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.
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.
