Brown Reaches Compromise With Supporters of Rival Tax Hike Plan

TOPIC ALERT:

On Wednesday, Gov. Jerry Brown (D) announced that he has reached a deal with supporters of a rival tax initiative to merge their proposals into a new single ballot measure, the San Francisco Chronicle reports.

For weeks, Brown and his advisers urged the backers of the "Millionaires Tax," as well as supporters of another competing tax plan, to drop their proposals, warning that having multiple tax hike plans on the November ballot could lead to them all being defeated.

The Millionaires Tax proposal has polled well, and the merging of the plan with Brown's tax hike proposal is expected to increase its chances of approval, according to the Chronicle (Buchanan/Lagos, San Francisco Chronicle, 3/15).

However, the new plan still faces competition from a third tax proposal filed by Molly Munger -- a wealthy civil rights attorney (Yamamura, Sacramento Bee, 3/15).

Background

Brown's initial plan -- which was endorsed by the California Medical Association -- would have raised income taxes on Californians earning at least $250,000 annually and have increased the sales tax by a half cent. The tax increase would have expired at the end of 2016.

The plan was a key part of Brown's $92.6 billion spending proposal for fiscal year 2012-2013.

The Millionaires Tax -- backed by the California Nurses Association, the California Federation of Teachers and other groups -- would have hiked taxes on Californians earning more than $1 million annually. Some of the revenue would have gone toward state health services.

Munger's plan -- called "Our Children, Our Future" -- aims to increase income taxes for all residents, with the highest income earners seeing the largest hike. Most of the revenue would support education programs (California Healthline, 3/1).

Details of Compromise Plan

The newly revised tax plan includes a smaller sales tax hike and a larger personal income tax increase on the wealthy than Brown had initially proposed (Sacramento Bee, 3/15). 

The proposal would increase the sales tax by a quarter of a cent, down from Brown's original proposal for a half-cent increase. The sales tax hike would expire in four years, as called for in Brown's original plan (Herdt, Ventura County Star, 3/14).

The new proposal would increase the personal income tax by one percentage point for individuals who earn $250,000 annually or couples who earn $500,000 annually and by two percentage points for individuals who earn $300,000 annually or couples who earn $600,000 annually (San Francisco Chronicle, 3/15).

The new plan also would extend the income tax increases on wealthy residents from five to seven years (Ventura County Star, 3/14).

The merged plan would raise an estimated $9 billion over the next fiscal year, $2.1 billion more than Brown's original proposal (Megerian/York, "PolitiCal," Los Angeles Times, 3/14).

Looking Forward

At the earliest, the revised tax plan will be cleared for circulation in early April, leaving just a few weeks to collect the 807,615 valid signatures necessary to qualify the measure for the November ballot, the Bee reports (Sacramento Bee, 3/15).

As a result, the governor will continue to collect signatures for his original proposal in case the new measure fails to qualify for the ballot (San Francisco Chronicle, 3/15).

Broadcast

On Wednesday, Capital Public Radio's "KXJZ News" reported on the tax compromise reached by Brown and supporters of the Millionaires Tax (Adler, "KXJZ News," Capital Public Radio, 3/14).

James Roache PharmD
Simple math again folks: As one of those business owners in healthcare who has generously avoided layoffs during the downturn,I say enough is enough. For every extra dollar either I or my company pays under this new tax plan, I will layoff and/or cut the benefits of my employees by an equal dollar amount. Most likely this will send former employees (and taxpayers) to the unemployment office to collect their 99 weeks of unemployment insurance. Hopefully this example will point clearly to the error of taxing those who create the jobs in order to subsidize the Nurses and other public employee unions. In this simple example there is demonstrated no increased personal or corporate taxes, more unemployment, fewer services provided to patients and an eventual ten-fold increase in costs to the State. Like I said folks, its simple math. Lesson: Control your budget, spend within your means and do not expect those already paying the highest taxes to keep bailing you out. It won't happen here.
Richard Rider
My WS JOURNAL Letter to editor (abridged) March 14, 2012 Pushing Those Golden Geese Away The California Facebook capital gains tax windfall is largely illusionary ("Facebook to the Non-Rescue," Review & Outlook, March 8). If the recipients get any tax advice at all, they will consider relocating outside the state to make the sale. Indeed, they only have to live outside California for over half a calendar year to establish residency somewhere else. If a shareholder takes such a one-time $10 million capital gain in California, he will pay about $1 million extra in state income tax. If Gov. Jerry Brown's retroactive tax increase passes in November, he would pay about $1.2 million. If the union-backed tax increase passes, he would pay about $1.5 million in tax. If such a recipient moves to income tax-free Nevada for only six months, he'll save anywhere from $165,000 to $200,000 for each month residing there just on capital gains, not counting the California income tax he'd save
Daniel Cole
"Oh Nevada here I come, right back where I started from..." Hmmm, sorta has a nice ring to it.
Robert Forster
Further momentum to an entitlement culture with class war fare vs. one of meritology. Clue=most people with excellent incomes have paid a high price to obtain it, both in sacrafice to family (long educational times) and high loan debt. Why strive for excellence when entitlement without contribution (unlike Medicare, social security) is our likely destination. Need to learn to speak Greek. Calif. will now be first in everything, including exodus of the upper middle class-- . Reform of government was never considered and we all know major inefficiencies in our infrastructure. The data and demographic trends speak for themselves. Pure lunacy. I mourn a once great state. It is no longer.
Scott Zettlemoyer
And this from yesterday: "Yesterday, a CalPERS board voted to lower its estimated rate of investment return from 7.75% to 7.5%. The change means the state will have to pay $303 million more to cover promised public employee pensions" Anyone paying for your lost IRA and 401K investments? Does it benefit the greater good if private employees pay more money to maintain public employee pensions that are overly generous?

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