California "Millionaire's Tax Initiative" (2012)
|Not on Ballot|
| This measure did not or |
will not appear on a ballot
A California Increased Income Tax for Those Earning Over $1,000,000 Initiative (#11-0091) was approved for circulation in California as an initiated state statute. It was frequently referred to in the press as the "Millionaire's Tax.". To earn a spot on the state's 2012 ballot, sponsors of the initiative would have had to collect 504,760 signatures.
If the initiative had qualified for the ballot and the state's voters had approved it, it would have:
- Added 3% to California's personal income tax rate on annual earnings over $1,000,000.
- Added 5% to California's personal income tax rate on annual earnings over $2,000,000.
- Allocated the new revenues as follows:
- 36% for K-12 schools
- 24% for public colleges and universities
- 25% for services to children and senior citizens
- 10% for public safety
- 5% for road and bridge maintenance.
- Provided local governments discretion to decide, subject to financial audits, how to spend new funds, with the exception that funds cannot go toward capital outlay or certain administrative costs.
Competing tax initiatives
The "Millionaire's Tax Initiative" was one of several competing tax increase measures filed for the November 6, 2012 ballot. Others include:
- Molly Munger's Tax Increase for Education Initiative
- Jerry Brown's Tax Increase Initiative
- A Tax on Oil Initiative
- An effort to collect more Income Taxes from Out-of-State Businesses.
Of these, the Molly Munger proposal and the Jerry Brown's Tax Increase Initiative were most often mentioned as competing with the so-called "Millionaire's Tax". The sense of competition comes from the concern, among those who generally support a tax increase, that if there are multiple tax increase proposals on the November 6, 2012 ballot, they might all fail. Whereas, these tacticians believe, if only one tax increase initiative is on the ballot, it stands a better chance of passing.
Pechtalt said, "We're not concerned that there will be multiple [tax increase] measures on the ballot...[voters will] be able to decide which makes sense for them."
The "Millionaire's Tax" was different from the Molly Munger tax and the Jerry Brown tax in several ways, but one of the most important ways it differed is that it would be permanent, whereas the Munger tax would be in effect for 12 years and the income tax part of the Jerry Brown proposal would be in effect for 5 years.
The wealthy in California
According to the state Franchise Tax Board, those earning $500,000 or more a year make up 0.5% of tax filers in the state, and pay 32% of the state's total take from the state income tax. The number of such residents has declined since 2007.
|Year||Residents earning $500,000+|
Text of measure
- "Adds 3 percent to personal income tax rate on annual earnings over $1,000,000; adds 5 percent for earnings over $2,000,000. Allocates new revenues as follows: 36 percent for K-12 schools, 24 percent for public colleges and universities, 25 percent for services to children and senior citizens, 10 percent for public safety, and 5 percent for road and bridge maintenance. Provides local governments discretion to decide, subject to financial audits, how to spend new funds, except funds cannot go toward capital outlay or certain administrative costs."
Fiscal impact statement:
- "Increased state personal income tax revenues dedicated to public universities, school districts, community college districts, and other local public services. Estimates of the revenue increases vary—for 2012-13, from $6 billion to $9.5 billion and for 2013-14, from $4 billion to $6 billion. These revenues would tend to grow in later years."
- The California Federation of Teachers was the financial sponsor of the effort to qualify the measure for the ballot. Joshua Pechthalt, president of the CFT, said, "We do have the money to get this on the ballot and we will be able to run a viable campaign, we're absolutely certain of that. We may not be able to raise the kind of money the governor can raise for his measure, but we think our message will really resonate with the 99 percent ... in a way that the other measures will not."
- The initiative also had the backing of the Courage Campaign and the California Nurses Association.
- Rick Jacobs of the Courage Campaign pounced on the California Business Roundtable for coming out against the Millionaire's Tax on March 8, saying, "Of course the CEOs of corporations like Chevron, Bank of America, Wells Fargo and PG&E would oppose the Millionaires' Tax of 2012 through their umbrella organization, the California Business Roundtable."
- David Kieffer of the SEIU said in late February 2012 that although he is sympathetic to the aims of the Millionaire's Tax, its supporters should withdraw it from contention in favor of the Jerry Brown Tax Hike Initiative. Keiffer said, "From a public policy point of view, we're going to end up with a big mess, where three competing tax initiatives will collide at the ballot box and we won't get any of them passed. Or we'll end up with this silly thing where the one with the most votes will get accepted. So let's imagine that by some magic Gov. Brown's and the 'millionaires tax' both pass, because they have the best polling. You know, the collision of public policy would be quite astounding."
