BY Hwa Lang (Calvin) Cho
Income inequality has always been an issue human society has been facing since the beginnings of history. Even before the concept of money, or a medium of exchange, was born, the idea of certain people being richer than others have always been around. Dismayed by this, there were numerous attempts in the 20th century to fix this, which included the popularized rise of socialism and communism. These movements hoped to get rid of such income disparities and instead replace them by stating everything is owned by the state. Ultimately though, democratic capitalism prevailed and with it, the concept of the rich and the poor continued to live on.
The international economic growth that occurred after WWII seemed to at first fix this issue as people lived a more stable life than ever. However, even with such unprecedented growth, the problem of income inequality could not be disclosed forever. Looking at this issue from 2020, it is clear that the problem has gotten better in some perspective - as the poor have gotten significantly better lifestyles compared to centuries ago - but the problem still exists and continues on. This issue seems to have no solution and while some attempts have done its job in reducing income gaps, they have mostly failed in solving the core of this issue.
II. Overview of Assembly Bill 1253
Assembly Bill 1253, otherwise known as the “millionaire tax” is a new legislation that Californian Democrats have been pushing for as a solution to this issue. This tax would add on to the already-existing taxes and raise the tax rate for millionaires to about 54%. While this would not necessarily change the fact that a small group of people make “more,” the millionaire tax would lower the amount of money millionaires take home, thus reducing the disparities caused by income inequality.
“The Personal Income Tax Law and California Constitution imposes taxes based upon taxable income of individuals, estates, and trusts at specified rates. This bill, for taxable years beginning on or after January 1, 2020, in addition to those taxes, would impose an additional tax of at the rates of 1%, 3%, and 3.5% on that portion of a taxpayer’s taxable income over specified thresholds, as provided. This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2/3 of the membership of each house of the Legislature. This bill would take effect immediately as a tax levy” (California Legislative Information).
In looking at the preambles of the proposal (which was on February 21st 2019 for the reference), it can be seen that that the plan would include higher taxes in accordance with ⅔ of the Legislature house. While most of the preambles in the text are rather irrelevant, what must be noted is that it would tax people at certain “thresholds, as provided.” This adds on to the implementation process of this law, by suggesting how the law will work by taxing millionaires over a longer period of time and how it’ll impose the goal amount only by raising the tax at a small rate every once in a while. Moving on though, it is additionally specified in Section 1 the followings:
“(a) For each taxable year beginning on or after January 1, 2020, in addition to any other taxes imposed by this part or the California Constitution, an additional tax shall be imposed as follows: (1) At the rate of 1 percent on that portion of a taxpayer’s taxable income over the adjusted one-million-dollar ($1,000,000) amount, but not over the adjusted two-million-dollar ($2,000,000) amount. (2) At the rate of 3 percent on that portion of a taxpayer’s taxable income over the adjusted two-million-dollar ($2,000,000) amount, but not over the adjusted five-million-dollar ($5,000,000) amount. (3) At the rate of 3.5 percent on that portion of a taxpayer’s taxable income over the adjusted five-million-dollar ($5,000,000) amount” (California Legislative Information).
Section (a) is meant to outline the different level taxes that different levels of millionaires must pay. Taxpayers making more than 1 million but less than 2 million must pay an additional 1 percent; taxpayers making more than 2 million but less than 5 million must pay an additional 3 percent; taxpayers making over 5 million and beyond must pay an additional 3.5 percent. The purpose of this clause is to ensure that not all millionaires are likened. While all millionaires may seem rich to non-millionaires, there is a significant difference between those with an income of 10 million dollars and 1 million dollars, and they must pay different levels of taxes.
“(b) For purposes of this part and Part 10.2 (commencing with Section 18401) of Division 2, the tax imposed under this section shall be treated as if imposed under Section 17041, including, but not limited to, the application of subdivisions (b) and (e) of Section 17041, except as follows: (1) Section 17045 shall not apply. (2) The tax imposed under this section shall apply without any adjustments to the income thresholds specified in subdivision (a) for filing status of the taxpayer” (California Legislative Information).
This primary center of focus in this section is section (2), which states that “the tax imposed under this section shall apply without any adjustments to the income thresholds specified in subdivision,” which suggests that this tax law may be adjusted as needed. Because of the way our economy has generally been growing and how inflation devalues a certain amount of money over time, this portion of the law, interpreted, means that it’ll most likely set the bars for these taxes lower if society wants to impose this tax on more people and higher if society wants to tax richer taxpayers more. Besides leaving this law flexible, (b) serves mostly as a piece that tries to fit this new legislation with previously-existing ones.
