A new CBP analysis examines the impact of the tax plan proposed last week by Senate pro Tem Darrell Steinberg and Assembly Speaker John Perez. The new paper includes an analysis using the Institute on Taxation and Economic Policy’s microsimulation model to assess the plan’s impact by income level. After blogging on the rumors of the proposal before its release, we had withheld comment until now pending a detailed analysis.
The bottom line: The proposal would raise critically needed revenues as part of a balanced approach to closing the budget gap. However, it would do so by raising taxes at the middle of the income distribution, while providing a tax cut to the wealthiest Californians, counter to the advice of prominent economists.
— Jean Ross