Meg Whitman isn't one of those Republicans who says the answer to everything is a sweeping tax cut. California's budget problems are bigger than that. We can only afford to cut taxes on the rich.
On Tuesday, Multiple Meg issued MEG 2010: Building a New California, a 48-page "policy agenda" that looks like a brochure for a Third World police state trying to look like an issue of Time. And she laid it on the line about taxes:
We simply cannot afford a big, across-the-board tax cut that would irresponsibly grow the state's already oversized debt level and drop our bond rating to junk status."
That would be irresponsible. So we have to face facts. We have to be adults.
And totally eliminate the state tax on capital gains.
Okay, I think I may have lost you there. That sounds kind of "big." But that's because MEG 2010: Building a New California isn't really a policy document. It's more like a text-based game of Three-card Monte.
Keep your eye on the red queen.
ELIMINATE THE STATE TAX ON CAPITAL GAINS
California is one of a few states in the country that doesn't tax capital gains at a lower rate than traditional income. This is double taxation at its worst. California's tax treatment of capital gains is a major impediment to capital formation and investment in new jobs. We should align California's tax treatment of capital gains with other competing states.
Sounds reasonable enough, right? And isn't that just like California, to punish its most productive citizens by taxing their dividends at the same rate as their pilot's wages? Why bother living off a trust fund at all?
But what does Meg mean when she says California is "one of a few states"?
In this case, forty-one.
Forty-one states tax capital gains at the exact same rate as "traditional income." Only nine tax capital gains at a lower rate. One of them is South Dakota. Which may be a "competing state" with California, but it's unclear in what.
So by "a few" Meg means "almost all" and by "align" she means "undercut" and by "competing states" she means Arkansas.
Watch the queen.
This paragraph is accompanied by a box that reads:
DID YOU KNOW?
AK, FL, NV, NH, SD, TN, TX, WA and WY Have No State Capital Gains Taxes
The implication here being that we should get rid ours too, and fast, or risk losing the TV industry to Alaska. But here's the funny thing about the states on the list. They just happen to be the same nine states that also don't have an income tax.
Unlike California, where the tax on "traditional income" can be as high as 10.3%.
Which is the tax that it would be "irresponsible" to cut, remember?
Let me replay that for you in slow motion, because the hand is quicker than the eye:
Some states don't tax wages or day trading.
California taxes wages and day trading at the same rate.
So we must end the tax on day trading.
And shift the entire tax burden to the middle class and the working poor.
Now this would be funny -- as James T. Farrell once said, some people are just born to have it jammed up their can -- except it would also bankrupt the state. Because the 144,000 richest people in California pay 50% of the taxes. And not on their paycheck from Chipotle.
According to the California Budget Project, the people in Meg Whitman's tax bracket make 62.8% of their money from capital gains.
Which Meg Whitman would stop collecting...
And save herself and the other billionaires a fortune...
While she explodes the state's already oversized debt level and drops our bond rating to junk status.
Wait. Show me that again.