Austin Hill

Unemployment is rising, the federal government is broke, and so are many of the states. Now more than ever America needs its various governments to exercise restraint, and to scale-back on spending.

And in the midst of this environment a stunning proposal has emerged in the nearly insolvent state of California: a third income tax.

The proposal is actually worse than a mere “additional” income tax – and I’ll explain this in a moment. First let’s look at the “other two” income taxes.

For the record, if you’re an American and you work and you earn personal income, your U.S. federal government imposes a tax on that income (most of us are well acquainted with this). And workers in forty-three of our fifty states also have their personal income taxed even further by their state government (the states of Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming do not impose a state income tax on their residents).

But now California, with an average statewide unemployment rate of over 12% (in some regions the rate is over 20%) and a budget deficit of somewhere between $10 and $15 billion, is considering the imposition of a third income tax. The additional income tax rate would vary, according to which region of the state one lives in, and would be imposed directly by school districts and county governments.

Many of California’s public school districts (there are over 1000 of them) are themselves broke, just like the state government. And because of a California law that was brought about by passage of a ballot initiative back in 1978 (it was famously known as “Proposition 13”), California school districts cannot simply do what most public school districts in America do, and continually raise property taxes higher and higher.

So in the absence of additional state tax dollars, and without the option of raising local property taxes, California school districts are searching for additional revenue streams to feed their never-ending spending addictions. In response, the California legislature is contemplating a new law that would literally grant local school districts broad new authorities to tax personal income – a third income tax for California residents – according to the needs of the individual school districts themselves.

Austin Hill

Austin Hill is an Author, Consultant, and Host of "Austin Hill's Big World of Small Business," a syndicated talk show about small business ownership and entrepreneurship. He is Co-Author of the new release "The Virtues Of Capitalism: A Moral Case For Free Markets." , Author of "White House Confidential: The Little Book Of Weird Presidential History," and a frequent guest host for Washington, DC's 105.9 WMAL Talk Radio.