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Election 2012 Resources

Tax Initiative Run-down

December 14, 2011

With no end in sight to the state’s budget crisis, several tax initiatives are currently being proposed to close the gap between spending and revenue. As these proposals are discussed, many are arguing that putting so many initiatives dealing with the same issue (taxes) on the ballot will simply result in voters rejecting them all. Below is a sampling of tax proposals that voters will likely be asked to consider in November:

  • The Schools and Local Public Safety Protection Act of 2012 (Governor Jerry Brown’s Proposal): Would increase income taxes on all individuals with incomes exceeding $250,000 by up to 2 percent and also proposes a half-cent increase in the sales tax through 2017. If passed, would allocate money to school districts, county offices of education, state general-purpose funding to charter schools, CA community college districts and public safety. The tax increases would expire in 2016. Supported by Democrats in the Legislature and labor groups including SEIU, CTA and AFSCME.
  • Our Children, Our Future, Local Schools and Early Education Investment Act: Would raise income taxes and allocate the money to the California Education Trust Fund which, in turn, would disperse it to school districts and early-childhood development programs. Would establish a Fiscal Oversight Board to manage distribution of funds. Proposes a sliding scale where high income earners pay more. For example, couples earning $1.5 million would pay $27,266 more while couples earning $75,000 would pay $428 more according to a Sacramento Bee analysis. Would expire after 12 years. Supported by Molly Munger, and the State PTA.
  • The California Clean Energy Jobs Act: Proposes to institute a mandatory single sales factor. Under this proposal, corporations would determine the taxes they must pay by evaluating the portion of their sales that take place in California. Would generate about $1 billion a year, of which $550 million would benefit a Clean Energy job Fund to pay for energy efficiency projects and clean energy production. San Francisco hedge fund manager Tom Steyer leads the group of proponents of this measure.
  • Protect Homeowners and Close Corporate Tax Loopholes Act: Would establish a “split roll” tax that seeks to divide the tax treatment of commercial and residential properties by removing Proposition13 protections from commercial properties, while leaving those protections intact for residential properties. Requires reassessment of commercial property every three years. Exempts all residential property including rentals and apartments. Tax revenue goes to county treasury to be transferred annually to the General Fund. Likely support includes California Teachers Association.
  • Think Long California. A 5% sales tax would be instituted on services (accounting, legal services, auto repair, hair salons, etc.) under this proposal. Would simplify the income tax code to two rates: 2% for joint filers who make $45,000 to $95,000; and 7.5% for those earning more. Would generate $10 billion to be used for public education and debt reduction. Sacramento Bee lists support as Googe’s Eric Schmidt; Condelezza Rice, Eli Broad, and Willie Brown.
  • California Funding Restoration Act. Proposes to raise revenue by increasing income taxes by 3% on individuals and families earning more than $1 million a year. For those earning more than $2 million, the increase would be 5%. Anticipated revenue increase would be $6 billion to be used for K-12 and higher education. Supporters listed as California Federation of Teachers; Courage Campaign; and community groups.