"You're only going to lose weight if you both exercise and watch your diet."Set aside for a moment the ever-charged argument about whether income tax increases spook the wealthy and consider this question: What would an increase in the personal income tax of a size similar to that of Illinois do for other fiscally troubled states? The New York Times examined this question in three embattled places, New York, California and New Jersey.In New York, an increase of two percentage points in the state income tax could raise about $9 billion and perhaps tip the state into surplus.In California, a similar action could raise more than $13 billion, which would cover just a portion of that state’s yawning $25 billion deficit.In New Jersey, a jump of two percentage points in each of its income brackets could raise nearly $5 billion, which would probably leave the state with a $4 billion to $7 billion deficit. Under these assumptions, a household with the median income would pay at least $1,000 more a year in each of these states; a family making $200,000 would pay $4,000 more.That an income tax increase of such a size could not close budget gaps in California and New Jersey underlines the vast challenge confronting these states. In California, Mr. Brown has proposed a deep, billion-dollar cut in higher education and $4 billion worth of cuts in services for the poor and unemployed. Even a substantial increase in its state income tax — already much higher than in Illinois — would only soften the harshest blows. [emphasis mine]
"Well, if exercise alone won't do it, why should I go to the gym?"
I really don't understand this attitude. Yes, you won't solve the entire problem - but that doesn't mean you shouldn't do it.
You know what else is different about this time? For the past decade, the wealthiest people have enjoyed historically low federal tax rates. In a way, states are making up for this neglect.Another caveat is that an increase of two percentage points in the rate brackets would leave California with the highest upper-income tax rate in the nation. And New York and New Jersey would not be far behind.The talk of such income tax increases, it should be emphasized again, is a thought exercise. It arises from an intriguing fact, however, that tends to set this recent recession apart from earlier downturns. In the recessions of 2001, 1990-91 and most forcefully after the deep dive of 1980-82, state and local governments cut deeply and made layoffs. Then a number of states and cities enacted income tax increases to repair the damage as the economy slowly turned upward.Not so in this recession.
We also have historic levels of income inequity, with the wealthiest taking a bigger piece of the pie than they ever have. Given that, I don't have any problem taxing them to make up these state budget shortfalls.
They have the money, and they're not using it to make the economy better. Tax them and let's fix our problems.