Facing huge deficits despite $10 billion in budget cuts last year,
California needs new tax dollars in order to avoid catastrophic cuts to schools and government services for the elderly, Governor Brown said.
His plan includes a 1 percent income-tax-rate increase for individuals making more than $250,000 per year, and a 2 percent rate increase for those making more than $500,000. It would also increase the state sales tax by half a cent to 7.75 percent.
In total, at least 10 initiatives that propose tax increases are vying to qualify for the 2012 ballot in California – a sign that the state that led the national tax revolt with Proposition 13 in 1978 might now be considering at least a partial reversal of course.
With many states still focused only on cuts, such a bold statement from California could reverberate nationwide – either giving other states cover to try similar measures or showing that, even with budgets in dire straits, tax increases are a political impossibility.
“A victory for tax increases in California could encourage similar moves in other states,” says
Jack Pitney, a political scientist at Claremont McKenna College. “If the tax measure goes down to defeat – in a blue state running a huge deficit – the effect would be to chill such proposals in other states for many years to come.”
