12 ms·

Shame on me for voting for a retroactive tax in Prop 30

35 points by danielodio 14y ago

mturmon 14y ago
"When our politicians do something like this to us, it makes me want to become more conservative, and just never vote "yes" to anything that could have -- and in this case, did have-- hidden gotchas no matter how principled the ideal might be." It sounds like you're looking for reasons to become more conservative. It has been quite clear to all residents that the state of California has been in trouble for a couple of years now. Teachers being let go en masse, school districts seeing cuts in state funds, and state services from campsites to the DMV being cut. The text of the Prop. 30 tax increase was originally finalized in March 2012, was sponsored by the Governor, and received a big push from him. The original text of what became Prop. 30 was developed by the Governor in 2011 (http://ag.ca.gov/cms_attachments/initiatives/pdfs/i1035_11-0090.pdf http://ag.ca.gov/cms_attachments/initiatives/pdfs/i1035_11-0...). If you're significantly affected by this increase in marginal tax rates (an extra 1% for individuals over $250K/couples over $500K, up to 3% for individuals over $500K/couples over $1M), you should be aware of these issues, or be paying someone who is.
- cdellin 14y ago
  While your points may be entirely true, in my opinion they are no excuse for failing to make clear the retroactivity of the proposition.
  - deleted 14y ago
    [deleted]
  - mturmon 14y ago
    The real WTF (that you, me, and the OP probably agree on) is the California initiative process, which forces/allows citizens to act as legislators. But to your point, the first substantive link off the official Prop. 30 summary page (http://voterguide.sos.ca.gov/propositions/30/analysis.htm http://voterguide.sos.ca.gov/propositions/30/analysis.htm) makes clear in several places that the increases will take effect starting Jan. 1, 2012. ("Because the rate increase would apply as of January 1, 2012, affected taxpayers likely would have to make larger payments in the coming months to account for the full-year effect of the rate increase.") If the OP was worried about taxes, he should feel lucky that 38 failed ;-).
    - cdellin 14y ago
      "The real WTF (that you, me, and the OP probably agree on) is the California initiative process, which forces/allows citizens to act as legislators." I definitely agree with this (-: You're right, in that a reasonably informed voter should have known the nature of the proposition. Unfortunately, due to the broken initiative process, those weighing the options tend not to be sufficiently informed. In my opinion (though not that of the US Supreme Court, see Calder v Bull), such ex-post-facto tax laws should be as prohibited as similar laws are in criminal circumstances.
      - mturmon 14y ago
        We're continuing to digress, but I have to imagine that the framers of the (generally successful) US constitution must be having a laugh at the expense of the framers of the (less successful) California constitution regarding the initiative process.
  - tzs 14y ago
    It was pretty clear in the voter's pamphlet. See the bottom of page 29 and the top of page 30.
redcircle 14y ago
Being a proposition, does the legislature have any responsibility involved in the unfairness of this retroactive tax? Isn't the responsibility of a proposition in the hands of the voters, thus making it really important for voters to do their research? The blog post should be laying the blame on us voters.
- Moto7451 14y ago
  Prop 30[1] was an initiative[2] so it went directly to the people for petitioning and then voting. The legislature was kept out of the loop. [1]http://ballotpedia.org/wiki/index.php/California_Proposition_30,_Sales_and_Income_Tax_Increase_(2012) http://ballotpedia.org/wiki/index.php/California_Proposition... [2]http://en.wikipedia.org/wiki/California_ballot_proposition#Initiative http://en.wikipedia.org/wiki/California_ballot_proposition#I...
- jalanco 14y ago
  This is interesting because, since it was a referendum vote, the people who passed it will likely not be affected by it, unless the average income in Calif. is much higher than I would assume.
  - Moto7451 14y ago
    Yes, that's likely a good part of why this was voted in and why Prop 38[1], with its tax increases on anyone making 7,316 or more, wasn't. [1] http://ballotpedia.org/wiki/index.php/California_Proposition_38,_State_Income_Tax_Increase_to_Support_Education_(2012) http://ballotpedia.org/wiki/index.php/California_Proposition... This is obviously not the first or last time this type of measure will be passed ;).
    - jalanco 14y ago
      Now that makes it even more interesting (not shocking, but interesting). I wonder how many examples of referendum-style laws are approved in CA where voters are voting against self-interest (or at least with non-trivial skin in the game) for Utilitarian benefit.
