As the coronavirus pandemic continues to wreak havoc on California's economy and the state's budget, politicians are have begun looking for new sources of revenue to help pay for the on-going catastrophe. One solution that's become popular with assemblymembers in recent weeks, is AB 1253, a proposed 'millionaire's tax' that could raise more than $6.5 billion in annual revenue.
The new tax would be applied to around 70,000 taxpayers in California who make more $1 million. The proposal includes several 'tiers' with the tax on individuals making more than $1 million set 1 percent. The more money an individual makes, the higher the tax.
- 1% on taxable income over $1 million but under $2 million;
- 3% on taxable income over $2 million but under $5 million; and
- 3.5% on taxable income over $5 million.
Currently, California's top tax rate is 13.3 percent, but if AB 1253 is passed, that would increase to 16.8 percent.
The pandemic has brought a once-historically low unemployment rate to levels not seen since the Great Recession. California reported an unemployment rate of nearly 15 percent since the pandemic began in March and health officials were forced to close non-essential businesses.