A couple of months ago, Meg Whitman released a glossy magazine she called Meg 2010: A New California. (It wasn't very detailed. Every third page was just a picture of a farm or Meg Whitman wearing safety goggles. So a lot of the plan involves protecting your eyes from fruit.) But it did include seven little words that will cost our bankrupt state between four and six billion dollars:
ELIMINATE THE STATE TAX ON CAPITAL GAINS
This week, Meg issued the second edition of her magazine. She's tweaked it a bit since she won the Republican nomination, and as she tacks to the center. (Gone are a whole series of ideas for making life miserable for illegal immigrants, for instance.) But she's sticking by the single most expensive proposal of her campaign: The total elimination of the state income tax on Meg Whitman.
She's also made a teeny-tiny adjustment to the justification for cutting her own taxes to zero, and changed it from a sleazy trick to a blatant lie, but I'll get to that in a minute.
The thing you have to understand first is that California taxes two kinds of income the same way. Capital gains, like Meg Whitman makes, and wages, like a nurse makes. Last year, Meg paid 9.3% on whatever she earned from a billion dollar fortune, not counting what her charitable trust hid in the Cayman Islands.
A nurse making $47,056 also paid 9.3%
Sounds fair, right?
So here's Meg's new plan: The nurse still pays 9.3% but Meg Whitman pays 0.00%
(When the first report came out, I guessed that the plan would cut Meg's taxes in half. I got that number by looking up how the average rich person earns their money: about half from wages, half from investments. Meg promised to release her tax returns - that was March - and since she hasn't, I'm going with a higher estimate. I'm ready to guess that none of her income comes from wages. It all falls in the new tax-free category. Unless she has a shift at Del Taco we don't know about.)
Since we don't have Meg Whitman's tax records, and we'll be getting them when hell freezes over, we don't know how much her Rich Eat Free tax giveaway will save her. But we can guess.
Let's say Meg has her billion dollars in a Bank of America Growth Maximizer Savings Account. Last year, married, filing jointly, her California state income tax would have been $90,843. I'll bet Meg did a little better than that. She knows all those insider trading guys from Goldman Sachs. So let's say her investments paid about the same as ten-year treasuries. If she made 3.75%, her California state income tax was $4,295,230.
Under Meg's plan, it would go down to zero.
On average, a really experienced California nurse makes $62,400. Her state income tax is $2,032. Under Meg's plan, it would go down to $2,032.
Another way of looking at these numbers: Meg Whitman's tax cut will save Meg Whitman four million dollars a year, basically even if she just has her money buried in the stable. It will save the average working Californian sweet F all.
And it'll cost the state billions.
It's going to take a lot of TV ads to make that sound like a good plan.
--
Okay, so here's what's changed about the justification for the tax cut in the new issue of Meg Magazine.
The first edition read like this:
ELIMINATE THE STATE TAX ON CAPITAL GAINSCalifornia is one of a few states in the country that doesn't tax capital gains at a lower rate than traditional income.
This trick figure comes from the fact that in some states the tax on capital gains can't be lower than the tax on traditional income because they're both zero. Another way to look at this stat: 41 states tax capital gains and traditional income (wages) at the exact same rate. So by "a few" she means 4/5ths.
This is double taxation at its worst.
This is horseshit at its most specious. Everything gets taxed over and over. Meg pays the liar who writes lies for her. That's taxed. He pays the therapist who helps him live with the guilt. That gets taxed. The therapist buys liquor. That gets taxed. Double taxation isn't an economic argument. It's just something Frank Luntz made up one day to mess with Joe the Plumber's head.
California's tax treatment of capital gains is a major impediment to capital formation and investment in new jobs.
For example, if a billionaire didn't have to pay taxes, he could hire you to express his dog's anal glands. And you could pay taxes.
We should align California's tax treatment of capital gains with other competing states.
There's nothing to "align" with. There are no states - not a single one - where they tax income and don't tax capital gains.
As I pointed out four months ago.
I didn't think catching this slippery crap was a major piece of investigative journalism. All you need is a map, a dictionary and sense of decency. California taxes traditional income and capital gains at the same rate. Just like Nevada. You're free to not like it, but you can't say it's not fair, unless you change the facts.
So they did.
Here's how the paragraph reads in the new edition:
ELIMINATE THE STATE TAX ON CAPITAL GAINSCalifornia is one of a few states in the country that taxes capital gains at a higher rate than traditional income...
I give up.
Now they can openly start voting for this, and people are not outraged? What kind of stupid folks are we anyway??/ Rise up and revolt against any politician and party that supports this outrageous benefit for the 2% rich only in this country, when they say they worry about the deficit and therefore cannot pay unemployment benefits...does this stink like a rotten egg or what????!!!
The poor can't pay, 1/8 of Americans are getting food stamps. It is inefficient to tax people and give them benefits too.
The middle class has the highest tax rates, and some of them get benefits now
the weathy have the lowest taxes, even lower than people who earn 20000.
Many americans say 'tax no one' but if you look up Argentina's default it is very ugly
Unless we cut defense by half and quit both wars cold turkey.
a woman working at gas station in Flagstaff AZ was ranting about estate tax. Like she'll have to pay it. Even the owner of the station probably won't need to pay.
If only she were Black and Democrat.
I think Bush gave them this idea and Reagan
fantasy
Wake up buddy, if this is your stance . . . Democrats need to all be voted out of office in 2010 because of the money Goldman donated to candidates in 2008, . . . 75% went to Dems . . . in 2006 it was 62%.
Top Recipients
Senate Obama, Barack $1,001,195
Senate Clinton, Hillary $411,150
President Romney, Mitt $234,275
Senate McCain, John $230,095
http://www.opensecrets.org/orgs/toprecips.php?id=D000000085&cycle=2010
That is how the "party of the people" somehoe always seems come down on the side of corporate interest.
Campaign reform anyone?
They skipped out on the primaries.
I'll vote for Jerry. I would truly have to leave if she won..
So the answer is to increase Reagonomics?
I don't understand how the Republican party can support Meg Whitman. Even if she won the nomination.