Editorial in today’s Wall Street Journal:  California as No. 1:

New York City has long been the highest tax jurisdiction in the United States, but California politicians are proposing to steal that brass tiara. California faces a $15 billion budget deficit and Democrats who rule the state Legislature have proposed closing the gap with a $9.7 billion tax hike on business and "the rich." …

The plan would raise the top marginal income tax rate to 12% from 10.3%; that would be the highest in the nation and twice the national average. …   The corporate income tax rate would also rise to 9.3% from 8.4%. So in the face of one of the worst real-estate recessions in the state’s history, the politicians want to raise taxes on businesses that are still making money. This latest tax gambit was unveiled, ironically enough, within days of two very large California employers [AAA and Toyota] announcing they are saying, in the famous words of Governor Arnold Schwarzenegger, "hasta la vista, baby" to the state.

There is already a reverse gold rush going on in California and the evidence points powerfully toward high tax rates as a culprit. Census Bureau data show that, from 1996-2005, 1.3 million more Americans left than came to California. And the people who are leaving are disproportionately those with higher incomes: the very targets the Democrats want to tax more. …

It may be that California Democrats are trying this now as a kind of trial run for Barack Obama next year. The Illinois Senator also believes he can solve the federal government’s fiscal imbalance by imposing higher tax rates on small business employers and the wealthiest Americans. If they can get away with it in Sacramento, look for a national reprise next year.

See also Tax Foundation:  California Legislators Push for More Double-Digit Income Tax Rates, by William Ahearn.