Jerry Brown: ‘Governor 13.3%’

John Seiler:

A Wall Street Journal editorial headline today branded Gov. Jerrry Brown: “Governor 13.3%.” That’s the percentage California’s top income tax rate would be if he finagles voters into passing his tax hike this November.

It’s a great headline. And I’m going to use the phrase to refer to him in the future: Governor 13.3%.

The 13.3 percent tax top tax rate would be by far the highest in the country, well head of the current top states, Oregon and Hawaii’s rate of 11 percent. California’s current top rate is 10.3 percent.

Wall Street comments:

“It’s hard to believe now, but Jerry Brown once ran for President as a reformer who favored a flat tax with a 13% top federal rate. That was 1992. Nowadays in his second stint as Governor, he’s running to give California alone a higher top income-tax rate.”

That’s right. In 1992, presidential candidate Jerry Brown proposed that the top federal rate — the one paid by everybody — should be just 13 percent. (Currently in 2012, the top U.S. rate is 35 percent, although President Obama wants to jack that up to 39 percent.)

People like to say that “California is the world’s 8th largest economy,” but this is ridiculous. In fact, we’re not a country, but a state. And we compete against other states, such as: Nevada, Texas, Washington, New Hampshire and Florida, all of which have zero state income tax.

For Governor 13.3% to propose a state income tax higher than the entire federal income tax he proposed 20 years ago is absurd.

Highest Taxes

Wall Street:

“The top 1% in California pay between one third and half of all state income tax revenues, depending on the condition of the economy….

“So for the privilege of living in California, a millionaire would pay close to $125,000 a year more in income tax than someone in Nevada, Texas or Florida. A Californian earning $10 million would pay an extra $1 million or more than if she moved to a state without an income tax, or nearly $500,000 than an average tax state.

“Even Mr. Brown, in one of his saner moments earlier this year, said that relying on millionaires to pay the bills causes “more volatility” in revenue collections, which has meant “a more or less constant state” of deficits. He was right. Capital gains collections collapsed to $734 million in 2009-10 from $1.6 billion in the boom years. So why would Mr. Brown make that problem worse?”

Wall Street also made the point that Supply Side economists do: That when taxes get this high, people don’t pay them. They leave the state or country. So the government fails to collect not only the tax increase, but the previous tax that the wealthy person was paying.

Paradoxically, that means if California wants to increase revenues to the state it must make this state more enticing to taxpayers — by cutting taxes. Wall Street points this out:

“One of the last states to have a tax rate as high as California is proposing was Delaware in the 1970s. Its rate hit 19.8%. Then-Governor Pete du Pont cut the rate to 10.3% in 1979 and later to 5.95%, and after five years the state’s revenues had nearly doubled and its credit rating went from the worst to one of the best.”

Governor 13.3% used to understand that. He talked to economics Arthur Laffer, the Supply Side economist who designed Brown’s excellent 1992 flat tax proposal. He should talk to Laffer again.

Laffer has produced a new study, “Eureka! How to Fix California,” for the Pacific Research Institute, CalWatchDog.com’s parent think tank. He calls for a 5.8 percent flat-tax for all Californians.

Laffer will be launching his new new book and signing copies at The City Club of San Francisco on March 27, from 5:30 to 7 pm.

And he’ll signing his new book on Wednesday, March 28, at the Pacific Club in Newport Beach.

March 26, 2012

 

 

 

19 comments

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  1. beelzebub
    beelzebub 26 March, 2012, 10:42

    As long as the wealthy are allowed to park their wealth in off-shore banks with immunity none of these higher taxes will make a bit of difference.

    One bank – United Bank of Switzerland – was said to hold 50,000 secret American accounts – that have failed to report (by law) their deposits to he IRS. Swiss law protects them and the Swiss government has thumbed their nose at the IRS. That means JoeSixPack must compensate for those unpaid taxes. Instead of doing the right thing and pulling the UBS banking charter for operation in the USA – the US government gives them a handslap. UBS is only one of hundreds of offshore banks that rich americans use to their advantage.
    Those rich american accounts in offshore banks will only multiply now. The little people will be forced to make up the difference in lost taxes. Watch and learn.