III. Similar Laws in Other States and/or Countries
In the United States, there are 6 states that have a special tax for millionaires. These states are California, Connecticut, Maine, New Jersey, New York, and Washington D.C. The most notable and renowned one though has been the one passed in New Jersey. In late September of 2020, the New Jersey State legislature branch passed the proposed millionaire tax, which stated that the taxpayers included in the new millionaire tax includes people making one million and up (it was set at five million prior to this passing).
“Under the plan, the state’s revised fiscal year 2021 budget includes an increase in the gross income tax rate on individuals with earned income between $1 million and $5 million to a proposed top rate of 10.75%, up from 8.97%. (New Jersey taxpayers above the $5 million income level have already been paying 10.75% on income of more than $5 million.)” (EisnerAmper).
Although the approximately 2% increase may seem small at first, this tax applies to the wealthiest people of the country, making even a small increase or decrease significant and can result in millions of dollars added to tax revenue. However, these taxes are rather low in comparison to some of the other countries. For example, Portugal taxes high income earners an upwards tax of 61.3% while Slovenia taxes at 61.1%. While the general population seem to agree that these taxes should be in place, it is not too clear whether these acts are beneficial to society.
IV. Societal Impact
Social Inequality has also been strongly seen with the growing gap in revenue. Through the incorporation of these millionaire laws, it is believed that these gaps will be bridged closer, benefiting the poor.
“Back from an extended summer recess, a group of influential Democratic lawmakers are rushing to raise taxes on California’s wealthiest earners before an Aug. 31 deadline. They claim hiking what is already the nation’s highest state tax rate for millionaires will immediately line the state’s depleted coffers with a multibillion-dollar boost. With historic unemployment rates and strained local governments struggling to provide services, Assemblymember Miguel Santiago says the rich can afford to pick up the slack” (Courthouse News Service).
It is true that many of the rich people do have the ability to pay more in tax while living a good quality life in comparison to the poorer levels of society. This would in fact progress society forwards in that social inequality in the income sector would be generally solved. However, there is much controversy surrounding this topic due to its negative economic effects for all of society.
V. Economic Impact and Controversy
This millionaire tax would bring “an estimated $6.8 billion a year” (Los Angeles Times) and give the state more money to reinvest in poorer communities. Despite being known as the “Golden State,” California still has to face the unemployment rate at 4% (numbers are pre-COVID-19 and as of late 2019) as well as inequalities in income that’s spread across the entire state. To some extent, these taxes are believed to help relieve emergency conditions that must be solved. However, there are several underlying economic factors that suggest these additional taxes aren’t always for the better.
“The Tax Foundation, for example, has estimated that a ten percentage point surcharge on incomes over $2 million—a change that would only affect the highest-income 0.1 percent of households—will slow growth enough to cost 118,000 jobs by the end of the decade. A still-preliminary analysis of presidential candidate Elizabeth Warren’s wealth tax—a change that would affect only the wealthiest 0.1 percent of households—was estimated by the Penn-Wharton Budget Model team to slow growth by more than 0.2 percentage points each year over the next decade.” (Economic Policy Institute).
As seen in such findings, it is evident that not all legislation that puts extra tax on the wealthy will prove to be beneficial. These rich people often end up spending more on markets, allowing for the growth of the national economy. By taking these monies out of these millionaire’s hands and putting it in the hands of the government, the basic concepts that control capitalism may be put at risk. Although the government does have the ability to put the additional tax revenue into emergency funds, economic growth, which may prove to be important in the long-run.
“For instance, Stigliltz points to the capital gains tax (levied on profit from the sale of a stock, business, land or art) as in need of reform. The maximum percentage a person can pay in capital gains tax is currently less than the maximum individual income tax rate (and mostly has been since the 1950s), according to the Tax Policy Center. That means that wealthy people, who have the resources to invest, are being taxed at a lower rate than those who are just earning an income” (CNBC).
Viewing this from a start-up CEO’s point of view who needs investments and funding, this tax may be extremely harmful. Richer investors who used to have the money necessary to fund these startups are prevented from having the money necessary. The money that they used to have is now in the hands of the US government, who obviously cannot invest again into these startups, ultimately causing a failure on the startups. While this legislation idea makes the richer less richer, it also makes it harder for the poor to become richer, causing a paradox.
