them to pay legal fees in a lawsuit they filed against CNN regarding a news story about the California congressman. via Kate Irby
Far more Sacramento County residents died in December and January than during any other two months in at least the past 20 years, according to a Bee review of new state and federal health data. via Phillip Reese
