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 As Illinoisans inch closer to the 2020 election, California
offers a warning about what happens when politicians promise a progressive
income tax can fix a state’s problems.
New research out of Stanford University shows that California’s progressive
income tax has triggered a wealth exodus, yielded much less revenue than
expected and lasted longer than promised. Most of what the tax did bring in has
gone to pensions, not classrooms or other services as politicians promised
California’s voters, according to David Crane, a Stanford University public
policy lecturer and president of Govern for California.
California’s wealthy residents were about 40% more likely to leave after
California voters in 2012 approved Gov. Jerry Brown’s progressive income tax
hike. That flight and other changes it triggered wiped out nearly half of
expected revenues.
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California called the measure Temporary Taxes to
Fund Education. It wasn’t temporary. It did not fund education. The
higher rates are still in place and Crane determined all additional
education funding went to pensions rather than classrooms.
Politicians pushing the “fair tax” in Illinois – which voters will
decide in November 2020 – should reckon with the truth about what
has happened in other fiscally mismanaged states that have adopted
progressive income taxes.
California offers an example of a policy failure that ought to be
avoided, not repeated
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