Brown ponders tax hikes for high wage earners

December 2, 2011 12:48:24 AM PST
California lawmakers gaveled themselves into their winter session Thursday with huge budget issues already hanging over their heads. The state's tax revenues are coming up hundreds of millions of dollars short. Gov. Jerry Brown thinks people are ready to tax themselves out of this bind.

Holiday shoppers have been enjoying a lower sales tax this season. It went down 1 percent in July as the temporary two-year increase expired.

"If you have lower taxes for buying things, yeah, that's always nice," shopper Daniel Wolfe said. "It's one little plus, especially the way the economy is."

But the days of a lower sales tax may be numbered because of California's lingering budget problems. Labor union sources say Brown is readying a $7 billion tax initiative to take to the voters next year.

Though details are still being hammered out, discussions include a 1 to 2 percent income tax hike on high wage earners who make at least $250,000 a year and a half-cent sales tax increase, all of which will expire in 2016.

Brown didn't want to talk about his tax plan after defending his pension reform package before a Legislative committee.

"Today is pension day," Brown said. "We have a serious problem with pensions and we're fixing them."

The California Federation of Teachers, though, has been involved in closed door meetings with the governor's staff. The union disagrees with the sales tax hike because it hurts the low and middle class, but supports targeting wealthier Californians to stop further budget cuts.

"It's time that the people who have been benefitting the most make sure that seniors have adequate care, that third graders have adequate education," Joshua Pechthalt with the California Federation of Teachers said.

Republicans think it'll be tough to sell more taxes to voters when state government is perceived as still being bloated.

"What's the answer? More taxes. More taxes. Which will support what? More spending. More spending," Republican Assm. Jim Nielsen, who is also the Budget Committee vice chairman, said.

Another challenge Brown may face is the other tax proposals that may be on the same ballot. Voters may reject them all because they're confused or frustrated.

One thing going for the governor is momentum. The majority of local tax hikes passed in last month's elections.


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