Proposition 30 would require taxpayers with incomes above $2 million, annually, to pay an additional 1.75 percent income tax.
A new 13.3 percent top marginal income tax was signed by Governor Gavin Newsom at the end of September. Prop 30, if passed, would mean those earning above $2 million would be paying more than 15 percent. This would be the highest income tax rate in the country.
About 80 percent of the money from Prop. 30 would be spent to fund electric vehicles and charging stations for low-income drivers. The remaining 20 percent would be spent on wildfire response.
What’s wrong with sticking the rich with more taxes?
That’s not really the question to ask. The question is, why would rich people stay in a state if they could move somewhere else and save 15 percent of their income?
During Covid, the wealthy, who had school-aged children moved out of California in droves, so that their children could continue to attend school in person. The poor, who live here, had no choice and their kids suffered with the low academic progress.
According to Ed Source, the scores are “depressing but also inevitable since California was among states that kept students in distance learning the longest,” said Arun Ramanathan, CEO of Pivot Learning, a nonprofit consulting organization that works with schools in California and other states on improving achievement. “Schools did not do a good job serving kids virtually and many kids stopped coming to school, especially in early grades” among low-income families without the resources to help their children.
During Covid, the wealthy took advantage of business Zoom meetings, which made remote work possible, and that continues today.
Over the last 10 years, California has lost more than 1.625 million citizens. Even the San Francisco Chronicle featured a headline “Richer People Left San Francisco in the Pandemic. And They Took Billions of Dollars with Them.”
The Internal Revenue documented that high-tax states, such as New York and California lost high-income earners to low-tax states such as Texas, Florida and Arizona.
Heck, even Governor Gavin Newsom’s in-laws, Kenneth and Judith Siebel left California for Florida in 2020, after purchasing a home in Naples.
Income taxes account for nearly three-quarters of California’s general fund revenues. According to the Wall Street Journal, the top 0.5 percent of taxpayer pay about 40 percent of California’s income tax.
Newsom is not supporting Prop. 30, nor are many of his donors, Neflix CEO Reed Hastings Zynga founder Mark Pincus and Pisces Inc. Managing director Robert Fisher.
Also, in opposition to Prop. 30 is the California Teachers Association – none of that money would go to schools.
Why would Newsom be against a “green” measure? It’s only speculation, but perhaps his wealthy friends have pointed out that they could move to Miami or Austin and pay nothing on income tax.
If all the “rich” have left California, because they can, who will pay the 1.75 percent? The continued migration of the wealthy from the state could also affect general fund revenues.
A YES vote on this measure means: Taxpayers would pay an additional tax of 1.75 percent on personal income above $2 million annually. The revenue collected from this additional tax would support zero-emission vehicle programs and wildfire response and prevention activities.
A NO vote on this measure means: No change would be made to taxes on personal income above $2 million annually.