For decades, the right has been complaining that California’s taxes are too high. What they actually mean is too progressive, as the top rates now hover around 13 percent of personal income. That, the right has claimed, would surely drive the wealthy from the state—though new data on population shifts show that it’s working-class people who’ve been fleeing the high-cost state while professionals and the wealthy have continued to move there. The right has also claimed that progressive taxes actually yield less revenue than less progressive and lower taxes, according to the haven’t-quite-penciled-out-yet equations of supply-side economics.
Undaunted, California has continued to levy the most progressive taxes of any state, and in the past two days, we’ve seen the results. This year, the state boasts an astounding budget surplus of $75.7 billion. California’s high-tech rich have seen their stocks rise so dizzyingly this year that the state’s capital gains and income taxes have yielded a bonanza, funded very disproportionately by what is still a sliver of the wealthy’s new wealth.
And what will the state do with all that funding? According to Gov.
Gavin Newsom’s newly revised budget, it will, should the Democratic-controlled legislature pass it (which is likely), devote at least $5 billion to erasing many tenants’ unpaid back rent, devote another $12 billion to constructing affordable housing largely intended for the homeless, pour an even more generous share of the bounty into the coffers of public schools, and provide $600 tax rebates to Californians with incomes of less than $75,000, including those Californians too poor to have paid taxes at all last year.
That’s for starters.
Imagine, now, if the federal government raised capital gains taxes on the rich as California has done, and moved the highest tax brackets back to where they were before the Reagan administration and a compliant Congress reduced them to levels that put even fixing basic infrastructure out of our fiscal reach. To be sure, California’s concentration of super-rich taxpayers has given the state a fiscal advantage, but other states with kindred concentrations have resisted comparable tax policies—in particular, New York, where Andrew Cuomo has refused to hike taxes on the Wall Street funders of his campaigns.
Given the relentless rise of the rich in America, California appears to have the only tax system in the nation in which the general public can benefit from that rise. And, need I add, this makes Gavin Newsom’s recall, improbable to begin with, even more improbable now.
|