mpyne 14y ago
I can see now why one would assume differently, but it has always kind of been my assumption that if a change to the tax code was approved before the end of the tax fiscal year, that the changes would possibly affect my taxes for that tax year. After all I always received tax breaks in the same year that they were approved.
tarr11 14y ago
It appears that the author is upset that his post-liquidity tax planning has been up-ended by prop 30. His argument only applies to entrepreneurs who have had an exit in 2012, and little to no income before that. This is a pretty narrow group. As an entrepreneur who moved back to California recently - the poor school systems of California were more of a deterrent to living here to me, rather than tax burden. Prop 30 addresses that. The referring article by Ethan Anderson [1] tries to extend this group of entrepreneurs to early employees of Facebook for example. However, most early employees do get paychecks and didn't have to "sacrifice" any more than employees at non-pre-IPO companies. [1] http://allthingsd.com/20121204/what-proposition-30-means-for-californias-entrepreneurs/ http://allthingsd.com/20121204/what-proposition-30-means-for...
- jacoblyles 14y ago
  Prop 30 doesn't address the bad schools in California. We have a big union problem: http://www.bloomberg.com/news/2012-04-23/new-california-taxes-pay-for-pensions-not-schools.html http://www.bloomberg.com/news/2012-04-23/new-california-taxe... High taxes, big deficits, and bad public services - California state government achieves the trifecta of suck.
  - xxpor 14y ago
    You don't have a union problem, you have a direct democracy problem.
    - jacoblyles 14y ago
      None of the big unsustainable pension increases involved ballot measures, as far as I know. The unions are the biggest spenders in California election and incumbency is rampant even when the state is going down the tubes.
      - xxpor 14y ago
        Then tell your local officials to grow a backbone. If incumbency is rampant, that's a structural problem with your redistricting process, not the unions. If BigCo Inc is allowed to spend a ton of money in elections, why can't the unions?
ghouse 14y ago
Yes, CA has a reputation for poor public schools and for large class sizes. And yes, CA now has the highest, or among the highest both personal income tax and sale tax. Where does all this money go? Are other states able to do more with less?
- druiid 14y ago
  A couple places. One is that we do have a large number of social programs that other states do not have. Second, we have the highest population of any state in the nation and that means a huge burden for instruction of students (We have enough people that we're like the 35th largest population in the world or something silly like that... meaning out of entire country populations). Additionally, we pay out more than we get back from the nation-state. I don't have the exact numbers off-hand, but it's something like 75/100 per dollar or maybe even less now.
- rprasad 14y ago
  All those fantastic public K12 schools in red states are made possible with federal education spending that is made possible by California (and to a lesser extent other blue states like New York and Massachussetts). California receives back less than $1.00 in federal spending for every dollar its citizens pay in taxes, while the smaller states receive back in federal spending significantly more than $1.00 for every dollar their citizens pay in federal taxes. In effect, California's largesse subsidizes the rest of the nation. If California received back in federal spending its fair share of the federal taxes its citizens paid, it would have a multi-billion dollar surplus each year.
  - druiid 14y ago
    Yep... I think it's like 75 cents on the dollar (which I wrote a bit earlier). Pobre California.
    - krakensden 14y ago
      Although arguably it's a good thing that we're not setting Missouri on fire until they pay us back the way Germany is treating Greece.
migueldeicaza 14y ago
People are so cute when they threaten to leave California because their taxes are a little bit higher. He is likely taking advantage of the long term capitals gain tax already, reducing his taxes from 35% or so to 17% or so.
- aliston 14y ago
  That was my reaction as well, but after reading a bit more about it, it appears California taxes capital gains as regular income. This bill might as well have been called the "taking money from Facebook investors" bill... combined with the federal capital gains rate, most startup IPO beneficiaries are going to pay ~30%.
mikeyouse 14y ago
