Did health care 'tax' just blow up California's careful budget plans?
California Governor Jerry Brown's plans to raise state taxes on the wealthy could be derailed because of voter concern about President Obama's plan to boost taxes on the wealthy and the Supreme Court's labeling the health care reform law a tax.
Californians may be choking on the “t” word.Skip to next paragraph
Subscribe Today to the Monitor
As a result, California Governor Jerry Brown’s November tax initiative – upon which his just-signed state budget depends – is more iffy than ever, say a host of analysts.
President Obama said Monday he wants higher taxes for the rich. California's small business owners also are worried about the financial hit they will take from the mandate of providing health-care insurance for their employees. Obama's Affordable Care Act is now, thanks to the Supreme Court, officially being called a "tax.”
Governor Brown's plan would raise the state sales tax and the income tax for individuals with incomes over $250,000 a year, with the money going to the state budget, schools, and public safety. His tax initiative would raise an estimated $8.5 billion in this fiscal year.
If the initiative fails, Brown's budget plan has a trigger to automatically cut $4.8 billion from education. Political scientist Dan Schnur told Bloomberg News that this trigger was "the most expensive ransom note in California political history." But Brown denies that he is trying to strong arm voters.
“The stars seem to be aligning against the passage of Brown’s November tax initiative,” says Jack Pitney, professor of government at Claremont McKenna College.
Others point out Brown’s isn’t the only tax idea on the ballot, and will suffer as a result.
"Californians face a crowded ballot in November ... with competing tax measures, concerns about their own pocketbooks, and numerous initiative battles," says David McCuan, professor of political science at Sonoma State University. “Passing anything is going to be tough,” he says.
According to California figures and the US Census, there are about 355,000 California households in the $250,000-and-higher income bracket. In a state with a cost of living as high as California's, that begs the question of who is bearing the brunt of the tax increase. It also strengthens presidential challenger Mitt Romney’s argument that “the last thing we need to do in this economy is raise taxes on anyone.”