Taxes on the rich DROP after Prop. 30 tax increase

Nostradamus encyclopedia coverJune 14, 2013

By John Seiler

Call me Nostradamus. I have predicted numerous times on CalWatchDog.com that the Propsition 30 tax increase, combined with President Obama’s national tax increases, would drop tax collections from the rich. That has happened.

Board of Equalization Member George Runner just wrote:

“According to the Franchise Tax Board, the highest 1 percent of income earners will pay more than $2 billion less in 2013 than 2012. That’s not surprising. A recent survey found 75 percent of affluent Californians are planning actions to reduce their tax liabilities—and a quarter are considering moving out-of-state.”

The Prop. 30 tax increase was passed last November, retroactive to 2012. So rich folks got mugged. Most didn’t prepare. But for 2013, they know how hard they are going to be hit with that massive, 13.3 percent state top income tax rate; on top of the confiscatory 39.6 percent Obama federal rate. Total: 52.9 percent.

The rich have had time to take such precautions as sheltering income, or leaving. After Prop. 30 passed, I talked to several who said they were lighting out for Texas or another country. That’s what has happened.

Think of rich people you know.  And think of government tax agents you know, such as IRS people you talk to on the phone. Which is smarter? Case closed.

Remember how Obama and Brown insisted that the rich must “pay their fair share”? The rich agreed — by paying less.

Overall, for the total of all income groups, tax receipts are coming in at $2.1 billion less than last year, mainly the drop in what the wealthy pay.

Yet, the Legislature is going on another spending binge. Why? Basically, because Prop. 30 passed in November 2012, but the windfall of new retroactive tax cash has been collected in 2013. That won’t happen again. Meaning the Legislature well could have a couple of billion less to spend next year.

Here’s the full chart for all income groups from the Franchise Tax Board:

Tax liability franchise tax board, June 14, 2013

 



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