Showing posts with label teachers. Show all posts
Showing posts with label teachers. Show all posts

Saturday, July 14, 2012

California Proposition 30: Governor Jerry Brown's Big-Government Tax Hike

California Governor Jerry Brown, in partnership with public-sector unions such as the California Teachers Association (CTA), the California Federation of Teachers (CFT) and the Service Employee International Union (SEIU) proposes big tax hikes on a small number of Californians in order to close a multi-billion dollar budget hole.  Despite the budget hole, threats to public safety, and threats to close public schools for weeks, the California Legislature continues to block prudent comprehensive public-pension reforms, to fund tuition benefits for children of undocumented workers, and to fund a not-so-"high-speed" rail line between Merced and Bakersfield.  The California Legislature has NO SPENDING PRIORITIES.

The latest incarnation of the Governor's plan will appear on the November 2012 ballot in California as Proposition 30.

California already has some of the highest state taxes in the United States.  Those earning over $48,000 incur a 9.3% state tax rate--California's second-highest rate, which by itself is already the fourth highest in the nation even without any tax hikes.  Only the top tax rates in Hawaii, California, and Oregon are higher.

If passed, Proposition 30 would burden California the nation’s first, second, third, and fifth highest marginal state tax rates!  The following chart compares California's current state income tax rates and proposed increases against the highest income tax rates in other states.  Billed by the Governor and his allies as a "temporary" tax hike, these rates would be in effect for seven years.  The income tax increases fall exclusively on the top 2-3% of taxpayers who already pay roughly half (or more) of California's entire tax bill.


In order to appear "fair" and "broad-based", Proposition 30 also increases California’s state sales tax, already the nation’s highest. The following chart compares California’s state sales tax rate to the other 49 states.


Despite all of Governor Brown's talk of tax fairness, Proposition 30 circumvents the Legislature’s 2/3rd requirement to raise taxes. In fact, Proposition 30 is “electioneered” by Governor Jerry Brown and his allies to only require a simple majority to pass. Proposition 30 asks the 50% of California voters--who pay little or no state income tax--to pass a big tax increase on the top 2-3% of California taxpayers, who already pay roughly 50% of ALL state income taxes. Proposition 30 is an abuse of the so-called “democratic process”, especially for so-called Democrats. Is this what “democracy” looks like?

Proposition 30 asks California voters for a four-year, 0.25% rate increase to the state sales tax, which equates to a 3.4% rate increase. The sales tax hike applies to ALL Californians. Proposition 30 also asks voters for a seven-year increase on only the top 2-3% of income taxpayers.  This equates to a 9.7% to 24.4% rate increase for the taxpayers who ALREADY pay the highest effective tax rate and roughly 50% of all state income tax.

In 2009, the average tax liability for every California taxpayer was about $2,655.  However, averages usually hide some important details.  For example, the average human being has one testicle and one ovary.  The bottom 50% of taxpayers (and possible voters) pays between $0 and $500 in TOTAL California income tax.  Meanwhile, Governor Brown's tax increase targets the top 2-3% of taxpayers who earn $250,000 or more ever year, despite that they ALREADY pay the highest effective tax rates.  These taxpayers also already pay between $9,000 and $1.3 million.


 The primary reason that California income tax revenues collapsed during the financial crisis is that INCOMES collapsed for ALL Californians, but especially for those at the top. The following chart shows the incomes and income taxes collected in 2007 (before the financial crash) and in 2009 (after the financial crash).  Why the big swings in income and taxes for those making over $1 million?  Unlike the federal tax system, California treats capital gains exactly like ordinary earned income.  The California Legislature loves all the extra revenue generated from stock market and real estate gains.  Unfortunately, this over-reliance means huge decreases during market crashes.  The subprime crisis causes simultaneous crashes is BOTH real estate and on Wall Street.  The California Legislative Analysts Office (LAO) has long recognized this problem as a cause for California's revenue volatility.

