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With California’s budget deficit at $12.8 billion, Governor Jerry Brown is looking at any and every way to fill the state’s coffers. After his tax plan was rebuked by Republicans this past year, Brown has decided to go straight to the voters with a signature drive to put a new tax proposal on the ballot.
Under the governor's proposal, California would impose a half-cent sales tax increase starting in 2013 and an income tax hike on high-income earners retroactive to January 2012. Both would expire at the end of 2016. The upper-income tax hike would start with a one-percentage-point increase at $250,000 for individuals and $500,000 for joint filers. A separate increase would charge 1.5 percentage points on income between $300,000 and $500,000; a third bracket would impose two percentage points on income above $500,000 for individuals. (Amounts are double for joint filers.)
The income tax change generally affects the top 1 percent of taxpaying households, a favorite target of Occupy protesters in recent months. 2009, according to the Franchise Tax Board, the 1 percent threshold of tax filers started at $400,635. In the same ballot initiative, the governor will ask voters to lock in a temporary sales and vehicle tax shift that pays local governments for housing inmates and other state responsibilities.
The Governor’s initiative, expected to be filed today, will be competing with 4 other ballot measures attempting to reform taxes. They are as follows:
• Think Long Committee for California ($10 billion) - Extend sales tax to most services, reduce income tax, lower corporate tax, raise taxes on out-of-state firms.
• Californians for Clean Energy and Jobs ($1.1 billion) - Raise corporate taxes largely on out-of-state companies to fund clean energy projects.
• Molly Munger, civil rights advocate ($10 billion) - Raise income taxes on all but the poorest taxpayers, with money going to school districts, preschools and early-childhood development programs.
• California Federation of Teachers ($6 billion) - Raise income tax on those earning more than $1 million a year, with 60 percent going to schools and higher education.
Some political observers worry that the initiatives could be too much of the same thing.
Some of the competing measures are being funded by labor unions and left-leaning groups that typically are political allies. While analysts expect the logjam to thin out, the ballot box discord could squander a rare political moment in which Californians are open to raising taxes. Governor Brown may work behind the scenes with some of his allies to ensure there are not too many competing ballot measures.
Voters have rejected the last seven tax-raising measures put before them, and history shows that when Californians see similar-sounding measures on the ballot, they vote no on all of them.