Sacramento Bee columnist Daniel Weintraub identifies one of the key issues with California’s current economic crisis: the California rich aren’t getting richer. The economics are pretty amazing:
The million-dollar earners peaked in 2000, when 44,000 of them — about enough to fill your average baseball stadium — reported incomes totaling $172 billion and paid more than $15 billion in taxes. The tax take from that relative handful of returns accounted for more than one-third of all income tax paid in the state.
The next year, the number of returns reporting incomes that high slumped to 29,000. Their combined income also declined, by nearly half, to $95 billion. And here was the killer: Their tax liability dropped from $15 billion to just under $8 billion. The money lost to the treasury that year would have been enough to pay for the state’s entire commitment to higher education, or most of the cost of the Medi-Cal system that provides health care to six million of California’s poorest residents.
It was a fascinating transfer of wealth — from investors in dot.com companies that got public into the coffers of the State in Sacramento. A 100-year flood. As Weintraub concludes:
California’s treasury is highly dependent on taxes from the state’s most affluent residents. When they do well, their wealth is shared with the rest of us. When they do less well, we also pay the price.
Weintraub noted earlier this week that a bill (AB 1815) has been introduced to increase income tax rates on top income taxpayers in California.