    Reply this comment
  2. Rex The Wonder Dog!
    Rex The Wonder Dog! 26 March, 2012, 11:05

    Governor 13.3% 🙂

    Reply this comment
  3. Rex The Wonder Dog!
    Rex The Wonder Dog! 26 March, 2012, 11:06

    Have yet to see Brown order a FREEZE on all gov salary and benefits, much less reductiosn to market levels. When he does that then we can talk. His sales tax is DOA.

    Reply this comment
  4. larry 62
    larry 62 26 March, 2012, 12:08

    If this proposal becomes law, watch California tax receipts drop like a rock, and then all that remains to be done is to turn off the lights.

    Reply this comment
  5. Phineas
    Phineas 26 March, 2012, 13:34

    A tax cut will have to be imposed by the people via a ballot proposition. The “progressives” who control the legislature will never agree to it.

    Reply this comment
  6. Val
    Val 26 March, 2012, 14:03

    beelzebub – Just a question for you, in your opinion if a person holds savings overseas but doesn’t repatriate interest on the savings back into the US should they still be liable for taxes?

    Reply this comment
  7. David H
    David H 26 March, 2012, 15:34

    Beelzebub you need to explain how somebody putting money in a foreign bank account is dodging taxes? As far as I’m aware any money you earn on US earnings is taxed irregardless of where the money is held. Maybe you are referring to offshore international corporations (shell companies incorporated in the Bahamas for example) from which US earnings are attributed. I think they are going after these foreign service corporations (FSC’s) now, but that doesn’t mean you can’t have a foreign bank account otherwise 1/2 the mexicans in SoCal would be in violation ;-/

    Reply this comment
  8. beelzebub
    beelzebub 26 March, 2012, 15:46

    “beelzebub – Just a question for you, in your opinion if a person holds savings overseas but doesn’t repatriate interest on the savings back into the US should they still be liable for taxes?”

    The law as written must apply to ALL americans equally. Ever heard of the phrase “Equality under the Law” before? It was supposed to be one of the hallmarks of living in America – that no one is above the law. If the super rich are able to illegally SKIRT the law by parking their wealth overseas hidden from the IRS then the law is a sham. My response to you is to either get rid of bad law or make it apply to everyone equally. Any foreign bank that allows a certain class of Americans to hide their money in off-shore accounts should have their American banking charters pulled forthwith. We are talking financial terrorism here. Middle class America should not be obligated to pay the tax bill for the fat cats who enjoy the best that America has to offer.

    Reply this comment
  9. beelzebub
    beelzebub 26 March, 2012, 15:53

    “Beelzebub you need to explain how somebody putting money in a foreign bank account is dodging taxes?”

    Go read the tax law as it pertains to an American putting his wealth in offshore banks. BY LAW it is reportable to the IRS. Don’t like the law? Fine. Change it. But don’t make the law only apply to one segment of our population but not to another. Either it applies to all equally or it’s a farce. I am not arguing the merits or the absurdity of American law here. I am arguing that it should apply to everyone EQUALLY. Without that we might as well live in Honduras.

    Go google UBS and how the swiss government has been involved in hiding 50,000 SECRET american accounts at their bank. And that is ONLY ONE BANK. No doubt there are millions of 1 percenters who are screwing the nation while living like Kings and Queens here. That goes against every principle this nation was founded upon!

