Wave of High-Income Tax Increases

In 2009 alone, California, Connecticut, Colorado, Delaware, Hawaii, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, and Wisconsin instituted either a permanent or temporary reform of personal income taxes.  Many of these states have increased revenue by over 5 percent.

This session, the Hawaii Legislature capped itemized deductions at $50,000 for joint filers with income over $300,000, or at $25,000 for individuals earning over $150,000.  The move will generate $33 million next fiscal year.  This follows the state's high-end income tax increase last year after the Legislature overrode the Governor's veto to raise three top rates, with the highest increasing from  8.25 to 11 percent.  The increase only applies to the top 2.6 percent of tax filers in the state.

At the end of January 2010, voters in Oregon overwhelmingly approved two ballot initiatives that ratified legislative action last year to increase high-end personal income and corporate taxes.  The initiatives will only affect 2.5 percent of the state -- the richest individuals and corporations -- and generate over $700 million in the upcoming fiscal year to protect vital services.

William Gates Sr., father of Bill Gates, is leading an effort in Washington to create a state income tax for wealthy state residents.  I-1098 would impose a 5 percent tax on joint filers above $400,000, and individuals making over $200,000, and a 9 percent on families making over $1 million.  The proposal would also increase the business and occupation tax.  In a recent article, Gates, along with Gerald Grinstein and Michael DeBell, writes, "this proposal offers a clear choice to voters: assist small businesses, cut taxes for the middle class and support much needed investments in our schools and in health care — or keep the status quo, which penalizes small business and shortchanges our children and families."  If 241,153 valid voter signatures are successfully gathered by July 2, the measure will appear on the ballot in November.

In Washington DC, Councilmember Michael Brown has proposed the creation of two new income tax brackets, 8.9 percent over $250,000 and 9.4 percent over $1 million.