Whether these millionaires are beneficial for the long-run is something that must be researched more. As it stands, it seems that the additional taxes will give good societal impacts due to its nature in lowering social inequality. However, because of its negative economic impact, not just for the ultra-rich but also the poor as well, the tax idea is something that must be dealt with carefully and cautiously. Benefits expected to bring by many supporters may not be reaped and may instead cause negative results for those root supporters.
Clifford, Catherine. “Top Economists Stiglitz and Piketty: The US Needs a Wealth Tax on Millionaires and Billionaires.” CNBC, CNBC, 17 Sept. 2020, www.cnbc.com/2020/09/17/economists-stiglitz-and-piketty-us-needs-a-wealth-tax.html.
Fontinelle, Amy. “Which Countries Have High Taxes on High Incomes?” Investopedia, Investopedia, 28 Aug. 2020, www.investopedia.com/incometax/which-countries-have-highest-taxes-high-incomes-0/.
Fontinelle, Amy. “Which Countries Have High Taxes on High Incomes?” Investopedia, Investopedia, 28 Aug. 2020, www.investopedia.com/incometax/which-countries-have-highest-taxes-high-incomes-0/.
Legislative Information, California. “What a New Jersey ‘Millionaire Tax’ Really Means for New York.” Empire Center for Public Policy, 18 Sept. 2020, www.empirecenter.org/publications/what-a-new-jersey-millionaire-tax-really-means-for-new-york/.
Skelton, George. “Column: California Is Too Dependent on the Rich. Now Isn't the Time for Another Millionaires' Tax.” Los Angeles Times, Los Angeles Times, 24 Aug. 2020, www.latimes.com/california/story/2020-08-24/skelton-california-millionaires-tax-coronavirus.
Taibi, Barbara. “After Years of Talk, New Jersey's Proposed Millionaires' Tax to Become Reality.” EisnerAmper, 22 Sept. 2020, www.eisneramper.com/nj-millionaires-tax-pwa-blog-0920/.
TurboTax – Taxes, Income Tax. “State Tax Tips for Millionaires.” TurboTax Tax Tips & Videos, 2019, turbotax.intuit.com/tax-tips/state-taxes/state-tax-tips-for-millionaires/L15HLnPCB.
SB 1030 states that each county and each city must create public housing for citizens to use upon request without charge. Sb 1030 prohibits local agencies from disapproving public housing if the public housing complies with state, country, and city requirements including, General planning, Local Zoning, and subdivision standards. SB 1030 also requires local courts to enforce provisions, if certain standards aren't met within 30 days.
California has the largest active workforce in the nation, as well as the largest state GDP where we rank 5th internationally. With higher wages being a major impact and guarantee of being involved in a labour union, we can see a direct impact on the economy and on individual housing situations. When wages increase there is a higher chance that individuals will purchase homes rather than rent, which in turn, decreases the chance of homlessness. Though beneficial, Labour Unions charge a fee in order to hire lawyers or spokespeople against the company which may scare away workers who are uneducated on the union. When a majority of workers are unionized, and are getting paid a higher wage, there is no negative impact on workforce productivity. In fact, it is the opposite, worker productivity increases when more workers are in fact unionized.
Business, Consumer Services and Housing Agency
The Business, Consumer Services and Housing Agency is under Secretary Castro Ramirez and Undersecretary Melinda Grant. It is in charge of licensing and regulating California professionals and businesses. Specifically, it is in charge of making funds available to more people and making rent more affordable and dignified. The type of services that they offer include housing assistance that go out to people in need of housing from a low-income family. Additionally, it offers business regulation and consumer protection. This however goes under the sub-committees that this agency has.
Department of Alcoholic Beverage Control
The Alcoholic Beverage Control Appeals Board is in charge of administration in alcohol consumption. It is under Director Jacob Appelsmith. It is in charge of writing decisions that affirm, reverse, or remand licenses, conditions, and protests on alcoholic beverages. This is especially important to housing and homelessness as one of the strongest reasons why people are unhoused is because of alcoholic addiction. The type of services that this department offers is licensing and approval of bills that are related to alcoholic beverage control.
Department of Real Estate
This department is under Commissioner Douglas McCauley. They were in charge of safeguarding public interests in real estate. In an industry that is so privatized, there are times in which real estate does not become accessible to the general public. The Department of Real Estate hopes to address issues of housing that pertain to not private but instead public ideals. It offers licenses and examinations of the industry to promote fair use.
