PROPOSITION 82, which would tax "the rich" to finance universal preschool for 4-year-olds, is deceptively appealing. But don't be fooled. It is bad for California. It is bad spending policy, bad governance and bad tax policy, and it would seriously damage the state's economy.
Proposition 82 is the latest in a string of terrible initiatives that seek to micromanage the state by creating unnecessary, inefficient, multibillion-dollar programs financed by ever-higher tax rates. Two years ago, it was Proposition 63, which slapped a 1% tax increase on those who make more than $1 million a year to pay for expanding mental health services. The list of what people would like if someone else were forced to pay for it is endless. These kinds of initiatives, if passed, could lay waste to the Golden State, turning it into a stagnant economy and a sick society.
California already has the highest sales and incomes taxes in the country. Now, Proposition 82 would raise the state's top personal tax rate to more than twice that of "Taxachusetts."
Why is this such a bad idea? Because in today's economy, more and more people and more and more businesses enjoy a wide range of options as to where they will locate, so it is important to keep tax rates not only at a reasonable absolute level but also in line with California's major competitors for business and jobs.
California's tax system already makes it economically uncompetitive in many areas, and Proposition 82 would considerably worsen the problem.
If the new 1.7% tax rate were only going to affect individuals earning more than $400,000 and married couples earning more than $800,000, that would be bad enough. But most of California's small businesses are sole proprietorships, partnerships and S-corporations, which pay taxes on the same 540 schedules you and I use. Thus, the proposed Proposition 82 tax hike would hit them as well, depriving them of income they could use to hire workers, raise pay, provide benefits and invest in their future.
These are the small businesses that are so important for job growth in California. If anything, the state should be moving in the \o7opposite\f7 direction, toward a broader-based, lower-rate, flatter, fairer and simpler income tax.
