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Skelton: Easing California's dependence on the rich

The numbers are in, and they're eye-catching: Gov. Jerry Brown's "soak the rich" tax increase really did drench them.

And it made California's harmful tax volatility that the governor regularly rails about even worse.

Tax volatility — the extreme surging and plummeting of income tax revenue — is the scourge that inflicted horrendous budget deficits on the state during the recession.

Brown is trying to treat the symptom of volatility by hoarding revenue spikes in a so-called rainy-day reserve. Then it could be tapped in hard times.

What California should be doing is curing the disease by reforming the tax system, stabilizing it and ridding us of the volatility. Broaden the tax base and bank less on the rich, whose incomes fluctuate wildly during periods of boom and bust.

But that would require heavy lifting — a willingness by Brown to commit political capital and fight powerful interests. He'd also need to explain it to the vast millions of low- and middle-income voters. And neither he nor fellow Democrats in the Legislature have the stomach for that during an election year — or any time.

It's more popular to draw blood from the rich.

New figures from the Franchise Tax Board show that the wealthiest 1 percent of Californians paid 50.6 percent of the state income tax in 2012 — up from 41.1 percent in 2011. It means that of nearly 15 million tax returns, about 150,000 generated more than half the revenue.

Brown's Proposition 30 tax hike took effect in 2012. Voters approved it in November, but the huge bumps in income tax rates for the rich were retroactive to January.

Under Prop. 30, the top rate was jacked from 10.3 percent to 13.3 percent, by far the highest of any state. The hikes began phasing in for single filers when their earnings exceeded $250,000.


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