Plan would give CA millionaires tuition tax break

August 29, 2012 12:00:00 AM PDT
Young people in California are one step closer to achieving affordable access to higher education, but a proposed middle class scholarship plan also allows millionaires in the state to qualify. The Middle Class Scholarship Plan is supposed to help California families who make too much to qualify for financial aid, but not enough to pay for a college education on their own. That's households with incomes of at least $150,000 a year.

"This is an important piece of legislation," Assembly Speaker John Perez recently said. It's one of his signature proposals this session. He'd pay for the scholarships by closing a $1 billion tax loophole that benefits out-of-state corporations and give those familes as much as a 60 percent discount off UC or CSU tuition, but a last-minute amendment removed the income cap and replaced it with a formula that somehow allows millionaires to qualify for middle class scholarships. Two independent calculations confirm the findings.

Peter DeMarco with California Employers Against Higher Taxes says, "This is a bad bill. Business interests opposed the original bill. Now, they really don't like it. "It just continues to show that when you try to do something that is politically expedient in the short term, you make sloppy errors," DeMarco says.

The Speaker's Office acknowledges the new formula is complicated but insists millionaires do not qualify for the scholarship program. The new formula aims to take into account families who have more than one child at a UC or CSU. "We want to make sure that people who are paying multiple college educations are not saddled higher just because they happen to hit that $150,000 mark. So, this will not apply to millionaires," said Speaker Perez's spokesman John Vigna.

To try and get Republican support for this bill, the proposal now also includes repealing the new fire tax on rural residents, an issue dear to their hearts, but they won't bite. "Vinnie Barbarino would say, 'Wat? Am I stupid or something here? Come on, really?' We're not going to go for it," said Republican Sen. Doug LaMalfa of Richvale.

With session ending for the year this Friday, the deadline to change bills has passed.