SB 728: Density Bonus Law, California State Assembly’s Committee on Housing and Community Development.
I’ll be reviewing the California State Assembly’s Committee on Housing and Community Development. The committee’s jurisdiction includes building homeless programs and financing housing projects, including redevelopment. The chair of this committee is Assembly Member David Chu and the vice-chair is Kelly Seyarto.
The bill I’ll be going over is SB 728, titled Density Bonus Law. The purpose of this law is to have cities or countries provide developers that propose a housing development within a region with a high population density incentives to do so. The idea behind this is that this will incentify developers to create more housing real estate properties in regions where people cannot find housing.
I think those opposed to this would be people who work in very high-density cities while living in a suburban area in the outskirts; for example, someone who works in L.A. and drives every day back and forth to Irvine where they live. For them, they bought a house already in a suburban area and settled down; if they have kids, their kids are already attending K-12 systems in that suburban area. Had this incentive been there before, their housing decisions would have changed.
I’ll be going over Assembly Bill 482 which is on the California State Senate’s Committee on Housing. The committee’s chair is Senator Scott D. Wiener and the vice-chair is Senator Patricia C. Bates. California’s Senate Committee on Housing reads over bills relating to housing for low and moderate income families, homelessness, and other land use rights.
The bill mainly focuses on financing middle-class families in getting a home; geographically, this is specialized to San Diego, San Bernardino, and Santa Clara Counties. This bill sets out ambitious goals. First, it hopes to make at least 40% of all housing units affordable and be available to be occupied by people of low income. Second, it states that at least 10% of housing units should be available to people of middle-income.
Groups that are opposing this include the State Building and Construction Trades. This is because the bill does not require housing construction projects to pay the required wages. Simply put, people who’ll buy the homes and people who’ll live in the homes will be relatively happy with this bill. However, in terms of the people who are building the houses, there will be slight opposition.
The COVID-19 pandemic has seen an upsurge in homelessness rates, mainly due to the surge in unemployment while the Consumer Price Index (primary source to indicate inflation) has increased dramatically (the most since 2008). While resettlement is a policy necessary to house the unhoused, it is just as important to work on “prevention.” By keeping people employed and businesses running, the issue of housing can be reduced. This issue is what the Keep California Working Act aims to resolve. As of June 30th, it has not been passed and within legislative floors, and there has been little work done. However, if this bill is passed, it would grant small businesses making a lower bracket of revenue extra funds. This grant money can be used for multiple purposes: payroll, working capital, rent, utilities, mortgage principals, and more. By granting businesses suffering due to the pandemic money, SB-74 hopes to re-establish economic order and stability within the state.
Although the way Fair Use Policy is described varies per country, it usually refers to the set of laws regarding the usage of copyrighted work. In most cases, Fair Use Policy allows individuals or corporations to use work either when 1) the work is very old or 2) when the work is for educational purposes. However, there’s lines on what are considered to be “educational purposes” that are most clearly defined in a case study between South Korea and the United States.
II. Fair Use Policy in South Korea
Everyone knows that the education system in South Korea is very strict and uniform. When the listening portion of the Korean SAT, the suneung, is occurring, the government forbids any planes from flying over South Korea in order to reduce unnecessary noise. Moreover, South Korea spends the most amount of its GDP per capita on private education in the world, showing off its people’s strong desire to educate the newest generation. Due to this obsession with education, the fair use policy is also very clearly laid out so all resources and works can be used for education. It is stated in Article 25, Paragraph 1 of the Copyright Act (Republic of Korea) that “Published works may be published in textbooks necessary for educational purposes of high schools and equivalent schools below” (Article 25).
There are numerous reasons why this article exists. First off, the law prevents copyright holders from barring the government’s right to educate the people. As an example, say there is an important piece of literature that the government feels is necessary to be taught to high school students. However the copyright owner refuses to allow the government usage of it and/or requests a huge sum of money. In this situation, the government can apply Article 25, Paragraph 1 of the Copyright Act and forcefully use the copyrighted work, regardless of the copyright holder’s protests.
III. Fair Use Policy in the United States
The United States actually has a similar fair use policy as South Korea. According to Chapter 107 of the Copyright Act (United States), fair use is defined as follows.
“Notwithstanding the provisions of sections 106 and 106a, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright” (Article 25).
