Brown’s Tax-the-Rich Mantra Won’t Work
The “w” word used by a Jerry Brown strategist to describe Meg Whitman’s alleged sellout on her pension reform proposals to public safety unions that are endorsing her dominated much of the coverage of the Oct. 12 debate. But far more important to California’s future was Brown’s own sellout to a failed class-warfare philosophy that tax breaks for the “rich” are unfair and will worsen our state’s fiscal problems.
Brown charged that Whitman’s plan to eliminate the state capital gains tax will benefit “mostly millionaires and billionaires,” add “$5 billion to $10 billion” more to our state’s budget deficit, and, he claimed, harm public schools.
The capital gains tax is a tax on the profit earned by selling primarily stocks, bonds and real estate. More than 87 percent of capital gains taxes paid in our state in 2007 came from taxpayers with adjusted incomes of more than $200,000, according to the Franchise Tax Board.
A reduction in the capital gains tax increases the profitability of entrepreneurial efforts and thus helps create new jobs, according to studies compiled by the Pacific Research Institute.