Almost everything I heard about Prop 30 mentioned that it would affect all income earned in 2012. It's hinted out in the summary that the OP posted and spelled out more concretely just below that overview: "Increases Personal Income Tax Rates From 2012 Through 2018." (from http://voterguide.sos.ca.gov/propositions/30/analysis.htm http://voterguide.sos.ca.gov/propositions/30/analysis.htm). While it is unfortunate that some feel mislead, the impact is quite small in 'real' terms. The married filing jointly bracket up to 500k will see a 1% increase in state income tax, up to $600k will see 2%, and above a million will see 3% incremental. If you sold your company and got a million dollar check, you'd see something like $10k in additional taxes (which is then partially offset by claiming them on your federal tax forms). Price of doing business in a high-tax state I suppose.
jfb 14y ago
The real error is voting on any proposition on the California ballot, full stop.
- druiid 14y ago
  I give your troll-fu a -5. There are good propositions and bad propositions. The onus is on the voter to decide what, if anything they should be voting on. In a state as large and as diverse as California the prop system is both a huge benefit or danger. I think it's much like a democracy in general.... you get out of it what you put into it.
  - jfb 14y ago
    Voting on propositions is a cause of California's sclerotic politics. The legislature is no longer capable of governing because its fiscal hands have been tied by the initiative process. If you think California is well governed then by all means keep signing the petitions and voting on the referendums.
    - druiid 14y ago
      Well let's get something clear here. Are you hating on prop-13 or something else? I don't think there are many people at this point that think prop-13 is/was a good idea, but look at it this way... we have the prop system, let's get our act together and get it changed (and use the good part of having it).
      - jfb 14y ago
        I don't admit that the public has a direct interest in setting fiscal policy. That is what our republican representatives do. Except, in California, they are prevented from doing anything useful by a) term limits and b) the constraints placed on governing by the imbecilic initiative process. I would vote on the initiatives that set the ground rules for governance -- things like redistricting. But the idea that modifying the state constitution as cheaply and easily as it can be modified would lead to better government, well … no.
eridius 14y ago
I didn't realize this was a retroactive tax either, but does that really change anything? I mean, if you made a bunch of money in 2012, would you have decided to not earn that money simply because of a slightly higher tax burden? I keep hearing this argument that entrepreneurs would decide not to do such-and-such action that makes money if the taxes on that money were raised, but that's never made sense to me. I mean, they still make money. They make slightly less with the taxes raised, but that slightly less is still a vast improvement over the near-zero interest rate on just letting your money sit in a savings account.
- bmelton 14y ago
  I know that when Obama originally threatened the progressive taxation, there was a contingent (I don't really know how large) of people whose incomes were 'on the bubble', or had incomes of between (let's say) $250-$255k who would have netted more bring home money by grossing less. I mean, the 'more money' argument certainly applies once you've crossed the bubble threshold, but if you're making $251,000, if the additional tax is only 1%, that translates to $2,510, which takes your gross to under the $249,999 you could have made and been exempted from the increased tax. For the self-employed, who have more control over their direct income, it might be more beneficial to take a slight pay cut and come home with more until you're able to give yourself a significant enough raise for it to not matter. Edit: I've been corrected by others who are more savvy on taxes than myself. I admittedly am not in the >250k tax bracket, but regardless, there is a contingent of people who are also wrong, and are working their taxes in the way I described.
  - evgen 14y ago
    Perhaps you have never actually had to deal with the "incredible crushing burden" of a high tax bracket, but it does not work that way. The tax does not apply to all earnings, only the earnings over a threshold. If you cross the threshold then it is all earnings over that threshold which are taxed at the higher rate; in your example someone who made 251000 would pay the higher rate only on the $1000 over $250000.
  - jbooth 14y ago
gojomo 14y ago
This idea of retroactive taxes may have legs. Rich people can often reconfigure their future earnings in response to upcoming changes. But they can't change past income – or even better, income from years whose returns have already been filed. Perhaps the revenue-hungry states will discover that the only tax increase that can't be skillfully avoided is one on already-admitted income, say from 2009. Or to pick a real bumper year for California tax revenues, 1999.
