California Taxes

The Heartland Institute discusses tax hike proposals in California for the 2005-06 session. Some proposals include:

* Raising personal income taxes. Assembly Bill 6 by Assemblywoman Wilma Chan (D-Oakland) is a redo of her failed 2003-04 legislation. It would add 10 percent and 11 percent tax brackets, starting at more than $100,000 (single) and more than $200,000 (single). The highest bracket is now 9.3 percent. Passage of Proposition 63 in November 2004 already added a 1 percent tax on income over $1 million.

* Making tax hikes easier to approve. Assemblyman Joe Nation (D-San Rafael) has introduced Assembly Constitutional Amendment 7, which would reduce from two-thirds to 55 percent the margin needed to pass special taxes on local ballots.

* Increasing taxes on business property. Senate Bill 17 by Senator Martha Escutia (D-Whittier) would create a “split roll” property tax system by reassessing property owned by corporations when 50 percent of the stock is transferred.

* Limiting tax credits. SB 27 (sponsored by Escutia) would limit aggregate amounts of all tax credits with carry-forward provisions to 50 percent of the net tax.

* Reducing research and development credits. Last session’s SB 1501 (Escutia) sought to reduce the R&D tax credit from 15 percent to 10 percent, and the basic research tax credit from 24 percent to 20 percent. That would have represented a tax increase of $150 million.

* Splitting the tax roll. Assemblywoman Loni Hancock (D-Berkeley) wrote the proposed Assembly Constitutional Amendment 16, instituting a split-roll property tax by assessing most non-residential property each year at fair market value--constituting a tax increase of up to $3.3 billion. Non-residential property is now reassessed only when it is sold.

* Increasing the vehicle license fee, a property tax-like levy on cars and trucks that Schwarzenegger rolled back soon after winning office in the Fall 2003 special election.

* Granting local authority to impose income taxes.

* New taxes on oil refineries, toxic chemicals, and railroad operations, and a recycling tax on fluorescent lamps.