Here’s a tax protest for you. If you’re single or married filing separately and make under $47,000, you pay the same 9.3% state income tax rate as people making as much as $999,999. And if you’re married filing jointly or a head of household, once your combined income hits $94,000 you pay the same 9.3% rate as do folks making all the way up to $999,999.

Millionaires pay a 1% surcharge – effectively a 10.3% rate – as the result of Prop 63 in 2004, which Prop 1E on the May 19 ballot would redirect away from mental health funding for the general fund.

The lack of middle brackets is one reason (among many) for the overall regressivity of taxation in California. New York state had a similar problem, which is resolved to a degree by the state’s plan to create tax brackets at the $300K and $500K level for married couples. It’s estimated to bring in at least $4 billion a year – won’t totally close NY’s $10 billion gap, but it’s a huge help.

Following New York’s lead, several other states are considering wealth taxes, as Progressive States Network notes (list is below the fold).

Would Californians support it? While the media might reflexively pander to anti-tax sentiment, recent national polling suggests this would be a popular move:

Almost three-quarters of Americans [74%] think it is a good idea to raise taxes on people making more than $250,000 per year, according to the latest CBS News/New York Times poll.

There is the not-so-small matter of the conservative veto – the 2/3 requirement to pass a tax. It strikes me as unlikely that Republicans will vote for it this year (surprise surprise). But that doesn’t mean it’s not worth supporting.

Republicans have used anti-tax rhetoric to split Democrats and maintain their control on the governor’s office and sustain the conservative veto for the last 30 years. It’s time we took their tax policies and shoved it down their fucking throats. What better way to show how the 2/3 rule works to protect the wealthy and screw everyone else, or to show who Republicans truly care about, than to bring a wealth tax bill to the floor of both houses for a vote?

The public does not support Republican tax policies, which are designed to let the wealthy escape paying their fair share and then force everyone else to either make up the difference themselves, or to sacrifice the very public services they need to remain prosperous and content.

It’s time for progressive Democrats to step up and push hard to raise tax rates on those making more than $250,000. President Obama is leading the way and the public has shown they will follow. What’s Sacramento waiting for?

Here is that extended look at state efforts to raise wealth taxes, courtesy of Progressive States Network:

•  Wisconsin: Wisconsin’s governor has proposed a new tax bracket for individuals making more than $225,000 a year or couples making $300,000.

• Connecticut: The Assembly’s Finance Committee approved adding four new income tax brackets, with rates ranging from 6% to 7.95%, for married Connecticut residents with incomes over $250,000 annually (and single taxpayers with incomes above $132,500).

• New Jersey:  New Jersey is considering a one year increase in the tax on the highest end income earners to 10.25% from 8.97% and suspending the property tax deduction for better-off New Jersey residents. The proposal would raise an estimated $620 million to help close a $7 billion shortfall.

• Iowa:  Iowa legislators are discussing a far-ranging proposal to reform and simplify their income tax code, including eliminating state income tax deductions for federal income taxes paid, which would increase income taxes paid by high-income taxpayers while the rest of the reforms would lower tax rates for low- and moderate-income taxpayers.  House Speaker Pat Murphy recently voiced his support for the changes and the Senate seems poised to act as well.

• Delaware: Governor Jack Merkell has put forward a broad-ranging budget plan that would take the constructive step of raising Delaware’s top income tax rate from 5.95% to 6.95% for residents making more than $60,000 per year, the first income tax increase since 1974.

• Oregon: Among the proposals to address budget shortfalls before the House Revenue Committee is one to increase income tax brackets for individuals making $125,000 a year.

• Washington: In a state that doesn’t have an income tax, Senate Majority Leader Lisa Brown has raised the possibility of an income tax on high-income residents to close the state budget gap, potentially taking the issue to the ballot.

In a totally predictable and unsurprising editorial response to the legislative counsel’s opinion that the majority vote budget package was constitutional, the Orange County Register mounted an all-out defense of the 2/3 rule that made the curious and, I will argue, completely unsupported claim that the 2/3 rule actually prevents tax increases.

In fact, what the 2/3 rule has done is massively shift the tax burden onto working and middle-class Californians while enabling the wealthiest Californians to evade their social responsibility to pay their fair share. The result is a collapse of the public services, from schools to health care, that most Californians depend upon to live, to thrive, and to prosper.