Despite that top taxpayers still  pay the highest marginal tax rates, Proposition 30 wants to increase those rates even more, leaving California even MORE VULNERABLE to future market swings. 

California ALREADY suffers from its high taxation. The result is that California suffers from a poor business tax climate that drives away jobs and causes are above-average unemployment.  Many Democrats within the California government refuse to believe that high taxes have any effect on California's economy, despite ample evidence to the contrary.  Why have California's tax revenues dropped?  It is NOT because tax rates are too low.  The fundamental problem is that California's private-sector economy is stagnating while government expenditures have increased.  Simply raising taxes, even if it is limited to the top 2-3%, will NOT fix what ails California.






California currently has the nation’s 3rd-worst unemployment rate, beating out only Rhode Island and Nevada.

 Naturally, the public-employee unions are bankrolling Proposition 30 and have spent over $31.6 MILLION as of November 3, 2012.


 Many of these groups are also recognized as the biggest spenders in California politics, according to a March 2010 report by the California Fair Political Practices Commission.  The California Teachers Association (CTA) has spent $10.7 MILLION on Proposition 30 so far and the Service Employees International Union (SEIU) has spent over $11.1 MILLION as of 11/3/2012.  The spending will likely be even higher by the time the election is over.
What kind of access does that kind of money buy? Just ask California Governor Jerry Brown, who has private town-hall meetings with California's public-sector unions.  Even career Democrats such as Willie Brown (no relation)--California's longest-serving Assembly Speaker and former Mayor of San Francisco--recognize that Governor Brown is a prisoner of the teachers unions. These are the same unions that are bankrolling his tax hike and likely will be out campaigning for it before November.


Meanwhile, the amount of money that the State of California spends continues to grow.  State spending is up 23% since 2000, even accounting for inflation.


Political columnist Dan Walters asks some very good questions about Proposition 30.
Why should we pay more ...
  • when we already have one of the nation's highest tax burdens,
  • when the Legislature is handing out raises to its staff,
  • when politicians haven't curbed rapidly increasing pension costs,
  • when they're wasting billions on prisons, 
  • when they've shunned a spending limit,
  • when they're spending tens of millions on illegal immigrants' college educations, and 
  • most importantly – when the state is mired in recession and 2 million-plus are jobless?
Fellow Californians, I urge you to VOTE NO on PROPOSITION 30!  It's bad tax policy and an abuse of the democratic system.
See also ...


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Tuesday, October 18, 2011

American Federation of Teachers: Part of the Solution or Part of the Problem?


According to a recent article in the San Jose Mercury News, the American Federation of Teachers (AFT) is pursuing  a possible ballot initiative to raise taxes YET AGAIN on California's millionaires. I certainly wish that the members of the American Federation of Teachers (AFT) would actually apply their math, economics, history, and critical reasoning skills. AFT is right. We do have a problem, but the problem is NOT that California's taxes are too low for upper-income earners.


First, a caveat: I am not now, nor have I ever been a "millionaire."  However, in 2007, 2008, and 2010, I spent more on federal, state, and payroll taxes than all my other family living expenses COMBINED!

California ALREADY has the second highest marginal tax rate (10.3%) in the nation. Only Hawaii has higher marginal rates (11%).  California's 2nd highest tax rate of 9.3% is the fourth highest in the nation behind Hawaii, California's top tax rate, and Oregon.  California's 2nd highest tax bracket starts at 48,000 in income.
http://www.taxfoundation.org/taxdata/show/228.html

California's millionaires ALREADY pay a surtax supposedly to fund mental health services proving, I guess, that you must be crazy to be a millionaire and officially live in California.

California ALREADY implements President Obama's so-called "Buffett Test."  Capital gains in California are ALREADY taxed EXACTLY like ordinary income.

