Official Title: Tax to Fund Education and Early Childhood Programs. Initiative Statute
Proposition 38 would increase California income tax rates to fund public education at every level as well as early childhood development programs. Education is good for individuals and is also at the heart of our democratic culture. Education funding went up during the housing boom, but even then was largely inadequate. It has declined since 2008, and is set to decline more next year if both Proposition 38 and Proposition 30 fail to pass.
The other side of the equation is: who will pay this tax? In California we already have a relatively high state income tax and state sales tax. The income tax, however, is quite progressive, so that low income families pay little or no tax. The problem for the state is that real estate taxes, which are the primary funding source for public schools, are not only capped, but in most cases seriously undervalue the real estate. In my mind reforming the old Proposition 13, which got us into this mess, would be a better way of raising funds. Apparently no one thinks a proposition amending 13 could pass muster with the voters.
Proposition 38 raises income taxes taxes by 0.4% at the low end ($7,316 for a single citizen, so about $35 per year, but at that level the exemption would bring the tax to zero). It progresses gradually, with the bulk of people probably in the $38,000 to $48,000 bracket being increased from 8% to 9.4%, about $500 per year. Currently the highest tax rate, 9.3% begins at $48,000. Proposition 38 would make for graduated increases in the top bracket up to a peak of 2.2% additional for those lucky folk making $2.5 million or more per year. That would be about $55,000 additional tax at that level.
Fair enough, but while the lower middle class in particular complains about high costs at state colleges, they don't want to be taxed to pay for it. A soak the rich scheme would have had a better chance of passing, but the middle class is so large that failing to increase its taxes really limits how much money can be raised.
Interestingly, the woman behind Proposition 38, Molly Munger, has a lot of money but did not get it through having a high income and saving parts of it. She inherited her vast fortune from Big Daddy Charlie Munger, best known for his association with Warren Buffet. California's inheritance tax is pretty minimal, but for some reason no one looks at that as a source of funding. And of course the rich, represented by Mitt Romney, want to end the national inheritance tax altogether.
Ms. Munger ran some attack ads against Proposition 30, which she sees as undercutting Proposition 38. Proposition 30 barely raises enough money to keep the education budget at current levels and balance future budgets, so you can see why teachers & professors mostly favor 38. The problem is 38 is unlikely to pass (because it taxes the working and middle classes). Attacking 30, causing it to fail along with 38, would be yet another disaster for our schools.
Vote for Proposition 38. It is the right thing to do. But your vote for Proposition 30 is the crucial one, as it has a better chance of passing.
Yes on 38, Increasing Income Tax Rates to Fund Education
Proposition 38 summary, official arguments, and text
Showing posts with label income tax. Show all posts
Showing posts with label income tax. Show all posts
Thursday, October 18, 2012
Wednesday, September 26, 2012
Yes on California Proposition 30
Title: Temporary Taxes to Fund Education. Guaranteed Local Public Safety Funding. Initiative Constitutional Amendment.
Proposition 30 raises two California taxes on a temporary, but lengthy, basis. The money would be used for education, including through the college level, and for public safety, which is mainly police and prisons.
Education, preferably free public education, is a fundamental pillar of democracy. California's public schools were underfunded even before the recession hit in 2008. College education, in particular, has become a luxury only a few families can afford.
Policing and prisons, the justice system, and the very nature of society, need fundamental reform, but in the meantime we have no viable substitute for public safety. People who live in fear of crime cannot exercise their human and democratic rights. Public safety also needs increased funding.
The taxes imposed by Proposition 30 are fairly minimal. There would be a 1/4% increase in the current sales tax, but the rate would still be lower than we had two years ago. This would last four years.
There would also be an increase in California State income tax on natural (non-corporate) persons making over $250,000 in annual income, or couples making over $500,000 in annual income. The increase is graduated, from 1% at the $250,000 to $300,000 level up to 3% at the over $500,000 level.
Given the incredibly low federal tax rates for the highest-income taxpayers, this is not really much of a burden to the most fortunate Californians. The rest of us wish we could make that kind of income and have the privilege of paying the higher rate. This tax increase would last for seven years, and my guess is that it will have to be renewed then.
If there is a problem with Proposition 30, it is that is uses the Constitutional Amendment process. The California State Constitution is already a huge mess. This will add to it. The text is complex enough to render it unintelligible not just to ordinary citizens, but to everyone who is not already an expert in the tax code and state constitutional law. I just don't see why tax increases require amending the Constitution, except perhaps that then they can't be reversed easily.
