Legislative Analyst Questions Democrats’ Budget Proposition
On Wednesday, Jason Sisney -- state finance director for the Legislative Analyst's Office -- said the Democrats' budget proposal to change the way Californians are taxed would raise taxes for middle-income earners, the Sacramento Bee reports.
Tax Swap Details
The Democrats' proposal would increaseÂ personal income and vehicleÂ taxes while decreasing state sales taxes.Â Supporters said the plan would reduce Californians' overall tax burden by allowing them to deduct the higher state taxes from their federal tax returns (Yamamura, Sacramento Bee, 8/12).
DemocratsÂ estimate thatÂ the tax shifts would generate about $1.8 billion this year and $3.3 billion more annually by 2015 (Buchanan, San Francisco Chronicle, 8/12).
They contend that the higher revenue would help the state bypass some of Gov. Arnold Schwarzenegger's (R) proposed cuts to health programs and social services (California Healthline, 8/4).
Sisney said a preliminary evaluation of the Democrats' budget plan found that it generally would lead to higher taxes for those who earn between $20,000 and $200,000 annually.
Californians collectively would pay $1.2 billion more to the state in personal income taxes by 2011, Sisney projected (San Francisco Chronicle, 8/12). He added that tax changes for individuals would depend on specific factors, such as whether the individual itemizes deductions on federal tax returns (Herdt, Ventura County Star, 8/11).
Steve Shea -- a budget aide for Senate President Pro Tempore Darrell Steinberg (D-Sacramento) -- questioned Sisney's assessment, pointingÂ to testimonyÂ from Kirk Stark, a professor at the UCLA School of Law. According to Stark, middle-income tax filers who earn between $50,000 and $200,000 annually would be most likely to benefit from federal deductions under the Democrats' plan.
Another analysis by the California Budget Project, which advocates for low-income Californians, predicts that the Democrats' proposal would raise taxes for people in the middle-income bracket (Sacramento Bee, 8/12).
Working With Republicans
Schwarzenegger and other Republicans said they will not support a budget that increases taxes.
However, Sen. Roy Ashburn (R-Bakersfield) complimented Steinberg for proposing the plan, which he called the "beginning of a solid proposal for tax reform."
Steinberg said he hoped toÂ continue negotiations with the governor and Republican lawmakers, adding that the proposed tax plan can be "tweaked" (San Francisco Chronicle, 8/12).Â ÂThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.