California's wealthy ALREADY pay the bulk of the state's income taxes.  The top 2% pay roughly HALF OF ALL PERSONAL INCOME TAXES (PIT).
http://soquelbythecreek.blogspot.com/2009/07/oppressive-progressive-income-tax.html


The top 33% minority ALREADY pays 94% of the entire Personal Income Tax load.  Meanwhile, the bottom two-thirds supermajority contributes JUST 6%. But who has more voting power to raise taxes on the minority?

Similarly, the 33% minority contributes more than half of California's General Fund revenue.


California's upper-income taxpayers ALREADY pay a much higher effective tax rate than do the majority of Californians.  I ask you, looking at the chart in the article below, who isn't paying their fair share?
http://soquelbythecreek.blogspot.com/2011/10/who-pays-their-fair-share-in-california.html


Even though a majority of Californians pay a lower state income tax rate than do a small minority, California's overall state tax burden is ALREADY one of the highest in the nation.


California's high taxes ALREADY places the state at or near the bottom on a variety of business climate surveys.  On one survey of 500 CEOs from around the country, California has ranked DEAD LAST as a place to do business since at least 2005!  In another survey, 70.5% of respondents ranked California as the least favorable business climate in the U.S.!
http://chiefexecutive.net/best-worst-states-for-business
http://www.taxfoundation.org/research/topic/15.html
http://www.aboutdci.com/wp-content/themes/dci/docs/Winning-Strategies-2011.pdf (See Appendix C).


Is it any surprise then that California also has the nation's second-worst unemployment rate?
http://www.bls.gov/web/laus/laumstrk.htm

Of course, as part of the AFL-CIO, the American Federation of Teachers (AFT) enjoys tremendous clout both in Sacramento and Washington, as does its cousin organization, the California Teachers Association (CTA).  The California Teachers Association (CTA) is the #1 top spender in California politics according to the California Fair Political Practices Commission (FPPC).  CTA outspends the #2 top spender, SEIU, by almost double!
http://soquelbythecreek.blogspot.com/2011/02/do-public-employee-unions-have-major.html
http://www.fppc.ca.gov/reports/Report31110.pdf


AFT is #11 on the list of top all-time national political donors, giving 91% of their member's state-mandated contributions to Democrats, 0% to Republicans. Hmmm.
http://www.opensecrets.org/orgs/list.php?order=A


California's politicians kowtow to the unions.  Even fellow career Democrats like former Assembly Speaker Willie Brown recognize this.  As he stated in his article, "Jerry Brown won't challenge teachers union," ...
http://articles.sfgate.com/2011-02-27/bay-area/28635640_1_teachers-union-pensions-union-leaders
"No one knows the power of such unions in California better than Gov. Jerry Brown.
"You'll notice that even as he's proposed draconian cuts to health and welfare programs and the state's universities, and asked taxpayers to pony up extra for several more years, BROWN HAS BEEN CAREFUL NOT TO TOUCH TEACHERS.
"HE KNOWS GOOD AND WELL WHAT THE CALIFORNIA TEACHERS ASSOCIATION CAN DO FOR HIM - OR AGAINST HIM - IN AN ELECTION."
Here's the ironic part of the story.

  • BOTH the American Federation of Teachers (AFT) and the California Teachers Association (CTA) are tax-exempt 501(c)(5) organizations, according to Form 990 disclosures on file with the U.S. Government and with Guidestar.org.
  • BOTH the American Federation of Teachers (AFT) and the California Teachers Association (CTA) derive the majority of their revenues from state-mandated union dues, paid by hard-working public school teachers.
  • This begs the next obvious question:  Who pays teachers' salaries?  Naturally, these come from the taxpayer.

Instead of using their political clout on REAL solutions, the American Federation of Teachers (AFT) is wasting their member's dues and our time on yet more non-solutions.  AFT, how about using your political clout on tax reform, spending reform, or pension reform?  For too long, organizations like AFT have blocked prudent reforms in California and in Washington.  Consequently, there are likely massive spending cuts coming as part of the Super Committee process, which likely means jobs cuts for AFT members and other public employees.  AFT, if you refuse to be part of the solution, then by definition, you become part of the problem.
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