California: Considering an Extra Tax for the Wealthy

California: Considering an Extra Tax for the Wealthy

The extra tax revenue would help fill a $13 billion budget shortfall.

California is not the only state facing a serious budget crisis and as part of the proposed fix for their shortfall, the governor is proposing a series of levies which would increase taxes for California’s wealthiest individuals. California is looking at at estimated $3.7 billion shortfall now, but next year’s projected budget shortfall is frightening: California may be facing a budget shortfall of as much as $13 billion.

The proposed tax would add 1% to the income taxes of Californians who earn more than $250,000 a year. Anyone who earns $300,000-$500,000 per year would be taxed at 1.5% per year, and the lucky earners who make over $500,000 a year would pay a 2% personal income taxes.

According to Wikipedia (and many other reliable sources), California is considered the eighth largest economy in the world. California already has one of the largest tax burdens in the United States; it ranked number six for tax burdens when measured in 2006. That said, California also has an enormous amount of of wealth and wealthy individuals and had approximately 14% of the United States’ assets as of 2010. If taxing those who benefited from living in California could actually fill the budget gap in California, there should be nothing wrong with it.

Washington state tried a similar measure in 2010. The initiative was backed by Bill Gates, Sr. and would have taxed the state’s wealthiest individuals. Opponents of the tax--likely some of the wealthiest individuals in Washington state--said that the initiative was designed just as a way to introduce an income tax for everyone in Washington state.

In the United States as a whole, the richest 1% own more than a third of of the nation’s wealth. But how much do the super-wealthy truthfully pay? You have to look at the actual numbers in a couple of different ways to understand the truth. The super-wealthy pay a higher dollar amount when they sign the checks for their tax bills than the rest of us, but they pay a lower percentage of their actual income.

If the wealthy were to pay what the governor is proposing in California, it would close up the budget hole and provide money for social programs and schools, which should be important priorities for any truthful citizen.