Continuing a meme that Democratic gubernatorial nominee Jerry Brown started during the debate last week, his supporters released a memo today estimating that Republican nominee Meg Whitman would see personal savings of between $8.2 million and $41.2 million over a four-year gubernatorial term if she keeps her promise to eliminate the state’s capital gains tax.
Brown had asked Whitman – the billionaire former eBay CEO – during their Oct. 12 debate at Dominican University of California in San Rafael how much her tax plan would benefit her own finances; she didn’t answer, and hasn’t released an estimate since. Today’s memo was prepared and released by California Tax Reform Association Executive Director Lenny Goldberg.
Whitman says eliminating the tax will stimulate investment, leading to job creation. Democrats say it would blow an even bigger hole in the already-shredded state budget while mostly benefiting the very rich, with no guarantee of an economic benefit.
“Meg Whitman has millions to gain, but we have everything else to lose,” California Labor Federation Executive Secretary-Treasurer Art Pulaski told reporters on a conference call.
He said eliminating the capital gains tax would reduce state revenues by $4.5 billion per year, with each dollar lost bringing “a decrease in the quality of life for Californians:” failing schools, reduced college admissions, shortages of police and firefighters, crumbling infrastructure, struggling seniors and disabled, and reduced or no child care, all without creating jobs.
Pulaski and Goldberg repeated their calls for Whitman to release her tax records so estimates such as theirs wouldn’t be necessary.
State Sen. Leland Yee, D-San Francisco, agreed the memo underscores Democrats’ contention that Whitman offers “a one-sided solution to our budget problem – it is to enrich the rich and cut from children and the poor.”
California saw faster economic growth than the rest of the nation from 2000 through 2007 even with the capital gains tax in place, said University of California, Berkeley Economics Professor Michael Reich, while other states such as Texas have outperformed California in recovering from this recession because they weren’t as hard hit by foreclosures.
Whitman’s campaign issued a statement saying leading economists are on her side.
“Having closely studied the issue, Meg Whitman’s proposal to eliminate the capital gains tax in California will spur investment and create jobs. As a whole, Meg’s economic policies of streamlining regulation and implementing targeted tax cuts are crucial in getting our economy moving again and getting Californians back to work,” Hoover Institute Senior Fellow John Taylor – an economic advisor to governors Arnold Schwarzenegger and Pete Wilson, as well as to presidents Gerald Ford and George H.W. Bush – said in the campaign’s statement.
But Reich said California investors have diversified national and international portfolios, and so their reinvestment wouldn’t benefit the Golden State’s economy all that much. He also said millionaires haven’t been leaving California in any measurable way due to taxes, and so it’s unlikely any would return if the tax was eliminated.