Not Just Millionaires Affected by Governor’s Tax Increase Plan
Gov. Jerry Brown wants his next budget, which he will unveil in early January, to be largely balanced by increasing state income taxes on wealthier Californians and boosting the state sales tax by one-half percent.
The increases would bring an additional $7 billion into state coffers annually until they expire at the end of 2016.
Awaiting title and summary from the Attorney General, the proposal by the Democratic governor would raise taxes on 431,000 of the 8.7 million Californians who pay state income taxes.
All California consumers would experience the sales tax increase.
More than half the state residents who would pay higher taxes earn between $250,000 and $400,000. Another 128,000 Californians earning from $400,000 to $1 million would also see their taxes climb, as would the 42,500 residents with taxable income of $1 million or more.
Individual taxpayers earning more than $45,000 a year and couples filing jointly with income of $90,000 or more pay the state’s top rate of 9.3 percent.
Under Brown’s plan, single filers with income between $250,000 and $300,000 and joint filers with taxable income between $500,000 and $600,000 would pay 10.3 percent in state taxes.
According to the Federation of Tax Administrators: As of January, no state has an income tax rate higher than 9.3 percent except Hawaii whose 11 percent rate is imposed on persons earning $200,000 and above.
For individual filers earning between $300,000 and $500,000, Brown would up the tax rate to 10.8 percent. The same for joint filers with income between $600,000 and $1 million.
Single filers earning $500,000 and above would see their rate climb by 2 percent to 11.3 percent. Joint filers with income of $1 million or more would pay the same rate.
California’s millionaires already pay a 1 percent income tax surcharge to support state programs treating mental illness.
That surcharge would not be affected by Brown’s proposal so Californian millionaires would pay, overall, 12.3 percent in state income taxes.
For taxpayers that use the standard deduction – roughly $3,700 for single filers and $7,500 for joint filers – the 10.3 percent tax rate kicks in at $254,000, and $507,500, single and joint filers, respectively.
The 10.8% rate starts for single taxpayers with adjusted income of $304,000 and for joint returns at $607,500.
Single taxpayers with adjusted gross income of about $504,000 or more and joint filers with income of $1,007,500 or more would pay the 11.3 percent rate.
The initiative puts these rates into effect starting in the 2012 tax year and concluding at the end of the 2016 tax year.
Filed under: Budget and Economy
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