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Calls to Tax the Rich Grow Louder

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Collectively, our states will see $136 billion in deficits in fiscal 2012 and 2013, even assuming more federal money for Medicaid.

The Pew Center found that as of June 30, 2008, states are obligated for $3.35 trillion in pension benefits owed to current and retired employees, but have only contributed $2.35 trillion, leaving $1 trillion unfunded. (HT: A. Gary Shilling & Company)

(Recently, we addressed this economic dilemma in a special hard-hitting Pop Biz investigative report).

One solution to these budget-busting problems: tax the rich!

As Forbes details, while the debate rages inside the Beltway about whether to allow federal income tax rates for the well off to rise on January 1, some state capitals are also now having a tax-the-rich debate.

Bill Gates Sr., father of billionaire Microsoft (MSFT) founder Bill Gates, has joined the discussion. He’s pushing for passage of a voter initiative on the November ballot that would impose a new state income tax on the affluent. Across the continent, New York’s just-passed budget includes a back-door tax hike on the truly rich as well as a front-door hike on affluent New York City residents.

All this, says Forbes, comes on top of the 2009 action, when eight states raised rates (permanently or temporarily) on high earners.

Here are the 10 highest state income tax rates for 2010:

1. Hawaii, 11%
2. Oregon, 11%
3. California, 10.55%
4. Rhode Island, 9.9%
5. Iowa, 8.98%
6. New Jersey, 8.97%
7. New York, 8.97%
8. Vermont, 8.95%
9. Maine, 8.5%
10. Washington D.C. 8.5% (Not technically a state, but it should be!)
POSITION:  No positions in stocks mentioned.