As a number of states consider tax hikes to plug deepening coronavirus-related budget holes, the California Legislature is considering a measure to raise tax rates on its wealthiest residents, who already face some of the top rates in the U.S.
The bill, introduced this week, would hike income taxes on people who earn more than $1 million per year. Those people would face three new surcharges, which include an additional 1 percent levy imposed on people earning $1 million, increasing to 3 percent at $2 million and 3.5 percent at $5 million.
California’s highest marginal rate is 13.3 percent. By some estimates, the new tax rates could raise the highest combined federal and state rates to 54 percent.
The state increases would also apply to capital gains. The bill would be retroactive to January 2020, if approved.
Revenue generated by the increase would be used to fund education and other government services.
A number of other cities and states are weighing raising tax rates to plug coronavirus-caused budget shortfalls.
Nashville, for example, approved a budget that contained what it acknowledged would be a “painful” property tax increase on its residents.
Colorado and California are also eyeing property tax increases…Read more>>