Boo on You, Millionaires

So you're a millionaire. Nobody likes you; it doesn’t matter that you earned your status through blood, sweat and tears; and, everybody (OWS/the state/the feds) all want your money.

Sad times if you happen to be a millionaire. Nobody likes you and it doesn’t
matter that you earned your status through blood, sweat and tears (great band
BTW)… the bottom line is you have money and everyone else wants you to give
it to them.

There are going to be no less than five competing tax initiatives on the November 2012 ballot, almost all of which have the concept of taxing millionaires in their respective crosshairs. Rest assured, I have not suddenly become the apologist for millionaires. I just find it fascinating that all these measures should appear
at the same time.

And there’s nothing fancy about what they seek to do. It’s just plain old redistribution of wealth through progressive taxation.

Gov. Jerry Brown this week filed an initiative to increase taxes in an effort to cut the state’s budget deficit. The initiative, which is tied to local government realignment, is estimated to raise $7 billion though the projected budget shortfall next year is estimated to be $13 billion.

First, the Governor’s initiative seeks to increase the state sales tax by .005 (a half-cent) from January 1, 2013 through December 31, 2016, then to increase personal income tax on the state’s top wage earners as follows:

>$250,000 individual/$500,000 joint: 1% increase (to 11.3% marginal)
>$300,000 individual/$600,000 joint: 1.5% increase (to 11.8% marginal)
>$500,000 individual/$1,000,000 joint: 2% increase (to 12.3% marginal) 

FYI: The personal income tax hike would be retroactive to the full 2012 tax year through 2016.

Meanwhile, a group fronted by the liberal Courage Campaign and the California Federation of Teachers has proposed an initiative that would raise $6 billion for K-12 education solely by raising income taxes on Californians who earn more than $1 million a year.

Another proposal, backed by the state PTA, would raise $10 billion a year in new revenue by raising taxes on a sliding scale on nearly all wage earners, with the heaviest burden on the wealthiest. The money would go directly to local K-12 schools and early childhood education PLUS the measure forbids the governor and legislators from using the money or directing how it may be spent.

The Think Long Committee has a proposal to raise $5 billion more for public schools every year and billions for public universities and local governments by reshuffling California's tax code. It would lower the state's personal income and sales tax rates and create a new levy of more than 5% on services that are not currently taxed.

Then there's a very different tax increase initiative that uses Proposition 13.  The proposal would allow "nonresidential real property" to be assessed using its "fair
market value" starting in 2014. County tax assessors would revalue the property at least every three years.

It exempts commercial and agricultural land as well as single family and multi-family residences. The initiative would also, starting in 2016, exempt "the first $1 million of tangible personal property," which backers say will protect small businesses. Finally, the initiative would double the homeowner tax break and increase the tax break offered to renters.