Ultimately, when an individual or corporation wishes to use a copyrighted for “teaching” or educational purposes, they are basically free to do so. This is different case-by-case but in most cases, usage of a work for teaching will not be a violation of Chapter 107 of the Copyright Act (United States).
IV. Problems in Application
Up to now, it seems that both countries share very similar fair use policies. In both countries, fair use policies allow for individuals or corporations to use works for the purpose of education. However, there is one significant difference that sets South Korea’s Fair Use Policy apart from the United States’. Examining Article 25, Paragraph 1 of the Copyright Act (Republic of Korea) again, which was, “Published works may be published in textbooks necessary for educational purposes of high schools and equivalent schools below,” (Article 25) there is one word that stands out. “Textbooks.” The South Korean government allows works to be published in textbooks by private publishing companies. Although officially, these companies state their main purpose is to educate the public, it is still true that those institutions profit from textbooks built off of works used under the fair use policy. The National Association of College Stores stated that “out of every dollar spent on a textbook, about 77 cents goes back to the publisher. Publishers make 18 cents in pure profit. The writer takes home about 12 cents” (Laude).
In the case of the United States, the law does not actually mention textbooks in specific unlike South Korea. However, it could very much be the same. The National Association of College Stores calculated the worth of the textbook industry to be “$14 billion dollars” (Laude). Such findings means around 14 billion dollars are being made using works used under the Fair Use Policy. Technically, because the official and “initial” purpose of these textbook companies were to educate the public and use it for “teaching” it is likely that that the court will not call this a violation of the Fair Use Policy.
There’s still a lot of parts that may be misleading from this publication as copyright and Fair Use Policy is something that depends per case. It is up to the court of the host country to decide what is a violation and what is not. Regardless, researching into the Fair Use Policies have shown this problem that can arise in the studied countries, South Korea and the United States. It is very much possible for individuals and companies to “unintentionally” make money off of work that is not completely theirs due to the Fair Use Policy.
Article 25, Paragraph 1 of the Copyright Act (Republic of Korea). (The law itself was written in Korean. The translation process was done via Google translate).
Chapter 107 of the Copyright Act (United States).
Laude, “The Textbook Scam: How a $14 Billion Industry Robs Students and Professors” The Spectrum, September 28 2017
In most cases and in most places, cutting the line is an action that is looked down upon socially. After all, “the act, which may be taboo in some instances, stands in stark contrast to the normal policy of first come, first served that governs most queue areas”(Wikipedia). The first come first served idea is “used to say that the people who arrive earliest get served or treated before the people who arrive late” (Merriam-Webster). according to the Merriam-Webster online dictionary. However, the action is usually looked down upon and is not legally unacceptable as most entities do not have a legislature regarding cutting the line. However, there are laws in some states that do regard cutting the line. Moreover, places such as amusement parks have rules within them that regard cutting the line which will be addressed in this editorial.
II. In Amusement Parks
In both amusement parks and airports, there are actually regulations that allow for the cutting of lines. In fact, in amusement parks, one can pay to cut the lines. According to a Slate article by Chris Money, “Universal and Busch offer so-called “VIP” tours that anyone willing to pay between $130 and $3,000 can go on. These tours brazenly let you cut to the front of all lines” (Money Chris). While this is not the case in every single amusement park, cutting the line is actually something that is “legal” in terms of regulations at parks if one has the money.
III. Washington State, USA
Interestingly enough though, there seems to be one state that the United States that regards cutting the line: Washington state. According to the HERO program of the Washington State Department of Transportation, “The fine for cutting in line at a ferry terminal is $139. In both cases, additional local court costs may be added to the fines” (Washington State Department of Education). While this rule doesn’t apply in other places, it is important to note that Washington State actually has a rule regarding cutting the line for at least ferries.
Money Chris, “Changing Lines, Paying to skip the queues at parks” Slate, Published June 3rd 2002 https://slate.com/culture/2002/07/paying-to-skip-the-queues-at-theme-parks.html
Merriam-Webster Online Dictionary, “Definition of First come first serve” Unknown date of Publishment https://www.merriam-webster.com/dictionary/first%20come%2C%20first%20served
Washington State Department of Transportation Hero Program, “Common Questions,” Unknown date of publishment, https://www.wsdot.wa.gov/travel/highways-bridges/hov/hero-questions
Wikipedia, Article Name: “Cutting the line” Unknown,.https://en.wikipedia.org/wiki/Cutting_in_line#cite_note-6