If U.S. hikes taxes, high-income Californians might pay almost 52 percent
POSTED AT 9:21 PM ON DECEMBER 5, 2012 BY ERIKA JOHNSEN
Whether it’s because we end up going over the fiscal cliff or because Republicans agree to President Obama’s plan of not extending the Bush tax cuts on America’s wealthiest earners, the possibility of an effective tax hike means that higher-income Californians may be in for a whopping aggregate marginal tax rate. The super-liberal state already succeeded in approving their own rate hike with Proposition 30 in the November election, and combined with the potential federal raises, they could be looking at a top bracket with a marginal income tax rate of just under 52 percent:
Gerald Prante, an economics professor at Lynchburg College in Virginia, and Austin John, a Lynchburg economics student, calculated marginal tax rates — the highest rates on the highest levels of income — for all 50 states. They combined state, federal and, where applicable, local income taxes, plus payroll taxes for Social Security and Medicare and included the deductibility of some taxes.
Proposition 30 added three percentage points to the marginal state income tax rate for California’s highest-income taxpayers, bringing it to 13.3 percent. That action raised California over other high-tax jurisdictions to a marginal rate of 51.9 percent, slightly higher than New York City’s level. Hawaii was the only other place with a calculated rate above 50 percent.
…Ouch. We already knew that California was headed for a fall, but here’s yet another problem with top-down government and specifically with President Obama’s proposals to hike taxes across-the-board on those he deems wealthy, i.e. families making more than $250k/year. As Joel Kotkin writes for Forbes, it’s kind of odd that blue states voted so overwhelmingly against their own self-interest in reelecting Barack Obama, because the tax hikes he campaigned on will come down disproportionately hard on the economies of blue states. The demographics and costs of living in different geographic regions suggests that being rich means very different things to different regions:….