Fortunately or unfortunately (depending on how you view these sorts of things), the California electorate has proven time and again that when faced with competing initiatives (or five) on the same subject, there is a tendency to vote "no" on all of them. Should be interesting to see if one wins the "Gouge the Millionaires" Sweepstakes.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Chip Krug December 11, 2011 at 08:33 PM
I don't understand how asking those who have all the money to help out in a time of need equates with gouging. There are plenty of people who invested blood, sweat and tears over the last ten years and did not end up millionaires. It seems to me there must be some perverse incentives in our system that allowed such a large redistribution of wealth in such a short period of time. Getting it back to "normal" seems to me to be just good, common sense, public policy and, more importantly, fair.
Lou Covey, The Local Motive December 12, 2011 at 08:48 PM
I don't necessarily agree with Mr. Stewart's terminology either, but when you realize that the people who will end up being taxed are not the purported members of society's financial elite, you have to wonder what we're trying to accomplish. The real source of the taxes stated in all the initiatives are actually small businesses under S Corporation laws. Many proprietors of small businesses are, on paper, millionaires, but take home well under five figures of income before taxes. The adjustment or Prop 13, since it exempts commercial, agricultural, single-family and mixed family property is targeted at "luxury cars" that can be seen in the form of delivery vans, construction equipment, as well as vacation homes... unless, of course, that property does not exist in California. So if you are a middle class person who just happens to own a small cabin in the Sierra's you're going to be taxed on it unless your total property, including your delivery truck, can be assessed below $1 million. The lodge in Switzerland is out of reach, however. These initiative are just another inefficient and ineffective means of redistributing wealth from the middle class to the government. The truly wealthy will not be affected.
mark fassett December 13, 2011 at 01:04 AM
It's so funny how it's labeled as "class warfare" and "redistribution of wealth" or "gouge the millionaires." Top FEDERAL tax rates are very very low compared to the past. CA rates are among the highest right now but I'm not sure about how that compares historically. Anyway, "gouge the millionaires" is really a poor choice of phrase. Many people believe in a progressive tax system where higher incomes pay more. That is hardly "gouging." As a matter of fact, some times of very high tax rates came during good economic periods regardless of what the talking heads want you to believe.
Veronica Palmer December 15, 2011 at 12:34 AM
The thought that millionaires and billionaires are self-made is preposterous on its face. Let's also not forget that the biggest transfer of wealth has been going up the ladder for the last 30 years or more. But that being said, what bothers me is that people are focusing on narrow issues. Sure, education is suffering. Sure, health care and health care providers are suffering. The environment is getting noticably worse by the day. Climate change though getting more and more dangerous in general, keeps throwing curve balls that make us wonder if there really is a climate crisis. In the meantime the large and multinational corporations suppress innovation, rape and pillage the environment and whole communities, buy politicians, initiatives and laws and then tell us it's the government's fault; that the government is incompetent and can't do anything right. There many things happening in our world that are beyond anybody's control or management but...I learned several years ago that it's the big corporations using politicians they purchased and the government as a foil, who are responsible for most of our problems. I am comforted that more and more people are beginning to look behind the the curtain at the palace in OZ.
Lou Covey, The Local Motive December 15, 2011 at 06:18 AM
Veronica, according to Forbes list of the wealthiest people in America, 2/3rds are identified as self made. In the top 20, 95 percent are self made. Outside the US, however, the balance is reversed.
Lou Covey, The Local Motive December 15, 2011 at 06:23 AM
The self made list includes Warren Buffet, Bill Gates and Larry Ellison as the top three and super lib George Soros as number 7.
Jennifer Tegnerud December 15, 2011 at 11:03 PM
Wow, where to start, yes, the easy solution is to "tax the rich" but what everyone seems to forget is the reason why the government is in the position in the first place, which is crazy pensions, too many employees, high salaries etc.. the gov needs to really look at the big problems instead of always villifying the "rich" ... I happen to know a very close relative of mine who immigrated to this country with $50 and now in his late 70's is classified as a millionaire, ALL blood sweat and tears. So there are plenty of self made people out there they just typically stay out of the media for obvious reasons. And when you take high income earners, and you add federal and CA state taxes; the people who don't cheat on their taxes are paying upwards of 45-50% total. But you wouldn't know that if you only listen and believe the media.
Veronica Palmer December 16, 2011 at 11:54 PM
I could say I was born in Germany. You wouldn't know by looking at me. What we say about ourselves is what we want others to know about us. It doesn't make it true.
Veronica Palmer December 17, 2011 at 12:07 AM
No, what got us to where we are today is decreasing government revenues. Our government now takes in as much in it did in the 1950's. The 1950' for God's sake! We went to war in two countries without paying for them. We had a financial sysyem that we crazy speculating on its own instruments and not investing in things that actually created something. We should not forget that for most of the last 30 years most, I emphasize most, government employees made less in actual salaries compared to their counter-part in private industry. So we promised them we would make up to them later in life during retirement. No one lives separate lives. Even the recluse needs sustainance, shelter, clothing, education, transportation, security and more. All provided by other people individually or collectively. Anyone saying they are self-made has an ego problem, in my honest opinion. It is the epitome of conceit.
