The California Taxpayers Association (CalTax) today announced its opposition to Proposition 30, the income tax increase initiative on the November ballot.
“Proposition 30 needlessly jeopardizes the revenue stream that pays for schools, healthcare, public safety, and other vital services,” CalTax President Robert Gutierrez said. “This measure would lead to more high-income taxpayers leaving the state, and the rest of us would have to hide our wallets, because the Legislature would impose new taxes and fees to make up for the lost revenue.”
Proposition 30 would increase the state’s top personal income tax rate – already the highest in the nation – to 15.05 percent, without the ability to deduct the tax from federal taxes or claim state tax credits against the increased taxes. This would hurt many small, unincorporated businesses that pay personal income taxes through the “pass-through entity tax.”
“Roughly two-thirds of the state’s income tax revenue comes from just the top 5 percent of high-income taxpayers,” Gutierrez noted. “Proposition 30 would dramatically increase the incentive for them to move to any of the 49 states with lower taxes, taking their tax dollars with them.”
California currently has a top marginal rate of 13.3 percent. The next highest rates are 11 percent in Hawaii and 10.9 percent in New York. The top tax rate is 6 percent or less in at least 26 states that impose an income tax; there is no state income tax at all in seven states (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming); New Hampshire is phasing out its 5 percent tax on interest income and dividends; and Washington taxes only the capital gains income of high-earners, at a 7 percent rate.
The CalTax website includes an analysis of the measure and others on the November ballot.
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