The Register argues:

California’s two-thirds vote requirement to pass new taxes is intended to protect taxpayers, not to accommodate tax spenders. This concept appears lost on the Legislature, which already overtaxes residents more than does nearly every other state and overspends what’s collected by billions, perhaps tens of billions, of dollars by the time a final accounting is made.

Of course, it is not true that the Legislature “overtaxes” residents “more than nearly every other state”. As both the US Census and the California Budget Project prove, California ranks about 12th or 13th in total tax burden. But it’s important for the Register to maintain the fiction that California somehow “overtaxes” people, otherwise voters might decide they don’t like the conservative veto that the 2/3 rule created.

When voters overwhelmingly approved Proposition 13 in 1978, they weren’t seeking to protect or stabilize government revenue streams. They were seeking to protect taxpayers. Each taxpayer.

This is an odd interpretation, since all available evidence suggests most Californians thought they were voting to protect elderly folks who were in jeopardy of losing their homes to rising property taxes. What exactly does the Register think they were trying to protect taxpayers from?

If Californians knew that the 2/3 rule actually serves to give conservatives veto power over state spending, including efforts to save schools and create jobs, would they be so supportive of it?

What’s at the core of the Register‘s argument is the notion that Californians don’t want higher taxes, so they had to give conservatives veto power to stop it. It has been a spectacular failure of a policy. Since 1978 the tax burden has actually become regressive in California. The lowest 20% income brackets pay 11.7% of their income in state and local taxes, whereas the top 4% pay only 7.1% of their income. It wasn’t like that 30 years ago.

The conservative veto has meant that California cannot raise income taxes on the wealthy in a time of crisis. It cannot raise corporate tax rates during a boom. It cannot stop Chevron, one of California’s largest landowners, from enjoying the same property tax protections as my grandmother.

And yet schools had to be built, potholes filled, and firefighters paid. Local governments had to turn more and more to sales taxes to provide these services. And despite the fact that those taxes are less progressive than income taxes, more than 2/3 of Californians – including Orange County voters in 1990 and 2006 – have voted for sales tax increases.

So when the Register claims that:

Even if your taxes are reduced to compensate for your neighbor’s tax increase, your neighbor’s tax still will have increased. And that’s what California’s constitution is intended to protect against.

…they are not telling you California has seen that very phenomenon take place, precisely because of the conservative veto. Wealthy Californians have seen their taxes decrease, but their neighbors – the vast majority of the state’s residents – now bear the tax burden, an unsustainable and economically ruinous situation which the Register defends for reasons known only to themselves.

California has been ground zero for the conservative experiment in gutting government and allowing the wealthy to escape their tax responsibilities, and the result has been a severe economic crisis. Perhaps it’s time we ended the conservative veto and stopped listening to those who defend it, and instead sought more sensible budget policies that will enable our state to recreate the California dream of sustainable and broadly shared economic security.

We have the (mis)fortune to be living through one of the great economic crises of modern history. We are at the opening stages of both that crisis and its massive reshaping of our way of life. As in the past this is a process that will take several years, probably an entire decade at least, to play out. Of course, we do not exactly have the luxury of being casual observers, or of waiting to see how it turns out. The crisis is dire and it is immediate. The possibility that by the 2020s we will be fully on the other side isn’t going to help those who are homeless, starving, and suffering here in 2009.

This crisis is shocking to many of us, since unless you are over 75 years old, you have never seen this before. Unfortunately this kind of economic collapse is nothing new to us who are familiar with US history. As more and more economic historians are starting to argue, the true parallel for this crisis isn’t 1929 but 1873, when a massive financial panic brought about a Long Depression that lasted, with a few short-lived booms and some nasty busts, until about 1896. This was the Gilded Age, an era of massive corruption and fraud in business and in government. Wealth was concentrated in the hands of a few, and most working people – whether in farms or factories – struggled to scrape by.

Our present crisis is not that different. Massive concentration of wealth is at the core of the problem. Wealth demanded less regulation so as to bring ever-greater returns, a logic that led to risky and reckless behavior. Meanwhile the wages of the middle class stagnated and the wages of the working class shrank. They were told that massive amounts of debt would make up the difference between their stagnant wages and the soaring cost of living. Ultimately, predictably, this was unsustainable. A massive crash is unfolding, and those who are not wealthy are being made to pay the price.

