Tuesday, February 11, 2014

A fair California flat income tax

Nine income brackets?  What the heck?

Since 1935, California individuals and corporations have been paying a state income tax. The individual California income tax is considered progressive, meaning the more a person earns the greater the rate imposed. California corporations pay a flat tax, depending upon the industry classification. The personal California rates are divided into nine tax rate brackets from 1 to 12.3 percent, 13.3 percent if you earn more than $1 million. The highest brackets were just voted into law (Proposition 30 in 2012) by the voters of California.

Why so many income tax rates? The sales tax is a true flat tax. Whether your economic status is resting on the bottom or you are a “1 percenter” we all envy, a pair of shoes, a hamburger or a gallon of gas is taxed at the same rate. That seems fair. Why wouldn’t a similar flat tax be just as fair for income earned? Some consider the flat tax a regressive tax. The tax would represent a greater proportion of total income for low wage earners. A true regressive tax would, of course, be the opposite of a progressive one.

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