Do the wealthiest Americans have a "moral" obligation to pay higher taxes?
California Governor Jerry Brown thinks so. Under Prop 30, the two-time Democratic governor is calling for a 3% tax hike on the state's richest 1% to help pay for the cash-strapped state's education system.
"It takes a refined theory to say to billionaires that it's easier to take three weeks of school away from kids in Los Angeles than it is to take 3% away from people who make hundreds of millions of dollars a year," said Brown in an interview with The Financial Times.
Prop 30 calls for a sales tax increase and staggered tax increases over seven years for individuals making $250,000 and families earning $500,000 or more.
The law is up for a vote during the Nov. 6 general election and billions of dollars in education funding is at risk if the law does not pass.
To further promote Prop 30 and appeal to religious voters, Brown cited the bible. "Luke 12:48 says: 'For those of whom much has been given, much is required.' Those at the high end can brace themselves for seven years and lend school kids a helping hand. I appeal to their sense of loyalty and fairness," he told the FT.
In the accompanying interview (video to come), The Daily Ticker's Aaron Task and Henry Blodget discuss the rancorous and complicated debate over whether the richest Americans should bare a larger share of the tax burden in this country, especially at a time of pervasive income inequality.
"When I was governor last time, personal income was $165 billion and the top 1% earned 8% of it," said Brown of his first-term during the 1970s. "In recent times the top 1% has earned 22% of personal income, which is now $1.9 trillion."
According to an annual study by the Tax Foundation, California residents paid 11.2% of their income in state and local government taxes in 2010. That was the fourth-highest rate in the U.S. behind New York (12.8%), New Jersey (12.4%) and Connecticut (12.3%). The national average across states was 9.9% in 2010 and unchanged from the previous year.
Recent polls show support for Prop 30 is waning, but the law is expected to pass. Should California residents vote in support of the proposition, it could have widespread implications in other states and on the federal level.
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