- Gov. Jerry Brown sat down with the editorial board of the San Francisco Chronicle in early March 2012 and argued against the Millionaire's Tax, saying, ""It's not good for schools, it's not good for public safety and it's not good for public confidence, because we go through all this and end up exactly in the mess where we started. People will be angry because they voted for this and nothing happened."
- The California Business Roundtable announced on March 8 that it opposed the measure. Jerry Carnahan of the group said, "We are aggressively moving forward to raise money and oppose these initiatives. We will ensure by the November election that the voters of California will understand their real impacts on our economy and jobs."
Concern from counties
Paul McIntosh, executive director of the California State Association of Counties, wrote a letter to the initiative's backers in February expressing concerns about the impact the initiative might have on county budgets: "We are concerned that your initiative would cap funding for local county public safety and social service programs at inadequate levels (2008 funding levels). If so, it would condemn counties to artificially deflated funding for vital and basic services for our residents". This is because the initiative is worded so that funds allocated to local governments are benchmarked to the funding levels that existed in 2008.
- See also: Polls, 2012 ballot measures
A Field Poll in February 2012 showed that a majority of likely voters supported the measure. An internal poll paid for by backers of the Jerry Brown Tax Hike Initiative also indicated that the Millionaire's Tax in February enjoyed the support of a majority of likely voters. However, that internal poll also suggested that if the Millionaire's Tax, the Munger Tax and the Jerry Brown Tax are all on the ballot, none of them will win.
|Date of Poll||Pollster||In favor||Opposed||Undecided||Number polled|
|February 14-18, 2012||Field||63%||31%||6%||344|
|February 17-19, 2012||Jim Moore||55%||34%||11%||500|
|February 17-19, 2012||Jim Moore||42%||53%||5%||500|
Path to the ballot
- See also: California signature requirements
- Joshua Pechthalt submitted a letter requesting a ballot title on December 5, 2011.
- The ballot title and ballot summary were issued by the Attorney General of California's office on February 2, 2012.
- 504,760 valid signatures were required for qualification purposes.
- The 150-day circulation deadline for #11-0091 was July 2, 2012.
- Backers of the initiative announced in March 2012 that they were pulling the initiative from circulation, and instead, throwing their support behind the so-called "merger" tax hike initiative.
- Letter requesting a ballot title for Initiative 11-0091
- Millionairestaxca.com, website in support
- Website of the California Federation of Teachers, which supports the initiative
- Business Week, "Brown Reaches Deal With Union on Tax-Increase Compromise", March 15, 2012
- Mercury News, "Competing California tax measures move ahead without Brown's blessings", February 6, 2012
- Los Angeles Times, "Dueling tax hike measures pushed as Democrats hold convention", February 12, 2012
- San Francisco Chronicle, "Tax measures to compete with Gov. Brown's plan", February 7, 2012
- Fox and Hounds Daily, "Brown’s Tax Plan Looking for Love", February 15, 2012
- Santa Cruz Sentinel, "As We See It: Competing tax measures: Soaking the rich", March 11, 2012
- LA County Political Buzz Examiner, "Courage Campaign and affiliates push for California 'millionaires tax'", February 29, 2012
- Sacramento Bee, "Courage Campaign fires back at California Business Roundtable", March 9, 2012
- Sacramento Bee, "SEIU director tells Jerry Brown's tax-plan rivals to step aside", February 29, 2012
- San Francisco Chronicle, "Jerry Brown pushes his tax proposal", March 7, 2012
- Los Angeles Times, "Poll: Millionaires tax stands best chance of approval in November", March 8, 2012
- KQED's "Capital Notes", "Simple Tax Initiatives, Not So Simple Impacts", February 23, 2012
- California State Association of Counties, "Letter of February 22 to Joshua Pechthalt
- Field Poll, "Both Millionaire's and Governor's Tax Initiatives favored by Majorities. Less Support for Munger Tax Plan", February 24, 2012
- Los Angeles Times, "Poll: Jerry Brown's tax can pass, but not with rivals on ballot", February 22, 2012
- February 20, 2012 memo from pollster Jim Moore to Jerry Brown
- If just one tax hike measure is on the ballot
- If all three competing tax hike measures are on the ballot