Daily Business Report-Dec. 31, 2018
LeBron James signed a $153.3 million contract with the Los Angeles Lakers and California will get its share in taxes. (Photo by Frank Franklin II, Associated Press)
Le Bron James’ move to Lakers
could cost him $20 million in taxes
Gov. Jerry Brown has gotten a lot of credit for California’s fiscal rebound. When he came to office, the state budget was running a deficit of $27 billion; now, as Brown leaves office, he’ll leave his successor, Gavin Newsom, with a $15 billion rainy day fund.
Thanks, Jerry! But Californians actually should be thanking other, richer Californians. Under the state’s progressive tax structure, 46 percent of state income taxes are paid by the top 1 percent.
Tales of the rich supposedly fleeing the state’s high income taxes are hardy perennials, but California still leads the nation in billionaires, and recent studies have found that, among higher earners, California has experienced a net gain.
In fact, one such report, by Stanford University’s Center on Poverty and Inequality and the state Franchise Tax Board, came out this year right around the time a famous 1 Percenter announced that he was departing the snow belt to join the Los Angeles Lakers.
LeBron James has been, in theory at least, a California taxpayer for several months now. How grateful should the rest of us in the Golden State be to him for his contribution?
As an illustration of the state’s fiscal dependence on the wealthy, and perhaps as solace to the shivering fans James left behind in Cleveland, let’s count the ways.
First, what is a California 1 Percenter? It’s those making at least $580,429 a year, according to the state Department of Finance.
And the average earnings of the 1 percent? $1.9 million. That’s 23 times more than the average California filer’s $83,256 income.
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