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High-income Californians may pay nation’s highest tax rate

Posted By admin On December 6, 2012 @ 5:48 am In Money Watch | Comments Disabled

The Sacramento Bee [1]
Dec 6, 2012

Thanks to passage of Proposition 30 last month, high-income Californians would pay the nation’s highest marginal income tax rates — nearly 52 percent — if President Barack Obama and Congress fail to make a deal to avoid the so-called “fiscal cliff,” according to a new study.

Without a fiscal cliff deal to the contrary, the Bush era tax cuts on high-income taxpayers would expire next year and rates would return to their previous levels.

Gerald Prante, an economics professor at Lynchburg College [2] in Virginia, and Austin John, a Lynchburg economics student, calculated marginal tax rates — the highest rates on the highest levels of income — for all 50 states. They combined state, federal and, where applicable, local income taxes, [3] pluspayroll taxes [4] for Social Security [5] and Medicare and included the deductibility of some taxes.

Proposition 30 added three percentage points to the marginal state income tax rate for California’s highest-income taxpayers, bringing it to 13.3 percent. That action raised California over other high-tax jurisdictions to a marginal rate of 51.9 percent, slightly higher than New York City’s level. Hawaii was the only other place with a calculated rate above 50 percent.

Their report [6] was published by the Social Science Research Network.

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URLs in this post:

[1] The Sacramento Bee: http://blogs.sacbee.com/capitolalertlatest/2012/12/high-income-californians-may-pay-nations-highest-tax-rate.html

[2] Lynchburg College: http://topics.sacbee.com/Lynchburg+College/

[3] income taxes,: http://topics.sacbee.com/income+taxes/

[4] payroll taxes: http://topics.sacbee.com/payroll+taxes/

[5] Social Security: http://topics.sacbee.com/Social+Security/

[6] report: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2176526

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