One of the aspects of the political economy of last 30 years has been tax cuts for the wealthy. This ensured that government was starved of revenue in the bad times, and unable to catch up, not to mention get ahead by providing adequate services and saving for a rainy day in the good times.

California has been the poster child for this. Since 1978 we have steadily excluded wealth from taxation. Since 1993 we have given $12 billion in tax cuts and tax breaks. Corporate taxes were around 9% in 1981 and are now below 5%, yet corporations have provided neither wage growth nor stable jobs to the state, and our core services are underfunded.

In the early 1990s both the United States and California raised taxes to deal with budget deficits – and that did nothing to prevent the return of economic growth in 1993. After 1993 we began cutting taxes again, but government still needed to be funded. Prop 13 ensured real estate wealth gains would not be accurately captured by government, and starved government of operating revenue. That led to a new emphasis on income taxes and especially on sales taxes to make up the gap.

As a result the poorest among us now bear the largest share of the tax burden. The lowest 20% income brackets pay 11.7% of their income in state and local taxes, whereas the top 4% pay only 7.1% of their income. The result is that lower income Californians have a higher tax burden – but get less in return for those taxes. Our income tax is also flawed in that there is only one bracket for people making between $47,500 and $999,999.

Sales taxes are more regressive than income and property taxes, but they are progressive as compared to spending cuts, a fact that not enough folks recognize. I also believe that it is not realistic to ask that only the wealthy pay more in taxes – everyone will have to pay more, including the middle class. But who pays what is the key issue, and we cannot avoid it any longer.

It is time to restore progressivity to California’s tax code and rebalancing our economy on a sustainable, stable footing. That means taxing wealth.

Progressive Democrats in two states with very similar economic profiles to our own – New York and Washington – are organizing to demand that higher income taxes on the wealthy be a core part of not just our budget solution, but our economic policy. Below the flip I give an overview of these efforts, what they can teach California, and why it is imperative that we follow their lead.

In New York State progressives spent several months demanding that instead of slashing education and other key programs, the state look to income taxes on the wealthy as a solution to the deficit. The Working Families Party and progressive Democrats were persistent in the face of Governor David Paterson’s initial rejection of the concept, and last week state leaders agreed to wealth taxes:

The new plan, which would expire after three years, would represent the largest state income tax increase in recent history, significantly larger than the surcharges imposed from 2003 to 2005, when the state last faced a major recession.

The plan would raise $4 billion a year by creating two new tax brackets, the highest one affecting those who earn $500,000 or more. If approved by rank-and-file lawmakers in the Assembly and State Senate, the tax increases would be a major victory for unions and liberal advocacy groups and a signal of the new balance of power in Albany, where Democrats won control of both houses of the Legislature and the governor’s office in last year’s election.

Progressive persistence and framing played a key role in getting this done. The Working Families Party offered a set of resources to activists to ensure that progressive taxation would be part of the New York state solution.

Closer to home, Washington State is grappling with a massive $10 billion budget hole, and proposing destructive cuts to education, the environment, and mass transit programs. Democrats control the state legislature, and Senate Majority Leader Lisa Brown, from Spokane (not traditionally a progressive hotbed), called on her colleagues to support an income tax on those making over $300,000, designed primarily to hit the wealthiest Washingtonians.

This is especially interesting given that Washington is one of four states without an income tax. In the 1930s a progressive Legislature created an income tax, but a conservative state Supreme Court composed of 1920s holdovers ruled it unconstitutional. Several efforts to create an income tax at the ballot box failed, but the most recent attempt was in 1974.

In a meeting with reporters and bloggers, State Sen. Brown laid out her rationale:

“People understand that this system isn’t fair. If a millionaire in my district lived just over the border in Idaho they would pay 7.8 percent of their income, if they lived in Oregon they would pay 9 percent. In Washington state they don’t pay to enjoy the benefits of the state.”

Brown went on to say low and middle income people – “the people who are most affected by the deep budget cuts” – pay a greater share of their income than affluent people to receive the services of the state.

And Brown also tied her strategy explicitly to Barack Obama’s tax increases on those making more than $250,000.

