Governor Calls On Lawmakers To Overhaul Tax System In Special Session

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(Sacramento, CA)
Tuesday, September 29, 2009
Governor Schwarzenegger called lawmakers into a special session today (Tuesday) saying they must act quickly on a list of recommendations to overhaul California’s tax system.

The proposals were made by a bi-partisan committee he appointed last year.   But, as Capital Public Radio's Steve Shadley reports, reaction is mixed...
The 14-member panel has made some bold proposals...including elimination of the state sales tax...corporate tax...and flattening state income taxes by capping the tax rate for the highest earners at six-and-a-half percent. 

The committee also has unveiled plans for a new business consumption tax...strengthen the state’s rainy day fund and create a tax dispute forum.  

Supporters say the goal is to stabilize revenues...even in a recession like the one that contributed to the state’s multi-billion dollar deficit this year.  

Governor Schwarzenegger says lawmakers should approach the proposals with an open-mind...
Schwarzenegger “People are scared of new things. So, I just want to challenge legislators, the legislative leaders to be courageous...”
Gerald Parsky is chairman of the tax committee. He’s urging lawmakers to move slowly on the recommendations...
Parsky “We have recommended that this system not be put in place all at once. It’s hard to estimate the revenues that would be developed out of this system. So a five year phase-in program where certain taxes go down as other taxes go up is part of what we think is a reasonable, cautious way to go about major change...”
The panel was divided on the recommendations. Five members voted against them. 

Senate democratic leader Darrell Steinberg said in a written statement that he’s afraid the changes won’t send more funding to education and other state services. 

Republican State Senator George Runner of Antelope Valley says he’s concerned the business tax amounts to what he calls a hidden tax...

“Consumers are never going to see what portion of their bill or item they buy is the tax. I believe that the tax system should be transparent. You should know exactly what that tax or taxes are costing you...”
And some labor groups also are crying foul. Art Pulaski is Executive-Secretary Treasurer of the California Labor Federation. 

He says the changes would hurt lower and middle income families...
Pulaski  “The commission’s proposals would be worse than none. It would send us in the wrong direction and in fact would entomb California in a perpetual recession...”
Governor Schwarzenegger says the proposals still need some tweaking.

But, he endorsed the plan and says he would sign the package if lawmakers sent him legislation today.