Proposed Millionaires Tax set to raise rates on top earners

The Assembly Budget Subcommittee on Education unanimously voted against proposed reductions in funding and dispersal of awards eligible under the Cal Grant program.

A proposed tax on high-income households, dubbed the “Millionaires Tax,” could potentially pro- vide over $6 billion for California education.

This new initiative is known as the ‘Millionaires Tax to restore Funding for Education and Essential Service Act.’ It is one of three initiatives thought up by three different legislators.

One initiative is being proposed by Governor Brown and calls
for short-term five year increases in income and sales taxes. The second proposal is from civil rights attorney Molly Munger whose initiative calls for a 12-year increase in personal income taxes to supplement educating spending. Finally, the Millionaires Tax, proposed by California Federation of Teachers, calls for an increase of 3 percent in the taxes of wealthy Californians.

“Public education has suffered because we have inadequate tax rates on the people who have the most money,” wrote Fred Glass, CFT Communications Director
via email, when asked about the underlying motivation for the creation of this initiative. “Our society has become much more unequal. Over the past twenty years the wealthy have doubled their share of total income; at the same time their tax rates have been reduced. If millionaires paid their fair share of taxes, we could improve the lives of millions of students.” The Millionaires Tax is aimed at increasing the tax of wealthy Californians and is estimated to raise $6-$9.5 billion per year. The plan calls for an increase of 3 percent in their state income tax while those who earn $2 million will be required to pay a 5 percent state income tax.

“The state has done a lot of cutting, especially in education, but also in health care and social services over the last three years because of the rescession, but also because a lot of tax breaks, mainly in the business in last ten years that add up to about $10 billion a year,” said Professor of Economics, Masao Suzuki.

The funds raised will be allocated with 60 percent going towards funding education while the rest will be broken down as 25 percent to support seniors, the disabled, and children’s services; 10 percent for first responders, firefighters, and law enforcement; and finally 5 percent to repair roads and bridges.

“The Millionaires Tax will raise $6 billion per year for the state of California, of which 60 percent will go to education; K-12 as well as higher education, and the other 40 percent to social services, public safety programs, and rebuilding infrastructure.” wrote Fred Glass, CFT Communications Director in an email, when he was asked about what they hoped to achieve with the initiative.

Mr. Glass went on to say that public disapproval of government expenditures is what leads to the inclusion in the Millionaires Tax which prohibits the Legislature and the Governor from using the money raised by the initiative to be redirected to any other programs, and finally imposes strict account- ability requirements which will make it a crime to misappropriate public funds.

“So our initiative sets up a separate fund that sends the money directly to the classroom and to the counties that deliver the social services that the Millionaires Tax supports,” wrote Glass. “On the other hand, there is also language at the end of the initiative that gives the legislature the ability,
by a 55 percent vote, to step in
if it needs to make sure that the funding is directed to its stipulated programs.”

The driving force behind these initiatives is a report by the California Legislature Analyst Office, which forecast a short fall of roughly $6.5 billion for the coming year. If this short fall is not dealt with, then the state government would be forced to raise taxes or to cut spending, in order to duel with the short fall.

“Both of the other initiatives would impose increased taxes on the 99 percent: Brown through a sales tax increase, and Munger by taxing income down to $7,316 per year.” said Fed Glass, the Communications Director for the CFT.

Katharine Harer, Skyline teacher and co-vice president of AFT-1493, summarized the feelings of many of those in the state.

“If they are going to live in the state and derive their income from this state, then they should be giving back to the state,” she said.