WTF, California?

 What is wrong with this state?

California's budget crisis may be "solved," with news of a tentative agreement leaking out today. Via Kim Thornton at Pet Connection, from the Sacramento Bee:

Multiple legislative sources said Tuesday that it would raise revenues temporarily by these means:

• Increasing the state's sales tax by 1 cent on the dollar.

• Increasing gasoline taxes by 12 cents per gallon.

• Raising the state's vehicle license fee from the current 0.65 percent of a vehicle's value to 1.15 percent, with 1 percent going to the general fund and local law enforcement getting 0.15 percent.

• Increasing the personal income tax across the board, either by assessing a surcharge on tax liability or increasing the tax rate.

Sigh, regressive taxes. Morons.

The vehicle license fee should never have been lowered in the first place -- that Ahnold brainstorm alone is responsible for a good bit of the state's financial problems.

The income tax is a no-brainer, and if we had good public transit across the state, the gas tax, too.

But to increase sales tax and, under the circumstances, the gas tax, is to simply crush people who are already barely making it to what, divert the wrath of the Republicans if they dared increase the income tax too much? Maybe they should read this New York Times op-ed by Netflix founder Reed Hastings:

I’m the chief executive of a publicly traded company and, like my peers, I’m very highly paid. The difference between salaries like mine and those of average Americans creates a lot of tension, and I’d like to offer a suggestion. President Obama should celebrate our success, rather than trying to shame us or cap our pay. But he should also take half of our huge earnings in taxes, instead of the current one-third.

Then, the next time a chief executive earns an eye-popping amount of money, we can cheer that half of it is going to pay for our soldiers, schools and security. Higher taxes on huge pay days can finance opportunity for the next generation of Americans.

[....]

This week, President Obama proposed imposing a $500,000 compensation cap on companies seeking a bailout. It’s a terrible idea. We all want the taxpayers’ money returned, and capping compensation at bailout recipients will just make it that much harder for those boards to hire and hold on to the executives who can lead their companies to compete and thrive.

Perhaps a starting place for “tax, not shame” would be creating a top federal marginal tax rate of 50 percent on all income above $1 million per year. Some will tell you that would reduce the incentive to earn but I don’t see that as likely. Besides, half of a giant compensation package is still pretty huge, and most of our motivation is the sheer challenge of the job anyway.

Instead of trying to shame companies and executives, the president should take advantage of our success by using our outsized earnings to pay for the needs of our nation.

I will never understand why people in this country aren't rioting in the streets.

Comments

[Cheryl]

Why do rich people pay thousands to CPA's and lawyers to not pay taxes? Why don't they just pay up like the rest of us? Bet you we wouldn't need to raise their tax rates if they did. The thing that Reed seems to have forgotten is that the $500k limit is a backlash to the golden parachutes to the Ken Lay's of the world who drove their companies into the mud and walked off with huge bucks. They shouldn't even get 1/2 of what they got. CEO's that do good - can still get the bucks. Reed should really have a chat with Jeffrey Hollender about what it takes to be a socially responsible CEO.

[Barbara Saunders]

Cheryl - though the super-rich have sketchy tax shelters and such, it is also true that most of "the rest of us" don't simply pay up, we pay more taxes than are legally required because we don't have the time, energy, knowledge, and professional help to figure out the tax code. I know that until I started freelancing, I didn't bother with looking for write-offs. Most freelancers I know (and my crowd is hardly rich!) pay lawyers and accountants to do our taxes. It's worth it.

[Kim]

I agree that an increase in taxes is necessary (in Canada as soon as you make over $126,000 they start to take 29% of what you make...) but I think the point of it was less about the individual making the money and more about the company spending the money.

These companies are bleeding money from every orifice. If they are in such need that they need to go to the government for billion dollar bailouts, why should their top CEOs continue to rake in the big bucks?

This may in fact persuade companies to absorb the losses internally instead of simply asking for a handout. ie Hey, if you cut your salaries from $5 million to $2 million, we can scrape by this year - if we have to go to the government, not only will you NOT get your $2 million, you'll only get $500,000!

And of course there are many ways around this - expense accounts, commissions, etc - and every company will find and exploit every one of them to keep their employees happy. But why should the taxpayers be handing out money for an executive's bloated salary when his management is what got the company in hot water in the first place?