- talmand 14y ago
  If this happened in a large enough scale the result of the lawsuits surely to be filed to combat it would be interesting. Scary thought though, considering being able to assign a retroactive tax in such a way. Doing a retroactive tax that reaches back to the beginning of the current year is one thing, reaching back to previous years after taxes filed and paid are another.
hvs 14y ago
TL;DR: "I voted in favor of taxes on people making more than $250,000 per year because I thought it wouldn't include me."
- danielodio 14y ago
  @hvs, not accurate. More like: TL;DR: "I voted in favor of taxes on people making more than $250,000 per year because I thought it wouldn't apply retroactively to decisions made in the past."
- bonch 14y ago
  My brain automatically disregards snarky "TL;DR" comments. I can't help it.
- deleted 14y ago
  [deleted]
DannyBee 14y ago
We're very bad at managing money. The only solution is to give us more money, while we hold your children's education hostage.
jggonz 14y ago
It sounds to me like this person didn't read the proposition before voting yes on it. I voted 'NO' for the proposition because it was going to be retroactive and because after discussions over the proposition with my friends, I decided that these additional taxes would only have negative effects on the Californian middle class. ($250k is middle class in California!) There is no excuse for being lazy. Sorry to be so harsh, but yes, shame on you.
- xxpor 14y ago
  >$250k is middle class in California! You might think this is true, but you're wrong.
  - talmand 14y ago
    As usual, depends on where you live. Most of the time when I see that $250k tossed around it's in reference to couples. Typically for a single person it's $200k. So a couple only has to reach $125k income each to be taxed at that rate. In some parts of the country it's not hard to imagine that two people can reach that and not be particularly wealthy based on local cost of living. But as you say, I would imagine for most of California this isn't an issue.
    - mturmon 14y ago
      You're off by a factor of 2. The extra 1% tax kicked in at $250K for individuals, $500K for couples filing jointly. That's very well-off anywhere in CA. Median household income in SF County is $73K, and SF County is quite rich compared to the state median of $61K.
- kaptain 14y ago
  $250k is not middle class in California. See https://en.wikipedia.org/wiki/American_middle_class https://en.wikipedia.org/wiki/American_middle_class. $250K is upper middle class at the most.
fotbr 14y ago
Because your site won't take a guest comment, I'll leave it here: "Smaller amounts of additional revenue would be available in 2011-12" should have been a clue that something hinky was going on. This is why you always read the full text of a bill, not just the summary prepared by someone with an agenda that you may or may not be aware of, and may or may not be in agreement with.
bialczabub 14y ago
I really don't see Prop 30 as the entrepreneurship killer its critics make it out to be. Why does nobody point out that in the event of an exit, an entrepreneur has control over the timing of their income? Sure, I suppose some subset of people who sold an inordinate amount of stock in 2012 now have to pay more, but how much more? Doing the math, it seems this tax likely increases ones tax bill by roughly 5%. If you believe a 5% decrease in take-home proceeds from successful outcomes will stop entrepreneurship, I've got some swampland in Florida to sell you.
- jacoblyles 14y ago
  If you move your company to Portland or Austin one year before your exit, you'll take home an additional 13%, I think. That's significant.
dpe82 14y ago
Wisconsin faced a similarly grim[0] fiscal situation three years ago - high public union labor costs and years of structural deficits plus the recession resulted in a deficit of over 20% of the budget. It was ugly and underhanded, but as many will remember the Governor successfully pushed through very unpopular[1] public union and budget reforms. It sucked, but it worked. We're now firmly in the black[2]. There are probably negative consequences that we'll learn about at some point, but at least the state resisted the urge to just raise taxes and not deal with its largest problem. California could learn a thing or two. [0] http://www.jsonline.com/news/milwaukee/69771807.html http://www.jsonline.com/news/milwaukee/69771807.html [1] http://en.wikipedia.org/wiki/2011_Wisconsin_protests http://en.wikipedia.org/wiki/2011_Wisconsin_protests [2] http://www.jsonline.com/news/statepolitics/state-to-release-projections-that-will-be-framework-for-twoyear-budget-fm7nihk-180173611.html http://www.jsonline.com/news/statepolitics/state-to-release-...

