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NORTHERN CALIFORNIA RECORD

Friday, March 29, 2024

New income tax hike could go to 16.8%; ‘Best path forward is for the Legislature to focus on helping employers create and maintain jobs’

Legislation
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Kline | https://www.caltax.org/about-caltax/staff/

Another proposal to increase taxes on California’s top wage earners closely resembles a similar measure that the Legislature declined to vote on last year.

AB 1253 would impose an additional 1% tax on those earning $1,181,484 million or more; 2% on $2,362,968 million or more, and 3.5% on $5,907,420 million or more; it would apply to the current tax year that started Jan. 1, 2021.

The figures are slightly higher than those in last year’s proposed tax increase.

California’s top earners currently pay a state income tax rate of 13.3%, the highest in the nation.

Hawaii is the next highest at 11%, followed by New Jersey at 10.75%.

California’s current budget outlook should preclude the need for adding to the costs borne by high earners, David Kline, vice president of communications and research with the California Taxpayers Association (CalTax), said in an email to the Northern California Record.

"California has record-high reserves and has experienced a windfall of unexpected tax revenue this year, so a tax increase would be entirely unnecessary,” Kline said.

The budget released by Gov. Gavin Newsom includes a $15 billion windfall.

“The best path forward is for the Legislature to focus on helping employers create and maintain jobs in this state so Californians can get back to work -- and the economic growth will produce even more revenue for the state under the existing tax laws,” Kline said.

Gov. Gavin Newsom has said he will not raise taxes this year, Calmatters reported.

When asked about that during a March news conference on AB 1253, bill sponsor Assemblyman Miguel Santiago, D-Los Angeles, said, “Before we engage in a conversation, we’ve got to go through the legislative process, and we’ve got a lot of homework to do before we get to that point.”

A coalition opposition letter to Santiago, authored CalTax policy advocate Dustin Weatherby, describes income tax as a volatile source of revenue.

“According to data from the enacted 2020-21 budget, 43.5 percent of California’s tax and fee revenue comes from the personal income tax,” the letter states. “[A]nd the most recent data from the Franchise Tax Board shows that under California’s steeply progressive tax structure, 0.5 percent of tax filers in California reported income of $1 million or more, but paid 40.1 percent of the total income tax dollars collected by the state.”

Other states also have been luring upper bracket earners away from California, CNBC reported.

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