No New Taxes Pledge Could Prove Hard to Uphold
By HOWARD FINE
Gov. Arnold Schwarzenegger insists on no new taxes, but that hasn’t stopped others from proposing a slew of state and local levies that would hit businesses and individuals hard.
What’s more, some of these proposals have found support in two recent statewide polls, suggesting that the public may opt for targeted tax increases versus the alternatives.
“Voters are getting more concerned about the possible ramifications of the budget crisis,” said Mark DiCamillo, a pollster with Field Research Corp., which publishes the California Field Poll. “People are telling us they favor some tax increases over deep service cuts.”
Several of the tax measures now under consideration are in the signature-gathering phase. These include a bid by teachers and director Rob Reiner to raise commercial property taxes statewide by about $5 billion to fund education, a 1% hike in income tax rates for state taxpayers with incomes more than $1 million to fund mental health services and a statewide telephone rate surcharge to raise $550 million a year for emergency and medical services.
If these measures collect enough signatures, they will appear on the November ballot.
Several other proposals targeted for the November ballot are in the discussion stage.
Among them: a five-year, half-cent hike in the state sales tax and an increase in the tax rate on upper-income taxpayers from 9.3% to 11%.
Indeed, with so many tax proposals now lining up for the November ballot, there is some fear of voter backlash. Anti-tax groups will have no shortage of campaign targets if several of these measures make it onto the November ballot.
They see the drive to pass taxes as a diversion from what they believe the real goal should be: reducing spending, both at the state and local levels.
“What you’re seeing here is people taking the path that offers the least initial resistance,” said Larry McCarthy, president of the California Taxpayers Association. “But any elected officials who believe the public now supports raising taxes do so at their own peril. Remember, just last October, nearly two-thirds of voters cast their votes for a gubernatorial candidate who promised not to raise taxes.”
Out of Step?
Schwarzenegger repeatedly has said he is against raising taxes.
At the news conference accompanying the release of his 2004-05 budget, the governor said that raising the taxes on the wealthiest Californians would cause them to flee to other states, thus hurting the overall economy.
But proponents of the tax hikes suggest that Schwarzenegger is out of step with voters.
“If the governor wants to be popular, he is not following the people’s wishes here,” said Mitchel Benson, spokesman for state Treasurer Phil Angelides. “He’s instead going through with billions of dollars in borrowing and cuts that will harm the state’s economy, not help it.”
Both the California Field Poll and the Public Policy of California poll released this month show that raising taxes on the wealthy appears to be popular with voters.
“The overwhelming majority of voters don’t regard themselves as wealthy, so this fits into that old maxim: ‘Don’t tax me. Tax that man behind the tree,'” said DiCamillo.
Taxing the Rich
More surprising, though, is the increased support for tax hikes in the past six months, DiCamillo said.
In the Jan. 15 Field Poll, 61% of those surveyed favored raising the state tax from 9.3% to 11% on single filers earning more than $100,000 and joint filers earning more than $200,000. That’s up from six months ago, when only 52% of those surveyed were in favor of boosting taxes on the rich.
In the past, State Sen. President John Burton, D-San Francisco, has proposed such a hike in income taxes. He repeated his support of the idea at a Jan. 5 news conference. Assemblywoman Wilma Chan, D-Oakland, has introduced such legislation.
Also popular with voters is a temporary half-cent increase in the sales tax. The Field Poll found 60% support for this tax; surprisingly, DiCamillo said, 54% of Republicans also supported it.
“I think there’s a general perception out there that a half-cent sales tax is really not that big an amount, so why not go ahead with it,” he said.
Anti-tax groups such as the Howard Jarvis Taxpayers Association are likely to fiercely challenge the tax hikes.
State Treasurer Angelides, who has emerged as an outspoken critic of Schwarzenegger’s $15 billion bond measure on the March ballot, earlier suggested a five-year, half-cent increase in the sales tax as a way to help balance the budget. But an Angelides spokesman said last week that he since has decided to throw his support behind raising the income tax on wealthy Californians.
Property Hike
Also gaining some support is the raising of commercial property taxes to market value. The Public Policy Institute poll found that 60% support the idea.
The California Teachers Association is counting on this, as it pushes its initiative to raise commercial property taxes by an estimated $4.6 billion to $5 billion. The extra money would go to K-12 education and preschool programs.
“The voters have shown time and time again that they understand the need to raise and invest funds in education,” campaign spokesman Jim Farrell said.
The question is whether voters will dig into their own pockets on this and several other potential measures on the November ballot.
“The fact is, voters have shown that they will approve certain types of tax increases for certain types of uses, particularly if they are for saving programs they believe need to be saved,” said Darry Sragow, a Democratic political consultant. “It looks like we may put that to the test one more time in November.”
Fine is a staff writer for the Los Angeles Business Journal.
