Tax Plan Would Hit California Harder
President Clinton’s tax-the-rich scheme leaves out a lot of people, namely folks in low-cost states who earn less than “rich” Californians but live just as well.
To reduce the federal deficit, Clinton proposes to raise tax rates for single people with taxable incomes over $115,000 and for married people with taxable incomes over $140,000. This share-the-burden program would fall harder on residents of California, where incomes are higher than in other states.
Last year, for example, nearly 6% of U.S. households had incomes of at least $100,000, according to the U.S. Census Bureau. In Los Angeles and Orange counties last year, nearly 11% of households took in at least $100,000.
Does this mean Californians tend to be wealthier than residents of other states? Not necessarily. While Californians earn more than most other Americans, they also pay more for homes and other goods.
We asked Runzheimer International, a management consulting firm based in Rochester, Wis., to compare the cost of living in Los Angeles and Little Rock, Ark., Clinton’s home for the last decade. Not surprisingly, the difference is substantial.
Runzheimer found that a “rich” two-income family earning $140,000 in Los Angeles is no better off than a two-income family earning $103,637 in Little Rock.
The consulting firm also found that a “rich” single person in Los Angeles with an income of $115,000 was no better off than a single person earning $84,576 in Little Rock.
What’s the bottom line? If Clinton’s plan is enacted, his ex-neighbors in Little Rock (along with folks in less expensive places such as Milwaukee, Minneapolis and even Chicago) can continue to live as well as “rich” Angelenos, without being taxed like them.
Battle of the banks: Bank of America’s rivals are stepping up efforts to lure former Security Pacific customers away from the banking giant.
San Francisco-based Wells Fargo Bank and First Interstate Bank are offering free checking accounts to former Security Pacific customers who make the switch from B of A. Los Angeles-based First Interstate is heaping on other goodies, including a free safety deposit box and no annual fee on its MasterCard or Visa card for one year.
At stake is an estimated $4 billion in deposits, which some in the banking industry believe B of A will lose as a result of its merger with Security Pacific. While that is a fraction of the deposits B of A picked up as part of the merger, $4 billion represents a bonanza to B of A’s smaller rivals.
Although the merger was announced in August, 1991, it has touched many banking customers only recently as B of A closed Security Pacific branches and distributed its eagle-embossed B of A automated teller cards.
First Interstate is taking its campaign for new business, dubbed “Project Win,” to the streets and parking lots near B of A branches, where it is leaving promotional flyers on windshields. Wells Fargo mailed pitches to several hundred thousand Southern Californians, trying to persuade them to switch banks.
Neither First Interstate nor Wells Fargo will say how much business their efforts have brought in, though both say they are satisfied with the results so far.
For its part, Bank of America says it has lost far fewer customers than it expected. Asked whether B of A will match enticements offered to consumers by its rivals, Richard Martino, vice president and director of marketing at the San Francisco-based bank, put it this way: “Our branches have the authority to meet our customers’ needs.”
This major problem is really minor: American Airlines has backed away from an attempt to improve its on-time ranking by changing the government’s definition of a “major” airline.
Last December, we told you that American, Delta and Northwest airlines had asked the government to raise the annual revenue requirement for “major” airlines to $3 billion from $1 billion. The change would have eliminated smaller rivals, especially Southwest Airlines, from the government’s monthly on-time rankings of the nation’s 10 “major” airlines.
As you might guess, Southwest had the best on-time record last year. Northwest was ranked second.
In comments filed with the U.S. Department of Transportation, American’s associate general counsel, Carl B. Nelson Jr., not only did an about-face, but poked fun at the proposal: “One solution to this controversy would be to create 10 different groupings, one for each of the 10 carriers reporting monthly on-time results, such as Giants, Titans, Eagles. . . . This would allow every carrier to be best in its group, but the public would likely be confused by the ensuing advertising campaigns.”
Delta and Northwest still support the change. The Department of Transportation has not indicated how it might rule.