35 points by danielodio 14y ago

"When our politicians do something like this to us, it makes me want to become more conservative, and just never vote "yes" to anything that could have -- and in this case, did have-- hidden gotchas no matter how principled the ideal might be." It sounds like you're looking for reasons to become more conservative. It has been quite clear to all residents that the state of California has been in trouble for a couple of years now. Teachers being let go en masse, school districts seeing cuts in state funds, and state services from campsites to the DMV being cut. The text of the Prop. 30 tax increase was originally finalized in March 2012, was sponsored by the Governor, and received a big push from him. The original text of what became Prop. 30 was developed by the Governor in 2011 (http://ag.ca.gov/cms_attachments/initiatives/pdfs/i1035_11-0090.pdf http://ag.ca.gov/cms_attachments/initiatives/pdfs/i1035_11-0...). If you're significantly affected by this increase in marginal tax rates (an extra 1% for individuals over $250K/couples over $500K, up to 3% for individuals over $500K/couples over $1M), you should be aware of these issues, or be paying someone who is.

cdellin 14y ago
While your points may be entirely true, in my opinion they are no excuse for failing to make clear the retroactivity of the proposition.
- deleted 14y ago
  [deleted]
- mturmon 14y ago
  The real WTF (that you, me, and the OP probably agree on) is the California initiative process, which forces/allows citizens to act as legislators. But to your point, the first substantive link off the official Prop. 30 summary page (http://voterguide.sos.ca.gov/propositions/30/analysis.htm http://voterguide.sos.ca.gov/propositions/30/analysis.htm) makes clear in several places that the increases will take effect starting Jan. 1, 2012. ("Because the rate increase would apply as of January 1, 2012, affected taxpayers likely would have to make larger payments in the coming months to account for the full-year effect of the rate increase.") If the OP was worried about taxes, he should feel lucky that 38 failed ;-).
  - cdellin 14y ago
    "The real WTF (that you, me, and the OP probably agree on) is the California initiative process, which forces/allows citizens to act as legislators." I definitely agree with this (-: You're right, in that a reasonably informed voter should have known the nature of the proposition. Unfortunately, due to the broken initiative process, those weighing the options tend not to be sufficiently informed. In my opinion (though not that of the US Supreme Court, see Calder v Bull), such ex-post-facto tax laws should be as prohibited as similar laws are in criminal circumstances.
    - mturmon 14y ago
      We're continuing to digress, but I have to imagine that the framers of the (generally successful) US constitution must be having a laugh at the expense of the framers of the (less successful) California constitution regarding the initiative process.
- tzs 14y ago
  It was pretty clear in the voter's pamphlet. See the bottom of page 29 and the top of page 30.

redcircle 14y ago

Being a proposition, does the legislature have any responsibility involved in the unfairness of this retroactive tax? Isn't the responsibility of a proposition in the hands of the voters, thus making it really important for voters to do their research? The blog post should be laying the blame on us voters.

Moto7451 14y ago
Prop 30[1] was an initiative[2] so it went directly to the people for petitioning and then voting. The legislature was kept out of the loop. [1]http://ballotpedia.org/wiki/index.php/California_Proposition_30,_Sales_and_Income_Tax_Increase_(2012) http://ballotpedia.org/wiki/index.php/California_Proposition... [2]http://en.wikipedia.org/wiki/California_ballot_proposition#Initiative http://en.wikipedia.org/wiki/California_ballot_proposition#I...
jalanco 14y ago
This is interesting because, since it was a referendum vote, the people who passed it will likely not be affected by it, unless the average income in Calif. is much higher than I would assume.
- Moto7451 14y ago
  Yes, that's likely a good part of why this was voted in and why Prop 38[1], with its tax increases on anyone making 7,316 or more, wasn't. [1] http://ballotpedia.org/wiki/index.php/California_Proposition_38,_State_Income_Tax_Increase_to_Support_Education_(2012) http://ballotpedia.org/wiki/index.php/California_Proposition... This is obviously not the first or last time this type of measure will be passed ;).
  - jalanco 14y ago
    Now that makes it even more interesting (not shocking, but interesting). I wonder how many examples of referendum-style laws are approved in CA where voters are voting against self-interest (or at least with non-trivial skin in the game) for Utilitarian benefit.

