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Brown Reaches Compromise With Supporters of Rival Tax Hike Plan

On Wednesday, Gov. Jerry Brown (D) announced that he has reached a deal with supporters of a rival tax initiative to merge their proposals into a new single ballot measure, the San Francisco Chronicle reports.

For weeks, Brown and his advisers urged the backers of the "Millionaires Tax," as well as supporters of another competing tax plan, to drop their proposals, warning that having multiple tax hike plans on the November ballot could lead to them all being defeated.

The Millionaires Tax proposal has polled well, and the merging of the plan with Brown's tax hike proposal is expected to increase its chances of approval, according to the Chronicle (Buchanan/Lagos, San Francisco Chronicle, 3/15).

However, the new plan still faces competition from a third tax proposal filed by Molly Munger -- a wealthy civil rights attorney (Yamamura, Sacramento Bee, 3/15).

Background

Brown's initial plan -- which was endorsed by the California Medical Association -- would have raised income taxes on Californians earning at least $250,000 annually and have increased the sales tax by a half cent. The tax increase would have expired at the end of 2016.

The plan was a key part of Brown's $92.6 billion spending proposal for fiscal year 2012-2013.

The Millionaires Tax -- backed by the California Nurses Association, the California Federation of Teachers and other groups -- would have hiked taxes on Californians earning more than $1 million annually. Some of the revenue would have gone toward state health services.

Munger's plan -- called "Our Children, Our Future" -- aims to increase income taxes for all residents, with the highest income earners seeing the largest hike. Most of the revenue would support education programs (California Healthline, 3/1).

Details of Compromise Plan

The newly revised tax plan includes a smaller sales tax hike and a larger personal income tax increase on the wealthy than Brown had initially proposed (Sacramento Bee, 3/15). 

The proposal would increase the sales tax by a quarter of a cent, down from Brown's original proposal for a half-cent increase. The sales tax hike would expire in four years, as called for in Brown's original plan (Herdt, Ventura County Star, 3/14).

The new proposal would increase the personal income tax by one percentage point for individuals who earn $250,000 annually or couples who earn $500,000 annually and by two percentage points for individuals who earn $300,000 annually or couples who earn $600,000 annually (San Francisco Chronicle, 3/15).

The new plan also would extend the income tax increases on wealthy residents from five to seven years (Ventura County Star, 3/14).

The merged plan would raise an estimated $9 billion over the next fiscal year, $2.1 billion more than Brown's original proposal (Megerian/York, "PolitiCal," Los Angeles Times, 3/14).

Looking Forward

At the earliest, the revised tax plan will be cleared for circulation in early April, leaving just a few weeks to collect the 807,615 valid signatures necessary to qualify the measure for the November ballot, the Bee reports (Sacramento Bee, 3/15).

As a result, the governor will continue to collect signatures for his original proposal in case the new measure fails to qualify for the ballot (San Francisco Chronicle, 3/15).

Broadcast

On Wednesday, Capital Public Radio's "KXJZ News" reported on the tax compromise reached by Brown and supporters of the Millionaires Tax (Adler, "KXJZ News," Capital Public Radio, 3/14).

This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
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