Brown Seeks Business Support For Tax-Hike Proposal
Tuesday, May 22, 2012
Gov. Jerry Brown on Tuesday pitched his proposal to raise the state sales and income taxes to an audience that traditionally opposes tax increases - members of the California Chamber of Commerce.
The Democratic governor wants voters to approve the temporary tax increases in November as part of what he described as a series of steps to help California recover from the recession without deeper cuts to education and social services.
Under the Democratic governor's initiative, California would temporarily raise the sales tax by a quarter-cent and increase the income tax on people who make $250,000 or more a year.
The chamber has not taken a position on the governor's tax proposal, but it is opposing a competing proposal backed by wealthy civil rights attorney Molly Munger.
Munger's initiative, also planned for the November ballot, would raise income taxes on nearly all wage earners for 12 years, bringing in an estimated $10 billion to $12 billion a year. The biggest increase would be on the wealthiest Californians.
Revenue from her proposal would go directly to public schools, while Brown's measure would use the money to prevent deeper cuts to schools and guarantee money for local public safety. The governor's proposal would generate less money per year and also be in effect for fewer years - the sales tax increase for five years and the higher income taxes for seven.
Brown, who was elected governor the first time in 1974, said California is making progress in recovering from the recession and reducing a budget deficit that reached $42 billion in 2009. His latest budget proposal last week put the current deficit at $15.7 billion, part of which would be covered if the tax increases are approved.
He also has proposed billions of dollars in spending cuts.
"I didn't come back here in this stage of my life just to, you know, obfuscate and try to kick the can down the road, but to try to do something about it," the 74-year-old governor said, drawing applause from about 1,000 business leaders at the chamber's annual gathering in Sacramento.
"The third act is when it gets good," Brown added moments later, saying he is anxious for good economic times to return. "You wait, we're going to get to Act 3 real soon."
He told business leaders the state is "making the tough cuts" and that he is promoting changes to public employee pensions through the state Legislature, although it's not clear how much reform the Democratic lawmakers who control the Legislature are willing to accept.
Although top business owners could be among those hardest hit by his proposal, Brown said increasing their tax burden is fair because the wealthiest 20 percent also have seen their incomes increase the most over the last 30 years while wages for others have stagnated.
His pitch drew mixed reactions.
Michael Clancey, a lawyer who teaches at the Northwestern California University School of Law in Sacramento, was not convinced by Brown's tax pitch, though he thinks Brown is sincerely focused on cutting state spending where he can.
"I'm a Republican. I tend to be against taxes," Clancey said after Brown's speech. "My focus is more on austerity."
Daniel Ramos, vice president of Ramco Enterprises Inc., a real estate development company in West Sacramento, said he thinks Brown's tax initiative could be approved if state legislators "demonstrate that they're serious" about cutting spending and limiting state employee pensions.
"That's what I would need to see before I would consider it," Ramos said. "If that happens, yes."