mpyne 14y ago

I can see now why one would assume differently, but it has always kind of been my assumption that if a change to the tax code was approved before the end of the tax fiscal year, that the changes would possibly affect my taxes for that tax year. After all I always received tax breaks in the same year that they were approved.

tarr11 14y ago

It appears that the author is upset that his post-liquidity tax planning has been up-ended by prop 30. His argument only applies to entrepreneurs who have had an exit in 2012, and little to no income before that. This is a pretty narrow group. As an entrepreneur who moved back to California recently - the poor school systems of California were more of a deterrent to living here to me, rather than tax burden. Prop 30 addresses that. The referring article by Ethan Anderson [1] tries to extend this group of entrepreneurs to early employees of Facebook for example. However, most early employees do get paychecks and didn't have to "sacrifice" any more than employees at non-pre-IPO companies. [1] http://allthingsd.com/20121204/what-proposition-30-means-for-californias-entrepreneurs/ http://allthingsd.com/20121204/what-proposition-30-means-for...

jacoblyles 14y ago
Prop 30 doesn't address the bad schools in California. We have a big union problem: http://www.bloomberg.com/news/2012-04-23/new-california-taxes-pay-for-pensions-not-schools.html http://www.bloomberg.com/news/2012-04-23/new-california-taxe... High taxes, big deficits, and bad public services - California state government achieves the trifecta of suck.
- xxpor 14y ago
  You don't have a union problem, you have a direct democracy problem.
  - jacoblyles 14y ago
    None of the big unsustainable pension increases involved ballot measures, as far as I know. The unions are the biggest spenders in California election and incumbency is rampant even when the state is going down the tubes.
    - xxpor 14y ago
      Then tell your local officials to grow a backbone. If incumbency is rampant, that's a structural problem with your redistricting process, not the unions. If BigCo Inc is allowed to spend a ton of money in elections, why can't the unions?

ghouse 14y ago

Yes, CA has a reputation for poor public schools and for large class sizes. And yes, CA now has the highest, or among the highest both personal income tax and sale tax. Where does all this money go? Are other states able to do more with less?

druiid 14y ago
A couple places. One is that we do have a large number of social programs that other states do not have. Second, we have the highest population of any state in the nation and that means a huge burden for instruction of students (We have enough people that we're like the 35th largest population in the world or something silly like that... meaning out of entire country populations). Additionally, we pay out more than we get back from the nation-state. I don't have the exact numbers off-hand, but it's something like 75/100 per dollar or maybe even less now.
rprasad 14y ago
All those fantastic public K12 schools in red states are made possible with federal education spending that is made possible by California (and to a lesser extent other blue states like New York and Massachussetts). California receives back less than $1.00 in federal spending for every dollar its citizens pay in taxes, while the smaller states receive back in federal spending significantly more than $1.00 for every dollar their citizens pay in federal taxes. In effect, California's largesse subsidizes the rest of the nation. If California received back in federal spending its fair share of the federal taxes its citizens paid, it would have a multi-billion dollar surplus each year.
- druiid 14y ago
  Yep... I think it's like 75 cents on the dollar (which I wrote a bit earlier). Pobre California.
  - krakensden 14y ago
    Although arguably it's a good thing that we're not setting Missouri on fire until they pay us back the way Germany is treating Greece.

migueldeicaza 14y ago

People are so cute when they threaten to leave California because their taxes are a little bit higher. He is likely taking advantage of the long term capitals gain tax already, reducing his taxes from 35% or so to 17% or so.

aliston 14y ago
That was my reaction as well, but after reading a bit more about it, it appears California taxes capital gains as regular income. This bill might as well have been called the "taking money from Facebook investors" bill... combined with the federal capital gains rate, most startup IPO beneficiaries are going to pay ~30%.

