2011-12-02 "Tax-the-rich measures may cancel each other out" by Joe Garofoli, Wyatt Buchanan, Marisa Lagos from "San Francisco Chronicle"
The tax-the-rich sentiment behind the Occupy Wall Street movement - and the cash-starved state budget - are reshaping California politics.
Several measures to raise taxes are aimed at the November ballot and most would hit the wallets of the wealthiest Californians.
At least five tax-raising ballot initiatives backed by people with deep pockets are gaining momentum, including one expected to be filed today by Gov. Jerry Brown. However, some supporters 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 cacophony could squander a rare political moment in which Californians are open to raising taxes.
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.
"Especially when they involve taxes," said A.G. Block, associate director of the nonpartisan University of California Center at UC Davis.
That makes conservative antitax advocates like Jon Coupal happy.
"It's much easier to hammer home a message to voters (that says): Look at how they all want to raise your taxes," said Coupal, president of the Howard Jarvis Taxpayers Association, which has great influence among conservative Republicans.
Noting that labor organizations are divided, Coupal said, "They can make our life more difficult if they're all reading off the same page, but I don't believe they have the capacity to do that."
Culling the offerings -
Realizing this, earlier this week, Diana Dooley, secretary of the state Health and Human Services Agency, told a group gathered in San Francisco that the Brown administration is working "behind the scenes" to ensure that "we don't have competing proposals" on the ballot.
It's not clear if the governor can head off the litany of proposed measures or whether his proposal will have the most appeal to voters.
A recent USC Dornsife/Los Angeles Times poll showed that Californians favor raising taxes on the wealthy, especially when the money goes to schools.
That's exactly what a group fronted by the liberal online Courage Campaign and the California Federation of Teachers wants to do. On Thursday, they proposed an initiative that would raise $6 billion for K-12 education solely by raising income taxes on Californians who earn more than $1 million a year.
Another proposal, backed by the state PTA, would raise $10 billion a year in new revenue by raising taxes on a sliding scale on nearly all wage earners, with the heaviest burden on the wealthiest.
The money would go directly to local K-12 schools and early childhood education. The measure forbids the governor and legislators from using the money or directing how it may be spent. The measure is sponsored by Los Angeles attorney Molly Munger, whose billionaire father, Charles Munger, is a longtime top associate to Berkshire Hathaway CEO Warren Buffett.
Occupy's impact -
Munger, who described herself as a "decline-to-state voter who usually votes Democratic," said that while many of these ballot initiatives have been discussed in some form for months, the Occupy Wall Street movement "shined a light on what was going on. They were right to make a fuss about the inequalities in our system and ask what could be done about it."
Brown's initiative, which would raise income taxes on wealthy Californians and increase the sales tax by half a cent for four years, has a broader scope but also an expiration date.
Sources involved in the talks with the governor said the plan, if approved by voters, would raise roughly $7 billion. Still, that wouldn't be enough to fully cover the projected budget shortfall next year, which the Legislative Analyst's Office has estimated will be $13 billion.
Brown's plan would include stair-stepped tax increases, starting with individuals who make more than $250,000 per year. Their tax rate would increase by one percentage point. People making between $300,000 and $500,000 would see a 1.5 percentage point increase and those making more than $500,000 per year would face a 2 percentage point increase.
The current maximum income tax rate is 9.3 percent.
The half-cent increase in the sales tax would be less than what the governor had proposed earlier this year. Brown wanted to extend a 1-cent increase in the sales tax - along with other taxes increased as part of the 2009 budget deal - but he could not persuade Republican lawmakers to allow a special election on that plan.
Prison realignment -
Another key portion of the governor's proposed plan is language that would protect county funding for Brown's criminal justice realignment program, which seeks to curb overcrowding in state prisons by having more offenders serve their time in local jails and report to county probation departments instead of state parole.
Another revenue-raising ballot measure is expected to emerge from the recent report by billionaire investor Nicolas Berggruen's Think Long California committee of the state's leading business executives and politicians. It proposes lowering personal income rates across the board and phasing in a 5 percent sales tax on services over four years.
Tax proposals -
Backer's name / Who is behind plan? / Whose taxes go up? / Taxes on wealthy / How much is raised? / Where does money go? / Temporary or permanent?
* Gov. Jerry BrownDemocrats in Legislature; labor groups including SEIU, CTA, AFSCMEEverybody's, with most on the wealthy. State sales tax increases by a half cent Income tax rates increase 1 percent for individuals making more than $250,000 per year; 2 percent for individuals making over $500,000Roughly $7 billion per year. It's not yet clear if money would go into the general fund or be dedicated elsewhere in areas such as educationTax increases would expire in 2016
* Think Long CaliforniaBillionaire investor Nicolas Berggruen leads group including Google's Eric Schmidt; Condoleezza Rice, Eli Broad, Willie Brown 5 percent sales tax on certain services phased in over four years. Income tax code simplified to two rates: 2 percent for joint filers who make $45,000 to $95,000; 7.5 percent for those earning moreRetains 1 percent surcharge for those earning more than $1 million. Top 5 percent would pay 62 percent of all income taxes. Reduces corporate tax from 8.84 percent to 7 percent $10 billion earmarked largely for public education and to pay down the state's debtNo sunset
* Our Children, Our Future: Local Schools and Early Education Investment Act Los Angeles attorney Molly Munger; endorsed by state PTA Sliding scale affects all but very low-income. High earners pay more Couple earning $1.5 million would pay $27,266 more. Couple earning $75,000 would pay $428 more. $10 billion earmarked directly to local K-12 education. Neither Legislature nor governor can touch fundsExpires after 12 years
* The California Clean Energy Jobs ActBillionaire San Francisco hedge fund manager Tom Steyer leads this groupWould require that corporations determine the taxes they owe based on the portion of their national sales that take place in CaliforniaFocused on corporationsAbout $1 billion per year. Of that, $550 million would be dedicated to a Clean Energy Job Fund that would pay for projects involving energy efficiency and clean energy productionMoney would be placed in the fund through 2018
* California Funding Restoration ActCalifornia Federation of Teachers; Courage Campaign; a number of community groupsWould raise income taxes 3 percent on individuals and families earning more than $1 million a year. Would increase to 5 percent on those earning more than $2 million a yearOnly those earning more than $1 million $6 billion annually for K-12 and higher educationNo sunset