    Reply this comment
  10. beelzebub
    beelzebub 26 March, 2012, 16:45

    Hey, did ya see that they have a prop on the June ballot to raise the tax on a pack of cigs by $1??? Now the tax on a pack of cigs will exceed the cost of the product! 🙂 I feel sorry for the smokers. Back in the good old days the government taught us that you had to smoke to be a man. Today if you smoke the government wants to punish you by sending you to the poorhouse. And don’t believe the BS about how the extra tax is going to fund cancer research! 😀 Pull my other thumb too, Mr. Clown! You know where that money is going to go – to fund the public pensions and fill the holes in the State budget. And the smokers are generally the underclass and the poor. I think I may live to see the day when the government makes tobacco a Class 1 controlled substance. Then they can turn it into a real money maker like they have weed, coke and heroin! 😀

    Reply this comment
  11. beelzebub
    beelzebub 26 March, 2012, 22:36

    btw, the polls say that Prop 29 – the $1 added cig tax – is almost certain to pass. The people still haven’t caught on. The general consensus is that taxes are fine as long as the other guy is forced to pay them to fill the deficit spending holes. So the masses will let the smokers (most of whom are from the underclass) twist in the wind – so long as the government continues to supply them with whatever free crap (medi-cal, medicare, pensions, food stamps, etc….) that they collect.

    This is essentially why this country is doomed to fail. The peasants fight amongst themselves for crumbs while the government and 1 percenters laugh all the way to the bank. There is absolutely no unity amongst the masses. They have effectively been divided and conquered. The oligarchs are alot of things…..but they are not stupid. They are masters of manipulation and control.

    Reply this comment
  12. queeg
    queeg 27 March, 2012, 12:46

    It gets tiresome reading diatribes by the envious…

    No tax is good. Rich people do good things…

    Miserable back benchers should pray on their knees rich people are out there….

    Reply this comment
  13. beelzebub
    beelzebub 27 March, 2012, 13:29

    “It gets tiresome reading diatribes by the envious…”

    And then there are those who love to promote two separate and distinct sets of laws in America….one for the oligarchs and another one for the serfs.

    And from the other side of their mouths they preach ‘liberty and freedom’.

    Laughable.

    Reply this comment
  14. queeg
    queeg 27 March, 2012, 16:44

    Exhausted!

    Reply this comment
  15. Rex The Wonder Dog!
    Rex The Wonder Dog! 28 March, 2012, 07:57

    Queeg, there has to be SOME taxation to support gov which supports infrastructure and services. They should be 1) minimal, they should be 2) applied progressively and they should 3) give you a fair bang for the buck.

    I think it is fair to say the gov has failed on all three issues.

    Reply this comment
  16. queeg
    queeg 29 March, 2012, 09:26

    Calif is UTOPIA-ZILLA due to progressive taxation…the users pay no taxes….

    Are you all public school dumbed down?

    Every government service should have a fee…pay or no service unless your disabled bonafide and lived in California two years bonagide.

    A part time legislature..three months per year….

    State budget rises only 3 % per year including pension costs and bond interest….no phony forecasts permitted..

    Reply this comment
  17. Beelzebub
    Beelzebub 29 March, 2012, 10:33

    You are still not addressing my point.

    I am not arguing whether taxes or the distribution of those taxes is fair and/or just. All I said is that if a law is enacted it must apply to ALL as written. That is not an unreasonable position. Otherwise we live under a fascist regime. The rich should not be allowed to park their wealth in secret offshore accounts free from taxation while the rest of us get gouged. If you believe that they should have the right to illegally evade what they legally owe while enjoying the finest fruits that America has to offer – and while everyone else pays through the nose – you are not a proponent of ‘Equality under the Law’. Just be honest and say it and I will respect your honesty.

    Reply this comment
  18. JustVoteNo
    JustVoteNo 29 March, 2012, 21:19

    I like the idea of the 3 month part time Legislature. That way they’d at least not be payed for the 9 months that they spend with lobbyist and campaigning, not to mention neglecting State business.

    – JUST VOTE “NO”

    Reply this comment
  19. queeg
    queeg 30 March, 2012, 09:50

    You can park your money in offshore investments!

    Call Romney he is good at it!!!,

    Reply this comment

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