Yes on 30, save our education system
Proposition 30 summary, official arguments, and text
Proposition 30 raises two California taxes on a temporary, but lengthy, basis. The money would be used for education, including through the college level, and for public safety, which is mainly police and prisons.
Education, preferably free public education, is a fundamental pillar of democracy. California's public schools were underfunded even before the recession hit in 2008. College education, in particular, has become a luxury only a few families can afford.
Policing and prisons, the justice system, and the very nature of society, need fundamental reform, but in the meantime we have no viable substitute for public safety. People who live in fear of crime cannot exercise their human and democratic rights. Public safety also needs increased funding.
The taxes imposed by Proposition 30 are fairly minimal. There would be a 1/4% increase in the current sales tax, but the rate would still be lower than we had two years ago. This would last four years.
There would also be an increase in California State income tax on natural (non-corporate) persons making over $250,000 in annual income, or couples making over $500,000 in annual income. The increase is graduated, from 1% at the $250,000 to $300,000 level up to 3% at the over $500,000 level.
Given the incredibly low federal tax rates for the highest-income taxpayers, this is not really much of a burden to the most fortunate Californians. The rest of us wish we could make that kind of income and have the privilege of paying the higher rate. This tax increase would last for seven years, and my guess is that it will have to be renewed then.
If there is a problem with Proposition 30, it is that is uses the Constitutional Amendment process. The California State Constitution is already a huge mess. This will add to it. The text is complex enough to render it unintelligible not just to ordinary citizens, but to everyone who is not already an expert in the tax code and state constitutional law. I just don't see why tax increases require amending the Constitution, except perhaps that then they can't be reversed easily.
Yes on 30, save our education system
Proposition 30 summary, official arguments, and text
Wednesday, February 10, 2010
Going Down With the U.S.A.
As we enter the off-year election season, Californians and Americans both have a lot to be angry about. The incompetence of incumbent politicians and their mostly capitalist masters has reached epic proportions.
Nothing is being done about overpopulation. Only token measures are being taken as greenish nods towards long-term environmental sustainability. Yet despite ignoring these very real problems, the economy is in shambles.
I believe that in general Californians are over-taxed. I am not saying that there are not people who don't pay their share, because of one loophole or another. I am saying that between local, state, and federal taxes and between income, real estate, sales taxes and various fees, the problem is not that the tax rate as a whole is too low.
Why, when we pay so much in taxes, is there so little to show for it? One reason is bureaucratic creep, which is the tendency over time for bureacracies to expand, and for pay for especially the highest level of bureaucrats to increase out of proportion to productivity. This is true within business corporations even more so that in government agencies.
The other is misallocation of taxes. This happens in all areas, on all scales. But the biggest problem for California is the biggest problem for the United States of America: defense spending.
The reality is that the U.S. runs a global empire. We spend more on our military than pretty much any conceivable combination of enemy states put together.
This has undermined America's economy since the Vietnam War, and now the sink holes are appearing. The biggest, undeniable sink holes are the federal deficit and federal debt.
While I believe that we are in an economic upturn this year, I don't see the Democratic Party or the Republican Party dealing with our fundamental economic problems. As a tag-team they are able to crush third-parties and independent candidates, but they also amplify economic mismanagement. In California the Republican politicians won't cut prison funding, or admit that the War on Drugs is a failure. The Democrats don't seem to recognize that the rest of us can only pay so much for welfare programs before we have to start begging ourselves. On the national level both parties fall over themselves to serve and protect the budget of the Department of Defense.
The most recent round of blame has to be laid squarely on the Bush tax cuts for the rich. Recall that many Democrats in Congress voted for those tax cuts, including Mike Thompson of California's 1st Congressional District. The cuts were supposed to stimilate the economy, eventually leading to higher tax collections on a larger economy. But then we had an amplification of the Islamic rebellion, and President Bush with Republican and Democratic Party support decided to invade both Iraq and Afghanistan. Domestic programs were not cut, nor were taxes raised.
The federal deficit was bad enough when the economy was in its latest up cycle, fueled by too-low interest rates from the Federal Reserve and the fee-based mortgage origination system that led to the housing bubble. When the bubble popped, the Democrats blamed George Bush and the Republicans, conveniently forgetting their own support for those low taxes on the rich and high defense spending.
