[PEN-L:33292] progressive taxation

["Ian Murray" <seamus2001@xxxxxxxxx>]

Wednesday night from Governor Davis:  "Fifty-one percent ($17.7 billion)
of this [deficit] problem is a reduction in revenues based on
predictions in our current budget.  Thirty-six percent ($12.6 billion)
of the problem are the one-time reductions that we used last year to
solve that problem.  Twelve-point-five percent ($4.5 billion) are
increased expenditures.



As you well know, we have a very progressive system in this state - 80%
of our revenues come from 10% of the tax earners.  So, we depend heavily
on the well-being of highly compensated Californians.  .From 1995 to
2000 these taxpayers experienced an increase in what they were providing
state government on the order of about 18% in '95, '96, '97, and '98,
and then it shot up in '99 to about 25%, and a little higher in 2000.
In 2001, they actually dropped down to zero - so there was a dramatic
falloff in 2001.  And 2002 they are down about 3%...



But when you have a very progressive tax system - which basically
exempts everyone from taxes making up to $45,000 a year - and depend
heavily on the performance of the top ten percent of your wage earners,
then you run the risk that, if they do badly, services have to be
reduced and there's not the revenue for other things we'd like to do in
government.  So, if there is one single problem that has caused this
problem, this is it.

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