Unfortunately Democratic governor Christine Gregoire – here in California today for the health care forum – is not supportive of the concept. Back in October she rashly promised to not raise taxes, something she felt she had to say to defeat her Republican opponent in what looked like a close election. Gregoire won by around 8 points, but has insisted on keeping this pledge even in the face of the worst budget crisis in state history. Still, Washington progressives are beginning to organize around income taxes on the wealthy as a solution to the budget mess, as well as a way to make the state’s tax system less regressive.

This is the same conclusion, by the way, that William H. Gates – Bill Gates’ wealthy Seattle lawyer father – came to in 2002, when he chaired a commission the Legislature created to investigate the state’s tax system.

Here in California we already have one of the highest income tax rates on the upper brackets in the country, although it is lower than the brackets Republicans like Ronald Reagan and Pete Wilson enacted. Some groups, like the California Budget Project, have argued that our state budget is too dependent on personal income tax revenue.

That may well be true. An income tax hike on the wealthy isn’t alone a long-term solution, but is a part of that solution as well as a necessary immediate answer to budget deficit and economic crisis. We need a modernized sales tax, a higher corporate tax rate, a split roll that excludes commercial property from Prop 13 protections, and ultimately, a residential property tax system that protects working families but makes wealthy individuals pay their fair share.

As I argued at the outset, everyone in California will have to pay more to provide economic security and sustainability by providing their government with the revenue it needs to meet our crises. There’s no way to make just the wealthy and just the corporations do it. But the overall structure must be progressive. The wealthy must pay a higher rate than the rest of us. And that’s just not the case right now.

No matter what happens on May 19, on May 20 we need to be ready to push income taxes on the wealthy as part of the solution to our budget crisis. The stakes are too high for us to not do so.

While their Congressional counterparts are busy offering nonsense budgets based on outdated numbers, California’s Republican legislators have decided to offer nothing at all in the way of solutions to the budget mess. Zed Hollingsworth tells George Skelton today that his caucus will offer no solid proposals and will hope that the Depression and the 2/3 rule will do their anti-government work for them:

Like most Republican lawmakers, Hollingsworth only says that the new tax hikes should have been avoided. Similarly, any future budget-balancing measures must  exclude tax hikes. But he doesn’t say precisely how….

So besides painful cuts in programs like education and healthcare, what else is possible? He answers: “Now’s a chance to look at some of these big reforms we always say we’re going to do and never do.”

Such as? Combining the state Board of Equalization and the Franchise Tax Board. The former collects the sales tax; the latter the income tax.

OK, but between the two, they spend less than $1 billion annually.

The GOP list gets really vague after that. “There are potential things we’re starting to think about, but we can’t go into much detail yet, because we don’t have much detail.”

And because of the 2/3 rule, which gives conservatives a veto over the state’s budget and spending priorities, he will never have to go into any detail at all. They just have to sit back, say “no” to anything that isn’t far-right in nature, and force the Democrats to come to their position.

Regardless of the outcome of the May 19 election, this will continue to be the pattern in the Capitol until the conservative veto is eliminated.

It’s also important to note that although Skelton considers the education and health care cuts as an aside, to the Republicans these are actually central to the plan. Their goal seems to be to defund those programs, perhaps in their entirety, and force everyone in California to pay for their schooling and medical care out of pocket. It’s an embrace of inequality and oligarchy, a statement that if you can afford to have the essentials of life you deserve, and if you can’t afford it, screw you.

Democrats need to become more assertive about pointing this out to people. The May 19 propositions distract from that core message, especially when Dems are out there selling Props 1D and 1E, which are unconscionable raids on children’s programs and mental health care in order to pay for larger corporate tax cuts. Again, regardless of what happens on May 19, every Californian who is not part of the right-wing agenda needs to hammer this point home at every possible opportunity.

Republicans have no solutions to this crisis. They merely see it as an opportunity to shock doctrine us into accepting their attack on the public services that produce prosperity and make a modern society livable. We’re not going to let them win.

The geography of Depression is spreading. Yesterday we looked at how Mendota and other Central Valley towns are facing Steinbeckian scenes of poverty. Today brings another account of dire economic straits – this time in the San Bernardino/Riverside region of Southern California long known as the “Inland Empire”.

