I have what I think is a better idea. Drop the personal income tax(and corporate income tax)for CA altogether and institute a extra 5% on the state sales tax. This would tax everyone equally, allow no deductions for any reason what so ever and save millions on not having to process millions of individual tax forms every year.
An extra 5% added to the sales tax would make it 14% in most places. Retail businesses would disappear as people did all their shopping online or on trips across state lines.
We need to go in the other direction — REDUCE the sales tax rate down to 5% total but have it apply to ALL goods and services. At the same time, retain the income tax, but reduce it to a flat 3% rather than the 5.8% Laffer suggests. His 5.8% figure is only required because he leaves the sales tax as-is — the current base includes less than 30% of all purchases because rents, groceries, utilities, and virtually all services are excluded. The current sales tax base is the epitome of attempting to tax the “rich” — no tax on “necessities” but high tax on “conveniences” and “luxuries”.
I’d be interested in how Laffer adjusted for the fact that so much income is not being reported because it is going to illegals under the table. His 5.8% seems high to me so I assume he left all the illegal income as untaxed.