Proposition 30 would hike taxes on California's super rich. That's a bad idea. Here's why
This is with respect to the Aug. 21 commentary by CalMatters journalist Dan Walters on the exodus of California’s high-income taxpayers. As noted, in less than 1% of cases, a portion of a California taxpayer’s income can be subject to federal and state rates totaling 50.2%; also, state taxes affect residential moves to and from California.
Reference was made to a San Francisco Chronicle’s sampling of the wealthiest relocations: 40 families who in 2020 left San Francisco for formal residency in Teton County, Wyoming, with a total income of $37 million, an average of $925,000/year.
California’s top rate applies when “taxable income” exceeds $1,250,000 (married and filing jointly), and then only on portions above this amount. On average, those in the Teton County sampling were likely taxed at rates higher than anywhere else in the country, just not California’s top rate. This is not to dispute the premise. Even a low rate on large incomes resembles real money.
The more pressing issue is Proposition 30, which will be on the November ballot. If passed, it will boost the rate on personal income over $2 million by 1.75 percentage points to 15%. Of these funds, 35% would be used for electric vehicle charging stations and 45% for EV incentives. Prop. 30 is highly promoted and funded by Lyft ($8 million) in apparent response to requirements that ride-hailing companies will be required by California to log 90% of their miles in electric vehicles by 2030. Gov. Gavin Newsom opposes the measure, noting the state has already committed $10 billion for electric vehicles and their infrastructure. Yet, as of July, those polled were in 63% in favor; 35% against.
It’s been indicated the top 1% of California taxpayers (150,000 people) generate half of the state’s income taxes. Within this, a smaller group generates 40%, these being the 100,000 taxpayers who make up one-half of 1% of California taxpayers. To this, add considerable real estate and personal property tax. Billionaires who’ve left the state include Larry Ellison and Elon Musk. A native-born and raised California professional golfer also departed recently with a net worth of several hundred million. These are parts of the iceberg we can’t miss.
Whatever the benefits of California’s ballot proposition system, it is far from perfect. Signatures are sought on street corners; corporations (Lyft just one example) invest millions; voters, without debate, and most often with no information other than possibly from TV ads, check a box, and voila! We have legislation.
November’s ballot will include a box for increasing tax on the super-wealthy. This while the state’s governor, whose major goal is to combat climate change, has criticized Prop. 30 as a cynical scheme, devised by a single corporation (Lyft) to funnel tax revenue to its company.
It’s not a good measure, and clearly not the path to retaining high-earning taxpayers on which our state so heavily depends.
Thomas Wagner is a resident of Rancho Mirage. Email him at tom.wagner22@gmail.com.
This article originally appeared on Palm Springs Desert Sun: Prop. 30, another tax on California's super-rich, is a bad idea