Lou Covey, The Local Motive December 17, 2011 at 05:13 PM
I'm not sure what you're saying here. Are you claiming that it is impossible to become wealthy on your own effort?
Lou Covey, The Local Motive December 17, 2011 at 05:39 PM
Veronica, that's not quite right. Our spending, as a percentage of the gross domestic product, is now as high as it was at the end of World War II. But in 1950, total revenue collected totaled 39 billion dollars, while estimated revenue to be collected in 2011 is 2.1 Trillion. That will rise, it is estimated at current taxation rates to 3.8 Trillion in five years. And your assertion that government workers, on average, receive less in pay that private sector is debateable, depending on which survey you want to read. However, all surveys agree that government workers recieve greater job security, more paid time off, and superior benefits and retirement than private sector employees. To your final point. I guess it depends on what you mean by self-made. Each of the people on the Forbes list came up with an idea or a means of doing something that many people found useful and valuable. In turn, those wealthy people paid a great number of people an agreed upon price for goods and services that had been developed by other individuals who paid a great many people to distribute and sell those goods and services. So, yes, everyone is interconnected, but not everyone comes up with ideas that spark the populace to spend their earnings upon.
Lou Covey, The Local Motive December 17, 2011 at 05:40 PM
Conceit, Veronica, is when you believe you are right in spite of massive evidence to the contrary.
Jennifer Tegnerud December 19, 2011 at 04:31 PM
Lou, wouldn't that be arrogance? Jealousy is what spurred Veronica's "conceit" comment plain and simple. It's the driving emotion behind OWS and all that. AND what I love is that she is basically reiterating the authors somewhat sarcastic(but not really) opening statement above that nobody likes people with money ...people are just lazy and have no work ethic anymore, that's the real problem. If you can get it for free why work for anything?
Lou Covey, The Local Motive December 19, 2011 at 04:54 PM
I wouldn't go that far. Arrogance comes out of a position of power when that position is attacked and conceit is common to the human condition and prejudice. Conceit is what causes factionalism: us vs them. It blocks the conversation. Veronica is correct in that there are members of the 1 percent that are very conceited and are causing some of the factionalism, but her error is in lumping ALL of them into that faction. She marginalizes her own position just as white power addicts marginalize themselves. There is no "them" nor is there an "us." There is only "we the people." Some are wealthy, some are poor, but we need to value all our contributions and avoid minimizing others.
Veronica Palmer December 19, 2011 at 07:36 PM
In a discussion like this it is very difficult to slice various groups up too finely as there are all kinds of people and motivations in every group. So if I marginalize myself, so be it. However Lou, thank you for correcting my statement on government revenues in the 1950's. I remember reading somewhere and sometime ago that current government revenues were similar to government revenues shortly after WWII. I agree with your concluding sentence or two. At one time we could take the luxury and for simplicity to describe oursleves as "self-made". We could take for granted all the people that helped us, inspired us, worked for us, opened doors for us, provided services or tools that made our ideas real. Every one of us is a creator at some time and sometimes more than once. It is We the people, all of us, that give value to an idea. Some of us are luckier than others when we have or acquire resources to inform the rest of the world. These are the things we take for granted and help us become "self-made" this or that. In a time where opportunity is becoming more restricted or unvailable to a large number of our fellow citizens. We need to remember that we ALL made our country great. We ALL worked to create the laws, the infrastructure, the institutions, the culture and more. On the negative side, we ALL consumed, polluted and used up our natural resources. I think everyone realizes that the party is over. Eventually, we'll ALL have to create something new.
Lou Covey, The Local Motive December 20, 2011 at 12:46 AM
Veronica, excellent points all along. Just to put everything in focus, though, the term, "self-made" is a very simplistic way of saying the individuals started with nothing more than a small space and an idea. There were no inheritances, great or small, to give them a leg up, and no special favors granted them. They had an idea and the blessing of timing that turned into great wealth. And the point I was trying to make is that people like that abound in the US as opposed to outside, where privilege and inheritance are the path to greatness. Steve Jobs and Steve Wozniak were public high-school buddies on a field trip to the Xerox PARC and literally found the software basis for their computers in a trash can. And they ASKED if they could have it. To Xerox the what became the Apple GUI was useless. To Jobs and Wozniak it was a revelation. Timing is everything.
Veronica Palmer December 21, 2011 at 04:39 PM
I'm sorry Lou I have to disagree with you. The "self-made", successful people have had extraordinary opportunities all through their lives that brought them to: 1, A certain point in time; 2. Opportunity; and 3. Talent, all came together. I think Malcolm Gladwell described it best in his recent book "Outliers". We do have a tendency to look at who a person is and not where s/he came from, his/her generation, his/her family and more. I was raised by parents who always made me remember that who I am is the work of others all around me together with my natural abilities. Later in my young adulthood, I came under the influence for a short time of the De Voss business plan. Anyone who has participated in that business plan is familiar with one of their guiding principles: Helping others to become successful will make you successful. My upbringing and the influences in my life may make me somewhat judgemental about people who claim to be "self-made" but I ask: Is anybody really self-made?