mikeyouse 14y ago

Almost everything I heard about Prop 30 mentioned that it would affect all income earned in 2012. It's hinted out in the summary that the OP posted and spelled out more concretely just below that overview: "Increases Personal Income Tax Rates From 2012 Through 2018." (from http://voterguide.sos.ca.gov/propositions/30/analysis.htm http://voterguide.sos.ca.gov/propositions/30/analysis.htm). While it is unfortunate that some feel mislead, the impact is quite small in 'real' terms. The married filing jointly bracket up to 500k will see a 1% increase in state income tax, up to $600k will see 2%, and above a million will see 3% incremental. If you sold your company and got a million dollar check, you'd see something like $10k in additional taxes (which is then partially offset by claiming them on your federal tax forms). Price of doing business in a high-tax state I suppose.

jfb 14y ago

The real error is voting on any proposition on the California ballot, full stop.

druiid 14y ago
I give your troll-fu a -5. There are good propositions and bad propositions. The onus is on the voter to decide what, if anything they should be voting on. In a state as large and as diverse as California the prop system is both a huge benefit or danger. I think it's much like a democracy in general.... you get out of it what you put into it.
- jfb 14y ago
  Voting on propositions is a cause of California's sclerotic politics. The legislature is no longer capable of governing because its fiscal hands have been tied by the initiative process. If you think California is well governed then by all means keep signing the petitions and voting on the referendums.
  - druiid 14y ago
    Well let's get something clear here. Are you hating on prop-13 or something else? I don't think there are many people at this point that think prop-13 is/was a good idea, but look at it this way... we have the prop system, let's get our act together and get it changed (and use the good part of having it).
    - jfb 14y ago
      I don't admit that the public has a direct interest in setting fiscal policy. That is what our republican representatives do. Except, in California, they are prevented from doing anything useful by a) term limits and b) the constraints placed on governing by the imbecilic initiative process. I would vote on the initiatives that set the ground rules for governance -- things like redistricting. But the idea that modifying the state constitution as cheaply and easily as it can be modified would lead to better government, well … no.

eridius 14y ago

I didn't realize this was a retroactive tax either, but does that really change anything? I mean, if you made a bunch of money in 2012, would you have decided to not earn that money simply because of a slightly higher tax burden? I keep hearing this argument that entrepreneurs would decide not to do such-and-such action that makes money if the taxes on that money were raised, but that's never made sense to me. I mean, they still make money. They make slightly less with the taxes raised, but that slightly less is still a vast improvement over the near-zero interest rate on just letting your money sit in a savings account.

bmelton 14y ago
I know that when Obama originally threatened the progressive taxation, there was a contingent (I don't really know how large) of people whose incomes were 'on the bubble', or had incomes of between (let's say) $250-$255k who would have netted more bring home money by grossing less. I mean, the 'more money' argument certainly applies once you've crossed the bubble threshold, but if you're making $251,000, if the additional tax is only 1%, that translates to $2,510, which takes your gross to under the $249,999 you could have made and been exempted from the increased tax. For the self-employed, who have more control over their direct income, it might be more beneficial to take a slight pay cut and come home with more until you're able to give yourself a significant enough raise for it to not matter. Edit: I've been corrected by others who are more savvy on taxes than myself. I admittedly am not in the >250k tax bracket, but regardless, there is a contingent of people who are also wrong, and are working their taxes in the way I described.
- evgen 14y ago
  Perhaps you have never actually had to deal with the "incredible crushing burden" of a high tax bracket, but it does not work that way. The tax does not apply to all earnings, only the earnings over a threshold. If you cross the threshold then it is all earnings over that threshold which are taxed at the higher rate; in your example someone who made 251000 would pay the higher rate only on the $1000 over $250000.
- jbooth 14y ago

gojomo 14y ago

This idea of retroactive taxes may have legs. Rich people can often reconfigure their future earnings in response to upcoming changes. But they can't change past income – or even better, income from years whose returns have already been filed. Perhaps the revenue-hungry states will discover that the only tax increase that can't be skillfully avoided is one on already-admitted income, say from 2009. Or to pick a real bumper year for California tax revenues, 1999.

