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2012 Tax Initiative Campaigns Taking Shape

November 22, 2011

It looks likely that three different initiatives to increase revenues could be considered by California voters on the November 2012 ballot.

  • Tom Steyer, leader of the anti-Prop. 23 Californians for Clean Energy and Jobs, recently submitted an initiative to the Attorney General for approval for signature-gathering. The initiative would force companies to calculate their taxes based on in-state sales, instead of another formula which allows companies that keep their offices and employees out of state. It would raise $1.1bil per year, which would be spent on energy efficient retrofitting, job training, K-12 education and community colleges.
  • The Think Long Committee, a group of “former governors, legislative leaders, U.S. secretaries of state, seasoned state finance directors and leaders in business and labor unions”, released a proposed initiative yesterday that would significantly change California’s tax structure. It would flatten and simplify the income tax, reducing both overall rates and the total number of brackets and eliminating most deductions. It would extend the sales tax to services, aside from education and healthcare, while reducing the rate on goods. It would also repeal parts of Prop. 98, which assures approximately 40% of the CA budget goes to K-12 education, and increase taxes on out-of-state companies like the Steyer proposal.
  • Gov. Jerry Brown is also planning a tax initiative, although the specifics are not yet clear. According to George Skelton, insiders say that the initiative would increase income taxes on the wealthy and sale taxes across the board. Brown will likely ally with unions to support the measure.

What makes these proposed initiatives significant is that they have money behind them. Good ideas are cheap; getting them on the ballot, and winning on Election Day, is not. Nicolas Berggruen, founder/backer of the Think Long Committee has pledged $20mil of his own money to back their proposal. Steyer and Californians for Clean Energy and Jobs put big money into their anti-Prop. 23 campaign. Brown won’t put anything on the ballot unless he’s ready to raise money for it and, if he’s crafting the measure with unions, they will likely be willing to spend as well.

It remains to be seen whether any of these initiatives reach the ballot, though most people say if you’ve got $2mil to spend, your initiative will make the ballot. If one or more is placed on the ballot, it will spur an important debate for Californians: tax increases, or more failing schools, more crumbling infrastructure, less support for those in need, and slow decline for our public universities?

Update: Kevin Yamamura of the SacBee has a writeup on the different tax initiatives that are currently on the radar, including one proposed by an organization named “Our Children, Our Future” which I didn’t mention above. Dan Morain, also of the SacBee, has more on their proposal.

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