Bloomberg News

California Tax Increases Qualify for November Ballot

June 21, 2012

California Governor Jerry Brown’s ballot initiative to raise income and sales taxes, and a competing measure by the daughter of Berkshire Hathaway’s Charles Munger, have qualified to go on the November ballot, according to the Secretary of State’s office.

Brown’s plan would temporarily raise the state sales tax, already the highest in the U.S., to 7.5 percent from 7.25 percent. The proposal would also boost rates on income starting at $250,000, with those making $1 million or more, now taxed at 10.3 percent, raised to 13.3 percent, the most of any state.

The Democratic governor’s appeal for higher taxes is the centerpiece of his budget plan to close a $15.7 billion deficit. If voters in the most populous U.S. state reject the measure, Brown’s budget calls for cuts of another $6 billion in spending, almost all of it from schools.

Brown’s measure will compete with a tax plan championed by the California State PTA and Molly Munger, the daughter of Berkshire Hathaway (A:US) Inc.’s vice chairman.

The proposal would increase taxes on income of $7,316 or more, from 0.4 percent for the lowest earners to 2.2 percent for individuals making more than $2.5 million a year. It would raise $10 billion annually for 12 years.

Munger’s plan would devote 30 percent of the additional revenue to pay school-bond debt for the first four years. For the remaining eight years, all the money would go to education.

The secretary of state also said an initiative pushed by Thomas Steyer, chairman of San Francisco-based hedge fund Farallon Capital Management LLC, qualified for the election.

Steyer’s plan would require businesses to figure their taxes solely on in-state sales, raising about $1 billion annually, with half set aside for the general fund and half for energy-efficiency programs.

The three additions bring to 11 the number of ballot measures voters will face in November when they go the polls to choose a president.

To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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