Sunday, September 25, 2011

California's Version of the 'Buffet Rule' Working Out Beautifully. Oh, Wait: It's Actually an Unmitigated Disaster.

'Progressive' left hardest hit.

The state's over-reliance on taxing the rich has been a disaster during bad times

If President Obama really wants to see the "Buffett Rule" in action, he should look at California's tax system. The state has been plagued by it for years.

The revenue stream is unstable and the state budget has been a deficit disaster... In California, we've got what you could call a Buffett Rule-Plus. There's an extra tax bracket — at 10.3% — for income exceeding $1 million.

...California relies heavily on rich investors for its income tax revenue, which fuels half of the general fund... Some examples of this over-dependence, based on the 2009 tax year:

• The top 1% earned 18% of California's income but paid 37% of the income tax.

Illustrating the volatility of the California income tax, however, the top 1% paid 48% of the total take in 2007 before the stock market collapsed. In the next two years, the state's income tax revenue fell 25%.

• The top 10% earned 45% of the income but paid 72% of the taxes.

During the recession, the middle class paid a slightly larger share of the declining income tax take. Those earning between $45,000 and $84,000 kicked in 11% of the total revenue in 2009, compared to 9% two years earlier. But one could argue they still were under-taxed. They earned 19% of the income.

"The real people who don't get taxed enough in California are the middle-income folks," says Steve Levy, director of the left-leaning Center for Continuing Study of the California Economy...

...Meanwhile, if Buffett really wanted to live by his own rule, he could leave Nebraska, move to California and pay our state taxes.

The math is actually pretty simple, unless you're a Democrat:

• If you punish success, you drive successful people away.

• If you reward sloth, you get more sloth.

• If you promote illegal behavior (such as illegal immigration), you get more illegal behavior.

But you can be sure that none of the tautological facts describing human behavior will ever influence a single progressive. Because for drones, ideology always trumps facts, logic, history and reason.

Image: HillBuzz.

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