Support SB 1255 (Burton)

The Congress of California Seniors strongly supports SB 1255 (Burton), which would reinstate the 10 percent and 11 percent tax rates for high-income Californians.

In this very difficult budget year, we believe that the only way to close the budget gap is to focus on a balanced solution to the crisis, which not only looks at budget cuts and borrowing, but revenue increases to close the gap.

Raising the top income tax brackets has been used to bridge prior deficits, most recently during the tenure of former Governor Pete Wilson. In fact, the state's top tax rate has exceeded the current maximum for nearly half (33 years) of the years since the state instituted the personal income tax. Former Governor Ronald Reagan also signed into law two increases in the top brackets, one in 1967 and again in 1971.

Only 2.4 percent of California taxpayers would be affected by the proposed increase. Taxpayers with incomes in the top one percent of California households - with average incomes of $1,341,700 - would pay more than 95 percent of the increase.

While only a small percentage of Californians would be affected by this bill, SB 1255 would increase state General Fund revenues by $3.1 billion on 2002-03, $3.2 billion in 2003-04, and $3.5 billion in 2004-05.

In addition, when fully phased in, last year's federal tax package will provide substantial savings to high-income earners that far exceed the increased state taxes they would pay under the proposed top brackets.

The top one percent of California taxpayers will receive a federal tax cut of $51,717, once the federal reduction is fully phased in. In contrast, reinstating the top tax brackets would increase the average tax bill of the top one percent by $7,674, after taking into account the deductibility of state income taxes for federal tax purposes.

More than a third of the cost of Californian's higher income taxes would be paid by the federal government in the form of higher deductions.

The Congress of California Seniors believes that SB 1255 will help us plan for the future without cutting vital state services or by mortgaging our future in the form of increased borrowing. We urge everyone to send Senator Burton letters of support for this important legislation.