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Bipartisan tax proposition looks to attract California voters

by Christopher A. Guzman, published

As California's economy continues to struggle, a bipartisan group of business leaders and former politicians is looking to overhaul the Golden State's tax system on the 2012 ballot.  The group bills itself as the Think Long Committee, a union of business and political leaders that the LA Times says is joining forces to place a $10-billion tax increase on the November 2012 ballot.  Those involved are described in the Times' recent piece:

"The Think Long Committee, which includes Google Chairman Eric Schmidt, former governors Gray Davis and Arnold Schwarzenegger and Los Angeles philanthropist Eli Broad, says its proposal would provide $5 billion more for public schools every year and billions for public universities and local governments."

According to some of what the plan proposes, the state's personal income and sales tax rates would be lowered. The San Francisco Chronicle, which obtained a 24 page plan, listed a set of proposals that included the following:

"-Simplify the income tax code to two rates- 2 percent for couples filing jointly who make $45,000 to $95,000 and 7.5 percent for those earning more, while retaining the 1 percent surcharge for Californians who earn more than $1 million. Couples who earn less than $45,000 would pay no personal income tax."

"-Eliminate most credits and all itemized deductions, except mortgage interest, property taxes, charitable contributions and research and development. Taxpayers would receive an expanded standard deduction equal to $45,000 for joint filers and $27,000 for single filers."

"-Reduce the state's corporation tax from one of the highest rates at 8.84 percent to 7 percent, lower than the national average. The move would help attract business, the report said."

"-Phase in a 5 percent sales tax on services over four years, exempting health care and education. Low-income households would get a sales tax rebate."

Other notable names the Chronicle noted  included as part of Think Long are former Secretary of State Condoleeza Rice, former San Francisco Mayor and Chronicle newspaper columnist Willie Brown, and former California Supreme Court Justice Ronald George. Backed by a 17 member panel, the committee will be chaired by billionaire Nicolas Berggruen. Furthermore, each member of the panel will be tasked with raising money to gather support for the proposition.

The proposition's proponents certainly have a task ahead of them if they want to gain the needed momentum for a 2012 passage. Although it's a "bipartisan panel," that doesn't mean it'll get an automatic pass from the state's frustrated electorate.

In terms of the plan itself, what particularly sticks out is the 5% sales tax portion. Depending on what goods and services are encompassed within this tax, the burden of proof is on those pushing for the measure to explain to voters how this portion is a win- and how it won't be detrimental. It will be telling to see which way general support swings when more details come out about how this particular aspect will specifically be implemented.

As indicated by a recent Field poll that sampled voter sentiment on ballot propositions, California's voters will want assurance that propositions meet what they- and not a few selected special interests- desire. With billionaire businessmen and former politicians pushing for this particular initiative, it's necessary to demonstrate how it is in the best interest of a broad swath of Californians.  Furthermore, if the measure is to have any credibility, there needs to be a high degree of transparency and full disclosure on who's involved in the measure's intricate workings.

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