May 3, 2016

California Top 1%: Is it fair to make them pay 48% of the state's income taxes when they make only 24% of the state's income?

One of Bernie Sanders' campaign talking points is that the top 1% should pay their fair share of taxes.

Well, let's take a look at California and state income taxes. 
How is this for "fair"?

One of my favorite newspaper columnists, straight-shooting George Skelton with the Los Angeles Times, published a column yesterday about California State Income Taxes and Bernie Sanders' ongoing reference to the top 1%.  Can you guess who pays what percentage?

Top 1% = 48% of California State Income Taxes.  

Yes, The top 1% of Californians paid nearly half - 48% - of California state income taxes in 2014, while making about 24% of the state's income.  Yes again, the top 1% (about 150,000 taxpayers) make 24% of the state's income, but pay 48% of California state income taxes.  How's that for an eye opener?

Credit:  George Skelton and the Los Angeles Times
While I realize the only thing that is truly fair in life is a baseball hit between 1st and 3rd bases, the above statistic begs the question:

Is it fair to make a group of people pay 48% of California's state income taxes when that group of people makes only 24% of the state's income?

And what happens when this small group of people doesn't make as much money, or members moves out of state?  Simple:  Potential devastation to California's economy.  Placing so much dependency on a very small group of people is simply irresponsible ... and plain stupid ... fiscal planning.

As an Enrolled Agent with high income tax clients, I can attest that California's "1%ers"  are tax conscious and are keenly eyeing the upcoming presidential election as they consider tax planning strategies.

Please contact me if you have questions about tax planning, tax preparation, or taxpayer representation (audit and collection) matters.

For information about my nationwide Consulting, Expert Witness, and Tax Services visit Fouts Financial Group.

Mary Rae Fouts

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