Tom Woodruff, director of Change to Win’s Strategic Organizing Center, offered this overview of the Depression in the Inland Empire, where unemployment is above 12%, and how the Employee Free Choice Act can help improve dire conditions:

The area’s fractured employment model has turned a recession into a depression. There are now tens of thousands of laid off warehouse workers with no unemployment, no safety net at all, just barely getting by.

Ignacio Sanchez lost his warehouse job in October and now struggles every day to feed his family. Ignacio was a “lumper,” unloading the large containers that come to the warehouses from the ports. He now spends his days watching over his five year-old daughter and searching dumpsters for cans and food. When he finds food, he has to hide where he got it from his daughter because if she knew, she might not eat it.

Olga Romero, who worked 14 hour days repacking shoes at a warehouse, was laid off three months ago with no warning or cause and has been unable to find work since. She can only afford to feed her family rice and beans for dinner, and worries about the days ahead. “There’s no future with these bad jobs,” she says. “I need a real job to take care of my family, not another temp job.”

As conditions worsen in the Inland Empire, the big retail companies that created the broken business model have not accepted responsibility for the damage they have done. They hide behind the temp agencies and third-party logistics firms in an elaborate shell game.

The Inland Empire became a warehousing and shipment center for the nation – handling the products shipped from China to LA/Long Beach and putting them on trucks and trains to the nation’s big box stores. The basic economic model was unsustainable; the employment itself was temporary and lacking in most basic benefits. And it goes without saying that most of these jobs were non-union.

Just as pro-labor legislation like Section 7(a) of the 1934 National Labor Relations Act and the Wagner Act of 1935 helped pull the nation out of Depression and ensure that the recovery would build a strong and lasting middle class, the Employee Free Choice Act can play a similar role in places like the Inland Empire:

More than one million new jobs will be created in the goods movement industry in Southern California by 2030, according to projections. For only pennies on the dollar, the retail industry could turn them into high quality, middle class jobs that support a family. These are jobs that cannot be outsourced and could play a major role in revitalizing our reeling economy. But only if the nation’s biggest retailers are held responsible for the treatment of all the workers in their supply chain.

I have to confess that I am not sure the goods movement industry’s future growth in SoCal will be so vast, and I am skeptical that relying on imports from China at the expense of domestic manufacturing (the Inland Empire used to be a major center of blue-collar work in the US, including the Kaiser Steel mill in Fontana) is a smart move. But in any case, we need to ensure that California’s workers have the opportunity to organize unions for economic recovery.

Because we are learning the same lessons today that we learned 75 years ago – that we will not have economic security and shared prosperity unless the people of this nation have the power to wrest wealth back from the oligarchs.

One of the most persistent zombie lies that conservative spread is that California’s taxes are among the nation’s highest. I have repeatedly pointed out that this is untrue, as the California Budget Project has proved (see page 18 of the PDF), and yet people like Jerry Brown continue to repeat the myth of California as leading the nation in taxing its people.

Today the US Census Bureau published data which says the CBP and I are right and the zombie lie is wrong: California is 12th in per capita taxes.

Since California taxation is on many people’s minds, it’s timely that the U.S. Census today released its latest data on state taxes. Total taxes collected by the 50 states (plus Puerto Rico and the District of Columbia) reached $781.8 billion in 2008. That’s a 5.1 percent increase over 2007. These figures cover the whole range of state taxation — from property, sales, and income taxes to the various licenses fees, such as vehicle, alcohol and hunting. There’s a spreadsheet breaking out each type of tax for every state. California amassed $117.4 billion in 2008, with the biggest share coming from individual income taxes ($55.7 billion).

Ranked by per capita taxes collected, California comes out 12th in the nation (see table below). Alaska leads the states by a large margin because of its huge oil severance tax.

The chart shows little overall trend – big states and small states, states with high unemployment and low unemployment, they’re all there. One cannot draw a conclusion from this chart that there’s any correlation between high taxes and high unemployment or poverty rates.

Of course, no amount of evidence or fact is likely to change the minds of California conservatives and their fellow travelers, who continue to cling to 30 years of failed policy and insist that any tax increase is going to destroy our state.

Instead California needs to improve its public services, repair the safety net, and use government to provide jobs – all of which will require new taxes – if we are to avoid a statewide Depression.