Think of it this way: if the state of California were to pull out of the Union, and we wanted to pay off our share of the national debt on a per capita basis, how much would we each pay? You don't even want to know the answer. It is too depressing to print here.
On a funnier note, the rich really kicked themselves in their collective ass with part of the Bush (+Democrats+Republicans) tax cuts. The rich don't pay the same taxes as you and me. Most Americans are employees, so their biggest tax bite is federal income tax on wages plus social security taxes. The rich mainly get richer from capital gains and dividends (of course they may pay real estate taxes, and sales tax). So President Bush lowered taxes on capital gains. But surprise, the economy was so mismanaged that between the time of the Bush tax cut and today, on the whole, in the stock market (the biggest liquid source of capital gains), no one made any capital gains!
In other words, in retrospect, as a class, the rich would have been better off not wrecking the economy with tax cuts and military spending. Then they would have at least actually had some capital gains to spend, after they paid the old tax rate.
When will they ever learn. [Where have all the flowers gone ...]
Nothing is being done about overpopulation. Only token measures are being taken as greenish nods towards long-term environmental sustainability. Yet despite ignoring these very real problems, the economy is in shambles.
I believe that in general Californians are over-taxed. I am not saying that there are not people who don't pay their share, because of one loophole or another. I am saying that between local, state, and federal taxes and between income, real estate, sales taxes and various fees, the problem is not that the tax rate as a whole is too low.
Why, when we pay so much in taxes, is there so little to show for it? One reason is bureaucratic creep, which is the tendency over time for bureacracies to expand, and for pay for especially the highest level of bureaucrats to increase out of proportion to productivity. This is true within business corporations even more so that in government agencies.
The other is misallocation of taxes. This happens in all areas, on all scales. But the biggest problem for California is the biggest problem for the United States of America: defense spending.
The reality is that the U.S. runs a global empire. We spend more on our military than pretty much any conceivable combination of enemy states put together.
This has undermined America's economy since the Vietnam War, and now the sink holes are appearing. The biggest, undeniable sink holes are the federal deficit and federal debt.
While I believe that we are in an economic upturn this year, I don't see the Democratic Party or the Republican Party dealing with our fundamental economic problems. As a tag-team they are able to crush third-parties and independent candidates, but they also amplify economic mismanagement. In California the Republican politicians won't cut prison funding, or admit that the War on Drugs is a failure. The Democrats don't seem to recognize that the rest of us can only pay so much for welfare programs before we have to start begging ourselves. On the national level both parties fall over themselves to serve and protect the budget of the Department of Defense.
The most recent round of blame has to be laid squarely on the Bush tax cuts for the rich. Recall that many Democrats in Congress voted for those tax cuts, including Mike Thompson of California's 1st Congressional District. The cuts were supposed to stimilate the economy, eventually leading to higher tax collections on a larger economy. But then we had an amplification of the Islamic rebellion, and President Bush with Republican and Democratic Party support decided to invade both Iraq and Afghanistan. Domestic programs were not cut, nor were taxes raised.
The federal deficit was bad enough when the economy was in its latest up cycle, fueled by too-low interest rates from the Federal Reserve and the fee-based mortgage origination system that led to the housing bubble. When the bubble popped, the Democrats blamed George Bush and the Republicans, conveniently forgetting their own support for those low taxes on the rich and high defense spending.
Think of it this way: if the state of California were to pull out of the Union, and we wanted to pay off our share of the national debt on a per capita basis, how much would we each pay? You don't even want to know the answer. It is too depressing to print here.
On a funnier note, the rich really kicked themselves in their collective ass with part of the Bush (+Democrats+Republicans) tax cuts. The rich don't pay the same taxes as you and me. Most Americans are employees, so their biggest tax bite is federal income tax on wages plus social security taxes. The rich mainly get richer from capital gains and dividends (of course they may pay real estate taxes, and sales tax). So President Bush lowered taxes on capital gains. But surprise, the economy was so mismanaged that between the time of the Bush tax cut and today, on the whole, in the stock market (the biggest liquid source of capital gains), no one made any capital gains!
In other words, in retrospect, as a class, the rich would have been better off not wrecking the economy with tax cuts and military spending. Then they would have at least actually had some capital gains to spend, after they paid the old tax rate.
When will they ever learn. [Where have all the flowers gone ...]
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