Taxing California’s Wealthy: A Snapshot
California, the golden state, has stood at the forefront of progressive tax policy among the states for the past dozen years. In 2012 the voters passed Prop 30, which put in place a temporary new top marginal income tax rate for couples earning over $500K/year, bringing in $7-9 billion/year for schools and services. In 2016 the voters extended Prop 30, originally pegged to sunset in 2019, until the year 2030, with Prop 55.
In 2020 the same coalition that brought us Props 30 and 55, led by public sector unions and a broad array of community groups, narrowly lost Prop 15, which would have separated residential from commercial property. It proposed that the latter would be taxed on the basis of market rates, thus no longer held hostage within the restrictions of the regressive Prop 13. The unique conditions of the pandemic, which prevented proponents from running a field campaign, was widely considered responsible for the loss of this “split roll” measure.
The question on everyone’s minds who follow such things is, what’s next? At the state level there are two leading possibilities between now and the 2024 general election.
Alex Lee of San Jose, the only DSA member of the California State Assembly, is offering AB 259. Sponsored by the California Federation of Teachers, AB 259 would be the first direct tax on extreme wealth in any state. Proposing to tax wealth of $50 million and over at 1% annually, and beyond $1 billion at 1.5%, it would apply to about 23,000 taxpayers (compared with seventeen million Californians who pay income taxes) and would raise in the neighborhood of $20 billion per year, or around 10% of the entire state budget.
Lee met recently with the CA DSA State Committee. He admitted that given the governor’s opposition it was not likely that AB 259 would go anywhere. Asked whether it could be a stepping stone to a ballot measure campaign in 2024, he said that he would have to talk with CFT about pulling together a prop ballot committee, but has not done so yet. CFT, for its part, passed a resolution at its recent convention supporting the wealth tax but leaving open the possibility that the organization might switch to another run at split roll if its chances seemed better.
One of the original Prop 30 coalition members, California Calls, is currently conducting research into the feasibility of a new split roll tax campaign. Their research is focused on testing what commercial property taxes would raise the most revenue while gaining the highest approval rankings from prospective voters.
DSA played a strong role in the 2020 commercial property tax campaign. Although these discussions remain at a preliminary stage, it’s fairly safe to say that in considering what statewide campaign(s) CA DSA might engage in, a winnable progressive tax campaign would rank high on the list for 2024. Stay tuned to this newsletter for updates on who gets the gold in the golden state.
