Do the math: 55% taxes loom for $300K-plus earners in California

Nov. 25, 2012

By Chris Reed

Matt Miller, a quirky and interesting writer-thinker for a lefty think tank (the Center for American Progress), has a warning for Gov. Jerry Brown. Writing in the Washington Post, Miller does the math and concludes that Proposition 30, combined with other factors, is going to take a heavy, European-style toll on California’s wealthy:

[W]hile Prop 30’s passage saves schools from devastating cuts for the time being, Brown has planted the seeds of future trouble. Follow the numbers: let’s say federal tax rates on top earners go back to 39.6 percent from 35 percent. Add in Obamacare’s new 3.8 percent tax on investment income and new 1 percent higher Medicare payroll tax on the same folks. Then toss in new top state rates of 11.3 to 13.3 percent (up from 9.3 and 10.3), and presto! Marginal tax rates for self-employed people in California earning $300,000 and up (who pick up both “sides” of the payroll tax on a chunk of their earnings) could reach 55 percent or more.

Read the whole thing here. Miller’s larger point — that taxes need to go up to pay for the government the public says it wants, but that tax hikes on the rich alone can’t generate nearly the money that Brown and President Obama contend — may not be one that libertarians or conservatives will like. But it has a defensible sanity to it.

Unlike, yunno, The New York Times’ economist/columnist/lunatic Paul Krugman, who wouldn’t mind a 91 percent tax on the rich. Really. Victor Davis Hanson nicely details Krugman’s derangement here.

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