Heads Up Millionaires; You’re The Target

California voters will have not one but three chances to take down rich people with a "Millionaires" tax.

California voters will have not one but three chances to take down rich people a peg or two as supporters of two ballot initiatives that would raise taxes on the state’s wealthiest people, ostensibly to fund public education and other services, say they’re not backing down from their efforts.

(NOTE OF IRONY: Bet Zuckerberg and the Facebook folks are just thrilled now with the timing of their IPO; a whole crop of millionaires being created just in time to get dinged by taxes. That'll teach you to be successful.)

Those other two initiatives could upend Gov. Jerry Brown's crusade to clear the November ballot of any competing tax measures so his take on the “millionaires’ tax” can pass. Or California voters could do what they almost always do when faced with competing or multiple measures on the same subject - reject all three.

Backers of the so-called "Millionaires Tax" officially began signature gathering last week, while proponents of the other measure, “Our Children, Our Future,” got a pledge from the primary backer that she would “spend millions” to get the initiative on the ballot.

"The Millionaires Tax of 2012" is supported most prominently by the California Federation of Teachers (CFT), the Courage Campaign (a liberal grassroots advocacy clan), and the California Nurses Association (CNA). Signature gathering has already started on the proposal which increases income taxes on people who earn more than $1 million a year in California. It will generate $9.5 billion annually, with the majority of the revenue dedicated to education (beneficiary: CFT), health services (beneficiary: CNA) and public safety. It has no expiration date.

This is all so Obama-esque. As you may recall, President Obama’s plan is to enact a higher tax rate for people making more than $1 million a year. The Prez said his plan – which he calls “The Buffett Rule” - is to make sure the nation's wealthy pay at least the same tax percentage as the middle class.

Meanwhile, with "Our Children, Our Future," the income tax for everyone in the state would increase, though the largest escalation wil fall on the highest wage earners. The prime backer is Molly Munger, a civil rights attorney from SoCal whose family is worth billions. She estimates the proposal would generate $10 billion a year that would be dedicated solely to education, with criminal penalties if lawmakers try to adjust it. It expires after 12 years. (Munger has given $800,000 so far to the effort.)

The Governor's plan would increase the sales tax by half a cent along with raising income taxes on individuals with annual incomes of $250,000 or more. It’s estimated to bring in $7 billion per year and would sunset after five years.

Both “The Millionaires Tax” posse and the "Our Children, Our Future" clique predictably expressed confidence that conventional wisdom is wrong, wrong, wrong and that one or more of the tax measures could pass even with multiple initiatives on the ballot. In typical tax the rich mode, it’s ready, fire, aim.

But the better analysis came from Steve Glazer, the Gov’s top political adviser. He is reported as saying the probable impact of multiple measures is that all of them would receive diminished support; comparing all the efforts to a circular firing squad.  Somehow apropos.

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.

Lou Covey, The Local Motive February 12, 2012 at 10:58 PM
Roger, I'm not sure if you are a small business owner but I'm assuming you are not. I am, come from a family a long line of small business owners, am friends with many small business owners and advise many small businesses. Almost any moderately successful non-chain restaurant in Redwood City will create an income of 7 figures and most are S-Corps or LLCs. Each of these is taxed on the basis of that income. Most of the owners take a "draw" rather than a salary and they take care of their families, many of them extended, with that money. None of them live in the lap of luxury but most make a good living and they employ many of the people in our town. They are not, in the least, what is characterized as the one percent, but they are most definitely in that level. Their tax rates are far above the Mungers and Buffetts of the world. All three measures will increase the taxes on those people, not on the Mungers and the Buffets. That's all I'm saying.
Eggbert February 19, 2012 at 05:40 PM
Quick perusal of relevant news coverage shows that Fox and its ilk are the only venues presenting the story as "Warren Buffett suing this IRS". Less agenda-driven outlets prioritized accuracy: it's NetJets, a unit of Berkshire Hathaway, behind the suit. And they make a rather good case that their tax bill at least merits review: http://online.wsj.com/article/SB10001424052970203611404577046374108267952.html Although admittedly, "Warren Buffet Sues the IRS" is a much juicier headline and serves to bolster a specific world view, it confuses rather than illuminates. Granted the sources, I'm sure that's intentional.
Lou Covey, The Local Motive February 19, 2012 at 08:36 PM
Eggie, you equate the HuffPo with rightwing media? Wow, You are liberal. http://www.huffingtonpost.com/2011/08/29/warren-buffett-taxes-berkshire-hathaway_n_941099.html
Roger Brina March 13, 2012 at 05:53 PM
For some reason your most recent "Aye, There's the Rub" piece is not open to comments, so I'll have to leave my response here. Less than one percent of California households make over a million dollars a year. So for you and others (like Lou Covey in the comments of this particular blog entry) to try and portray this as a tax on the average middle-class person is highly disingenuous. Furthermore: unlike the federal tax code, California's tax code does not treat capital gains differently than regular income. This means that both capital gains and regular income are taxed at the same rate. In other words, your claim that this tax initiative won't do anything to increase the tax burden on the super-rich who make money off investments is false at best and deliberate obfuscation at worst. "Aye, there's the rub" indeed. Finally, thanks for the shout out to Occupy Redwood City. I can't speak for the others of our General Assembly but I appreciate the publicity, even when it's snarky.
Lou Covey, The Local Motive March 13, 2012 at 05:57 PM
Roger, you're right that cap gains and income are taxed the same in California, however, they aren't taxed until the asset is sold. So someone who is a millionaire on paper isn't taxed until they sell their stock. And by keeping their sales below the threshold, they can get a nice living without ever earning a pay check. But some restaurant owner with a million in revenues, he does have to pay.


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