State government revenues have swelled 30% in the last five years. That’s a bigger raise than most workers have received, but public unions and their friends are asking voters for more at the ballot box on Nov. 8.
In California unions are seeking to extend a 2012 ballot referendum that raised taxes on individuals making more than $250,000 and bumped the top rate on income above $1 million to 13.3% from 10.3%. Proposition 55 would postpone the income surtax’s scheduled sunset by 12 years to 2030. Ergo, another “temporary” tax increase becomes permanent.
A mere 1% of California earners account for about half of the state’s income-tax revenues and a third of the budget. Since 2012 California’s coffers have grown by nearly 40% thanks to large capital gains. About two-thirds of the new revenues have gone to schools, but for the teachers union it’s never enough.
A recent Field Poll shows voters favoring the tax extension by two to one. Opponents have raised $3,000. Labor groups and hospitals—Medicaid would get a dedicated share of the revenues—muzzled the opposition by vilifying donors to the antitax campaign in 2012 and dumping $60 million into this year’s initiative.
Maine is following California’s leftward lead with an initiative to impose a three-percentage-point surcharge on household income exceeding $200,000 per year—regardless of whether the taxpayer files as an individual or jointly. If enacted, Maine would lay claim to the second highest top individual rate in the country at 10.15% after California’s 13.3%
The Maine Heritage Policy Center estimates that the tax would cost 4,000 private jobs and $265 million in real disposable income by reducing economic activity. Some would shift next door to New Hampshire where the income tax is zero. The Pine Tree State was one of only five states last year to lose population, and the tax hike would make it harder to recruit and retain professionals in high-demand fields like health care. The average salary of a physician in Maine is $210,760, and about half of pass-through business income was reported on returns with income greater than $200,000.