Prop. 30, approved by voters in November 2012, raised state income taxes retroactively to Jan. 1, 2012, on singles making more than $250,000 and married couples making $500,000. It raised rates by one, two or three percentage points through 2018, bringing the top rate on incomes above $1 million to 13.3 percent, the highest in the nation.
Bryan Goldberg, who founded the Bleacher Report sports website and sold it to Turner Broadcasting for about $200 million in mid-2012, is moving his primary residence from San Francisco to New York this year. A major reason, he says, is Prop. 30 and the way it was applied retroactively.
Lee Schneider, a hedge fund salesman who works from home, also cited Prop. 30 as the “deciding factor” for his move from Walnut Creek to Austin, Texas, in 2012. The California native had recently built a $2 million house at the foot of Mount Diablo and took a loss on the sale, but “I can make half of it back in one year of tax savings,” he says.
Schneider’s neighborhood in Texas, which has no state income tax, is full of cars with license-plate frames from California dealerships. On a flight from Austin to Los Angeles shortly before Christmas, 11 of the 12 seats in the emergency row were occupied by people who had moved from California to Texas, he says.
Gov. Jerry Brown’s budget proposal released last week estimates that Prop. 30 alone will generate $5.7 billion in additional income tax revenues in fiscal 2014-15. That represents 5.4 percent of total general fund revenue, projected at $106 billion.
The budget makes no allowance for migrating millionaires.
I’m sure it won’t be a problem. Governor Moonbeam is a financial whiz. California’s financial problems have been solved and it’s now free to spend, spend, spend.
The $155-billion budget proposal would increase general fund spending by more than 8%, to $106.8 billion.
“We’re putting $10 billion into the schools of California after years of drought and cutbacks and pink slips for teachers,” Brown said.
Brown defended a proposal in the budget to tap into the $850 million generated by new fees on polluters to help finance the troubled statewide high-speed rail project. Brown says the so-called bullet train will help California “pull together to form a greater community” and reduce greenhouse gases over time.
Sounds fantastic. How much will this cost?
Mr. Brown and his advisers have strongly affirmed their support for the planned $68 billion rail line
That’s gonna require a lot of fees on a lot of polluters. And a small army of inspectors to fine people for polluting to fund a bullet train that will fight pollution and then more money to cover the pensions of the inspectors…
Retirement benefits for public employees are underfunded by $218 billion, according to administration estimates, and the state has billions of dollars in other outstanding obligations and debts.
Brown on Thursday said there will be progress on teacher pension funds once people see the “disaster ahead.”
They did see the disaster ahead… and they voted for it.
Speaking of disasters ahead on the other side of the coast…
Mayor Bloomberg warned that raising taxes on high earners could drive them from the city. “One percent of the households that file in this city pay something like 50% of the taxes,” explained the Mayor. “In the city, that’s something like 40,000 people.”
Fortunately Bloomberg was replaced by a sensible Communist who ran on a platform of banning plastic bags, taxing the rich and eating pizza with a fork.
But it’s not like William Wilhelm Jr aka Bill de Blasio inherits a city deep in debt and teetering on the edge of ruin.
New York City debt doubled under Bloomberg to $110 billion. The interest on that debt is at $6 billion. Three years of interest on New York City’s debt equals the debt that drove Detroit into bankruptcy court.
With $90 billion in unfunded pensions and more retired city workers, in some branches of public employment, than active workers, New York City’s total liabilities exceed its assets by $125 billion.
All we need now is a high speed train to San Francisco.