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The recently passed federal tax bill lowers the corporate rate from 35 to 21 percent, reduces rates in five of the seven tax brackets, and according to the New York Times will cut taxes for about 75 percent of filers in 2018. The bill also caps the amount of state taxes filers can deduct on their federal return at $10,000, and that displeases politicians in California.
State Senate boss Kevin de Leon has responded with the Protect California Taxpayers Act, which will allow Californians to pay their state income taxes as though they were a charitable donation, and therefore fully deductible. The money would go into a California Excellence Fund run by the treasurer’s office and wind up in the state budget. GOP strategist Bill Whelan calls it a “twofer” for California, directing more money to Sacramento and less to the federal government. On the other hand, the Sacramento Bee sees it as just another loophole and “a short-term solution,” with critics even in the state capital. California taxpayers could be forgiven for taking another view.
The Golden State deploys the top marginal income-tax rate of 13.3 percent and the highest base sales tax at 7.5 percent. Senate boss de Leon did not for a second consider that these punitive rates might be too high and that workers would benefit from lower taxes. Instead he wants workers to pay the same high rates, in effect, under the table. This affliction is known as taxoholism, the mindset that high taxes are always a good thing and which automatically resists tax reductions of any kind at any level. Another victim is hereditary, recurring governor Jerry Brown. He denounced the tax-limiting Proposition 13 as “fraud” and a “rip-off,” but it passed with 65 percent of the vote. Brown then proclaimed himself a “born-again tax cutter,” which was never true. He now supports the nation’s highest taxes with evangelical fervor and recently layered on a $5.2 billion gasoline tax that will further punish California workers. They should understand that taxoholics represent the government, not the people.