Goldy may hate to dwell on this, but I’m going to keep piling on. The Seattle Times’ “Calitaxication” editorial is one in a long series of deeply misleading claims they’re making about the crisis here in California. In order to ensure that Washington doesn’t follow California’s path, it’s necessary to do as thorough a demolition job as possible on the Times’ editorial as possible.

I think Goldy’s done a good job of hitting the flaws of the Times’ argument that I-1098 would somehow replicate the taxes found in Oregon and California. But there’s a deeper point that needs to be made: California’s budget woes aren’t due to too much tax – instead the issue is that taxes aren’t high enough on the upper end.

One piece of the Times’ editorial that needs further attention is this:

California did that. Its state income tax on high earners is 10.8 percent, and its sales tax mostly ranges from 8.75 to 9.75 percent. Such high levels of tax have not brought wealth and balanced budgets to California. Skilled people are leaving.

This isn’t really true. And since it’s at the core of the argument against taxing the wealthy – that doing so would cost jobs and lead skilled workers to leave – it’s important to show how this too is a flawed statement.

Despite the reputation the Times gives California, the Golden State isn’t actually all that tax happy. After Republican Governor Pete Wilson pushed through an income tax increase in 1991, the top tax rate was 11% for high earners (individual incomes of $200,000 and above). Those expired at the beginning of 1996, but did not prevent California from coming back from the severe early ’90s recession by that time – nor did they lead to any mass exodus of the rich and the skilled from the state. In fact, the numbers of people paying the higher rates under the Wilson tax increases in the 1990s rose, according to research from the California Budget Project:

The number of California’s joint personal income tax filers with incomes of $200,000 or more rose by 33.4 percent between 1991 and 1995 – a period in which California temporarily imposed 10 percent and 11 percent tax rates on high-income earners. In contrast, the total number of joint filers declined by 6.7 percent.

In the late 1990s Wilson pushed through a massive tax cut, including to personal income taxes, justified by the dot-com boom. By 2002, this lost revenue played a key role in producing the state’s large budget deficit that ultimately brought down Governor Gray Davis and gave Arnold Schwarzenegger his opening to become governor in the 2003 recall.

In 2004, however, California voters approved Proposition 63, which raised the tax rate to 10% on incomes over $1 million in order to fund mental health services. It passed with over 53% of the vote.

According to the Seattle Times, this should have destroyed the state’s economy and caused a flight of the rich. It did no such thing. The numbers of people who paid that tax rose after it was enacted, just as it did in the 1990s (again from the CBP):

The number of millionaire taxpayers – those with adjusted gross incomes of at least $1 million – increased by 37.8 percent between 2004 and 2006, after voters approved an additional 1 percent surcharge on taxable personal income above $1 million, which took effect on January 1, 2005. During the same period, the total number of personal income taxpayers increased by 4.2 percent.

As we well know, California’s bubble burst in 2007-08, and again revealed the underlying weakness of the state’s budgetary system. But the problem isn’t high taxes – instead it is the legacy of the notorious Proposition 13, passed in 1978, which capped property taxes and forced state and local governments to rely on more volatile sources of revenue, such as the sales tax. This legacy was compounded by the extremely reckless Wilson dot-com era tax cuts that I mentioned above.

So are skilled people leaving California as a result of these tax increases? As we saw above, the opposite seems to be happening: tax increases on the wealthy if anything have been accompanied by an increase in the number of people paying the tax. California’s boom and bust economy has many causes – an overreliance on real estate, a lack of public services to help secure and grow the middle class – but taxes on the wealthy aren’t one of them. Skilled workers continue to come to California to start businesses, work at our leading corporations, and to innovate the 21st century economy.

Neither are these taxes leading businesses to flee the state. Jed Kolko of the Public Policy Institute of California debunked this notion back in June 2010:

Rhetoric aside, California loses very few jobs to other states. Businesses rarely move either out of or into California and, on balance, the state loses only 11,000 jobs annually as a result of relocation—that’s just 0.06 percent of California’s 18 million jobs. Far more jobs are created and destroyed as a result of business expansion, contraction, formation, and closure than because of relocation. Business relocations, although highly visible, are a misleading guide to the overall performance of the California economy. The employment growth rate, which takes into account job creation and destruction for all reasons—not just relocation—is a much better measure of the state’s economy.

There’s no doubt California faces serious challenges. Our unemployment rate is 12.2%, much worse than Washington’s 8.7%. But that is due largely to the much more severe impact of the housing market bust than the impact of taxation, as shown above.

Here in California, we’re all too familiar with the impact of tax cuts, which have destroyed our public services and our ability to balance our budget. It’s not for nothing that some of us call this state “Failifornia” (in fact, it was the title of my Netroots Nation panel on California politics). As someone with a lot of family and friends left in Washington State, I urge you to not believe the BS that the Seattle Times is trying to sell you as they try to turn Washington into Failington by adopting the insane anti-tax policies that have devastated California.

(Oh, you might be wondering who I am. I lived in Seattle from 2001 to 2007, but now live in Monterey, California, where I work as Public Policy Director for the Courage Campaign, a 700,000 member organization working to make California more progressive. I also write at the website Calitics, the state’s leading political blog. I’ve also written several articles at the Olympia Newswire earlier this year on state budget and tax issues.)