Rather than a wealth tax, we should build on these successful strategies that create jobs and support working families.
By Cottie Petrie-Norris, Tom Daly, Tim Grayson, Sharon Quirk-Silva, James Ramos, Carlos Villapudua and Blanca Rubio, Special to CalMatters
Members of the California Assembly
Feeling overtaxed and frustrated with the cost of doing business in California, some of the state’s wealthiest residents abruptly moved out of state in recent months.
Elon Musk, the world’s richest person, went to Texas, which has no income tax. Billionaire Larry Ellison, the CEO of software giant Oracle, moved to Hawaii and relocated his company headquarters to Texas.
While there may not be much sympathy for executives who are choosing to leave our beautiful state, the exodus of these jet-setters has painful consequences for all Californians.
Despite popular political slogans to the contrary, millionaires and billionaires already contribute a disproportionately large share of our state’s income tax revenue. California has long maintained the highest personal income tax rates in the nation for its wealthiest residents. The result: the top 1% of state taxpayers contribute nearly half of California’s personal income tax receipts. They provide vital funds for education, health care and social services.
Amid the COVID-19 crisis, the wealthiest Californians have been crucial to keeping our state budget afloat. Despite the economic calamity afflicting many segments of the economy, the surging stock market has produced higher-than-expected tax revenue for the state. This has resulted in at least a $15 billion budget surplus that will allow the Legislature to reverse cuts to schools, health care and local governments.
The crucial importance of this windfall against the current economic backdrop cannot be overstated. Put simply, if more billionaires flee California, the tax burden on the rest of us will increase.
The pandemic has stripped bare long-standing economic and racial inequities in our state and nation. Small businesses, which employ nearly half of the private workforce, have permanently shuttered in record numbers. Consequently, unemployment has reached record levels. Tragically, people of color are becoming infected and dying from COVID-19 at a much higher rate than the rest of the population.
California Democrats are committed to leading the state to an inclusive economic recovery, but there is disagreement about the best strategy to move forward in a way that lifts up all Californians. Some have proposed new wealth taxes to address income inequality and further bolster state revenues.
We believe there is a better way.
Rather than raising income taxes even higher, we should take focused actions to build on successful strategies that create jobs, drive innovation and support working families. We should continue to expand the Earned Income Tax Credit, which puts cash in the pockets of the working poor. We need to restore the Research & Development Tax Credit, which spurs the innovation that drives our economy. We must extend a lifeline to small businesses to help them survive the pandemic. Critically, we must ensure that workers have jobs to return to and our local governments have revenues to provide vital safety-net services.
California will always be an attractive place to live, but there is a tipping point. Proposals that drive away California residents who fund a large share of our state’s budget will ultimately hurt everyone we represent – we will have less money for schools, health care, job training and everything else our communities need. That is why we have joined together to oppose any additional wealth taxes proposed in the Legislature.
Unwise tax policy can sabotage California’s recovery. We must focus on growth that uplifts all Californians. This is the best way to rebuild our economy, create good jobs and make the California dream a reality. The only winners from raising personal income taxes in California will be high-end real estate agents in Texas.
Assemblymember Cottie Petrie-Norris, a Democrat from Laguna Beach, represents the 74th Assembly District, firstname.lastname@example.org.
Assemblymember Tom Daly, a Democrat from Anaheim, represents the 69th Assembly District, email@example.com.
Assemblymember Tim Grayson, a Democrat from Concord, represents the 14th Assembly District, firstname.lastname@example.org.
Assemblymember Sharon Quirk-Silva, a Democrat from Fullerton, represents the 65th Assembly District, email@example.com.
Assemblymember James Ramos, a Democrat from San Bernardino County, represents the 40th Assembly District, James.Ramos@asm.ca.gov.
Assemblymember Carlos Villapudua, a Democrat from Stockton, represents the 13th Assembly District, firstname.lastname@example.org.
Assemblymember Blanca Rubio, a Democrat from Baldwin Park, represents the 48th Assembly District, email@example.com.