Lou Covey, The Local Motive December 21, 2011 at 04:52 PM
Again, Veronica, the term "self-made" is applied by the editors of Forbes, not the individuals listed. It is the magazines descriptor. I have no idea how Warren Buffett refers to himself. The difference is that most US wealth is in the hands of people that didn't have it when they started. And I disagree with you, as well, because I think Americans DO look at where people started. Sam Walton was revered during his lifetime because he built the WalMart empire (whatever you may think of him) but his children who inherited it are not as well received. In the US, your reputation is stronger when you build something from nothing, than it is if you win the lottery.
Lou Covey, The Local Motive December 21, 2011 at 05:00 PM
I have to disagree with you, as well, about extraordinary opportunities. Yes, we do hear of that happening, but what we don't hear as much about is how many times those successful people failed before lightning struck. I spend most of my time with creative people, entrepreneurs, inventors and visionaries. 99 percent of what they do takes an incredible amount of time and effort only to fall apart. It's like Thomas Edison said about invention: it's 1 percent inspiration and 99 percent perspiration. Most wealthy people sacrifice much, work harder and support more people's dreams than anyone can ever imagine. It is those people who gained wealth without that effort that are causing the problems we face now.
Lou Covey, The Local Motive December 21, 2011 at 05:19 PM
One more thing. Several years ago I was at an elecronics trade show about a month after David Packard died. At the close of the show, at the Hewlett Packard booth a crowd gathered for a final announcement. All it was was the reveal of the show t-shirt that had not yet been passed out. It was being saved for the show exhibitors. All it had on it was a picture of Bill Hewlett and Dave Packard, looking at the garage where they started it all during the ceremony to make it into a historical landmark. Throughout the crowd of several hundred you could hear weeping. There was not a single person there who did not owe their career and livlihood to these two guys. Lliterally, millionss of people around the world make a living because of the idea they had. They spawned business and technologies that they never received any compensationf or. They founded children's hospitals, supported the arts, established scholarships for no other reason than that what they did was fun... not because they could make money out of it. Hewlett and Packard received a lot of notice for this because their largesse was in the billions of dollars, but their example is not unique. They touched a lot of lives that would never be the same.
Veronica Palmer December 21, 2011 at 07:03 PM
I think we are getting lost here. The original arguement was whether the 1% should pay back to society or not. Everything that you and I and others have said is true in individual cases. But we still have the fact that over the last 30 years there has been a huge transfer of wealth upwards and that the lower tax brackets have had to bear the larger burden of maintaining a standard of living that we've been told everyone deserves. There is so much money at the top that those that have this money no longer have enough truly tangible wealth building activities to invest in. So now, they invest in monetary instruments that do nothing but move money around. It has frequently been referred to as a financial casino. And that can have disasterous affects as we've recently experienced. Our government is now split pretty evenly between those that want government to work well for all of us and those that don't want a government to work except for their clients. This, by the way, includes certain democrats as well as republicans. This is the problem. This is a complicated world. Can we really solve the problems of the world individually?Wouldn't we want to work together to solve our problems? Are we willing to contribute to the health of our culture, our society, our world together? Or are we really on our own?
Jennifer Tegnerud December 21, 2011 at 07:46 PM
Veronica, now I understand where your thoughts are coming from based on how your parents raised you. What you need to understand is that some of us were not raised that way and bc we both have examples of success we each feel our way is the right way. But anyhow, I agree that the very top 10% of the 1% like movie stars, rap stars who throw money around like it's nothing, and especially the CEO's and Board members of companies that vote on 95million dollar salaries for each other (newt Gingrich) etc, they can stand to pay more in taxes. But I feel that there is a better solution, since government seems to mismanage their income. A big problem I personally have is people taking advantage of the "System" for example, a girl I knew got pregnant by her unemployed bf, so she went on the WIC program even though her family is quite well off in this city. So why should she qualify for state or federal assistance when her family should/could help her out or she or her BF could get a job I mean she went to private school? I have friends in Philly who own a few section 8 houses, and they complain that their tenants live better than them with the new cars, and flat screen tv's etc, bc they keep having kids, and just don't marry their partner so they keep qualifying for gov. assistance. I am all for helping out those who are truly in need, and it breaks my heart to see private charitable companies who maybe run a half way house for abused women go out of business so...
Jennifer Tegnerud December 21, 2011 at 08:24 PM
bc the Gov doesn't have the capabilities or funds to evaluate those on assistance for the right reasons and who is cheating the system. A radical thought here would be to suggest that the gov give up providing social services and instead hand them over to private yet public companies(Salvation Army etc). They could get their funding if the gov made a mandate that all large corporations/banks and the top 10% of the 1% earners had to dedicate 2-3% of their net income to a charitable organization. These companies can then hire more case workers and really work with what each individual seeking assistance needs thus helping them down the path to reestablishing their lives and helping our economy in general. This is just an alternative thought because 43% of American's don't pay any Fed Tax and I am sure a large portion of those people are the ones who take but don't give back. The gov can tax the "rich" more and more but if we don't know where it's REALLY going why should we let them? I would pay more taxes if I knew it was making a difference and not just lining politicians pockets.