talmand 14y ago
If this happened in a large enough scale the result of the lawsuits surely to be filed to combat it would be interesting. Scary thought though, considering being able to assign a retroactive tax in such a way. Doing a retroactive tax that reaches back to the beginning of the current year is one thing, reaching back to previous years after taxes filed and paid are another.

hvs 14y ago

TL;DR: "I voted in favor of taxes on people making more than $250,000 per year because I thought it wouldn't include me."

danielodio 14y ago
@hvs, not accurate. More like: TL;DR: "I voted in favor of taxes on people making more than $250,000 per year because I thought it wouldn't apply retroactively to decisions made in the past."
bonch 14y ago
My brain automatically disregards snarky "TL;DR" comments. I can't help it.
deleted 14y ago
[deleted]

DannyBee 14y ago

We're very bad at managing money. The only solution is to give us more money, while we hold your children's education hostage.

jggonz 14y ago

It sounds to me like this person didn't read the proposition before voting yes on it. I voted 'NO' for the proposition because it was going to be retroactive and because after discussions over the proposition with my friends, I decided that these additional taxes would only have negative effects on the Californian middle class. ($250k is middle class in California!) There is no excuse for being lazy. Sorry to be so harsh, but yes, shame on you.

xxpor 14y ago
>$250k is middle class in California! You might think this is true, but you're wrong.
- talmand 14y ago
  As usual, depends on where you live. Most of the time when I see that $250k tossed around it's in reference to couples. Typically for a single person it's $200k. So a couple only has to reach $125k income each to be taxed at that rate. In some parts of the country it's not hard to imagine that two people can reach that and not be particularly wealthy based on local cost of living. But as you say, I would imagine for most of California this isn't an issue.
  - mturmon 14y ago
    You're off by a factor of 2. The extra 1% tax kicked in at $250K for individuals, $500K for couples filing jointly. That's very well-off anywhere in CA. Median household income in SF County is $73K, and SF County is quite rich compared to the state median of $61K.
kaptain 14y ago
$250k is not middle class in California. See https://en.wikipedia.org/wiki/American_middle_class https://en.wikipedia.org/wiki/American_middle_class. $250K is upper middle class at the most.

fotbr 14y ago

Because your site won't take a guest comment, I'll leave it here: "Smaller amounts of additional revenue would be available in 2011-12" should have been a clue that something hinky was going on. This is why you always read the full text of a bill, not just the summary prepared by someone with an agenda that you may or may not be aware of, and may or may not be in agreement with.

bialczabub 14y ago

I really don't see Prop 30 as the entrepreneurship killer its critics make it out to be. Why does nobody point out that in the event of an exit, an entrepreneur has control over the timing of their income? Sure, I suppose some subset of people who sold an inordinate amount of stock in 2012 now have to pay more, but how much more? Doing the math, it seems this tax likely increases ones tax bill by roughly 5%. If you believe a 5% decrease in take-home proceeds from successful outcomes will stop entrepreneurship, I've got some swampland in Florida to sell you.

jacoblyles 14y ago
If you move your company to Portland or Austin one year before your exit, you'll take home an additional 13%, I think. That's significant.

dpe82 14y ago

Wisconsin faced a similarly grim[0] fiscal situation three years ago - high public union labor costs and years of structural deficits plus the recession resulted in a deficit of over 20% of the budget. It was ugly and underhanded, but as many will remember the Governor successfully pushed through very unpopular[1] public union and budget reforms. It sucked, but it worked. We're now firmly in the black[2]. There are probably negative consequences that we'll learn about at some point, but at least the state resisted the urge to just raise taxes and not deal with its largest problem. California could learn a thing or two. [0] http://www.jsonline.com/news/milwaukee/69771807.html http://www.jsonline.com/news/milwaukee/69771807.html [1] http://en.wikipedia.org/wiki/2011_Wisconsin_protests http://en.wikipedia.org/wiki/2011_Wisconsin_protests [2] http://www.jsonline.com/news/statepolitics/state-to-release-projections-that-will-be-framework-for-twoyear-budget-fm7nihk-180173611.html http://www.jsonline.com/news/statepolitics/state-to-release-...