Reply #36: The reasoning here is simple. [View All]

[Xithras]

Income from top earners is erratic and is dependent on the performance of investment markets. California's current tax structure pulls roughly half of our income taxes from those top earners. Even if the state economy is doing well, a down year on Wall Street can cause the California budget to take a major hit. A down year in real estate can also cause a major hit. Investment markets like those we've seen for the past few years, where multiple markets are tanking at once, can be devastating, causing budget losses that exceed actual economic contraction in the state, percentage wise. Our Democratic state leaders have been saying the same thing for several years now...we have created a situation where the health of the state budget is highly dependent on the incomes of a tiny percentage of our population. It's not a healthy way to fund a government.

This proposal is only unique in that it wants to flatten taxes to fix the problem. The alternative solution, the one supported by most Democratic lawmakers in Sacramento, is to simply raise taxes on the low and middle class to narrow the gap a bit, and increase the percentage of the government funded by traditional wage earners.