Jennifer Tegnerud December 21, 2011 at 08:25 PM
And on another note, a duel income of a working professional couple in this area puts them in the top 5% of income earners in this country, if not in the top 1%. As the top 5% is $155k and top 1% is $344k. The sad thing is even at $155k it's still hard to buy a house, have 2 cars, 2 kids, and live comfortably but in Utah for example that is living like a King! So, there needs to be some scale based on where you live.
Lou Covey, The Local Motive December 21, 2011 at 09:57 PM
OKK, let's go with that. I think the argument is not whether they 1 percent should give bback, but whether they are giving their "fair share." That's where the landmines go off because no one can objectively determine what is "fair." Warren Buffett says he want's to be taxed more, but he continues to fight a $700 million tax bill that he claims is "unfair." What we need is a politician who will just say, "Look, middleclass, we know we've been forcing you to carry the burden of the economy for decades, but the very wealthy have ways of limiting their income and we can, politically, ask the lower classes to pitch in. So it's all on you folks." That's the reality and the politician who says that either has teh chance to become a hero or never be heard from again.
Lou Covey, The Local Motive December 21, 2011 at 09:58 PM
Make that , " can't, politically."
Veronica Palmer December 21, 2011 at 10:08 PM
Jennifer, you have a few ideas worth pursueing but I essentially disagree with you on the basic premise that government is unable to manage its finances. Now I recognize that there are some areas of gevernment spending I don't like and that some people game the system but we are ignoring that the big businesses do a much better and efficient job of gaming the system. I don't agree that businesses are inherently better than government for providing services. This seems to me to be the arguement you are standing for. There are plenty of examples for both our positions but the currently popular position is that business does it better than government. Neither entity is perfect. I believe that as long as we elect people who don't want government to work at all levels; we won't have government that works at any level. We have been doing this for decades and as long as we keep doing this it won't get any better. I am sure that most of the 43% that don't pay Fed. Income Tax aren't making enough money to pay income tax in the first place. I'm sure they take something from the rest of us. But I don't think I'd like the alternative. I'll leave that to the reader's imagination. I resent most, as you apparently do too, the big and profitable corporations and the corporate CEO's and hedge fund managers that destroy our environment and our economy get tax breaks, tax refunds and taxpayor funded bailouts. These are the ones who really game the system big time.
Lou Covey, The Local Motive December 22, 2011 at 12:47 AM
Wealth and Income are two separate things. Wealth is assets and capital. Income is what we receive for our labor. They are not interchangeable. When we talk about taxing the wealthy, we are talking about taxing the income they make from investment, primarily, not about distributing their wealth. But according to Politifact, most of the wealth in this country doesn't belong to the "one percent." To top 400 wealthiest people own $1.3 trillion of the wealth while the bottom 60 percent have $1.26 trillion, so the wealthiest have more than most. But the total net worth of the US, $54.9 Trillion, is fairly evenly divided among the other 39 percent... what we would call the middle class which includes school teachers, teamsters and public employees. Now let's look at income. Total annual income in the US is more than $12 Trillion. The top 20 percent (that's people making over $100,000 a year) take a little over 26 percent of that and those making less than poverty level take 3.6 percent. That means 70 percent of all the income in the US is earned by people making between $100,000 and $22,000. When we talk about raising taxes on the wealthy, we really aren't talking about fixing our economic problem, because even if we confiscated everything the top 1 percent own, we wouldn't be able to balance the budget. "Taxing the rich" is just a feel-good concept. It's vengeance only. The money we need to fix our country, if we don;t do major cuts, exists in the middle class 
Jennifer Tegnerud December 22, 2011 at 01:54 AM
Well the lovely thing about this country is our freedom of speech, and our ability to say; " let's agree to disagree." This article is perfect example of mismanaged or stupid gov spending, and how government assistance isn't being monitored. Enjoy and Happy Holidays Redwood Cityites! http://www.coburn.senate.gov/public/6946d43b-bccf-4579-990e-15a763532b40.html
Veronica Palmer December 22, 2011 at 10:45 PM
Lou, I have to take exception to your comment that "tax the rich" Is "about vengeance only". It is not about vengeance! It is about people that have the resources to spare. You know that income for the lower 98% has hardly gone anywhere but sideways for over thirty years now but the top 2% have experienced income growth over the same period. Expecially the top 1% who have generally experienced hundreds of times more growth than the rest of us. As an aside average household income for the 98% has been declining in recent years due to cuts we are taking and higher costs of living. I think what I object to in this discussion is that the middle class and the poor have not sacrificed enough and the rich shouldn't be included in this sacriffice. Lou, GIVE ME A BREAK! I haven't had a raise in 4 years and my daily living expenses have gone up and up. And I'm a lucky one. I still have a job. I have to ask you Lou: What does you're America look like?


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