Californian Treasurer Proposes Increases In Tax In 'Plan B' Budget Plan

by Mike Godfrey, Tax-News.com, Washington

23 February 2004

Californian State Treasurer, Phil Angelides, unveiled a contingency plan last Thursday that would involve increases in state taxation and borrowing, should voters reject the $15 billion Economic Recovery Bond on March 2, which is intended to restore California's troubled finances.

Under the plan, the higher rate tax brackets, last seen during the governorships of Reagan and Wilson, will be restored. This will mean a 10% tax will be levied on single taxpayers earning more than $140,000 per year, and an 11% levy on those on incomes over $280,000.

In addition, Angelides has proposed the introduction of a 0.25% sales tax that will remain in place for the next three fiscal years.

“I continue to believe that it is critical to put in place a rational and balanced contingency plan, developed now and ready to be implemented,” the State Treasurer commented in a recent letter to the current Governor, Arnold Schwarzenegger, who wants to ease the state’s deficit without resorting to tax hikes. “As I have previously stated, the State need not descend into fiscal chaos or face “Armageddon” if there is such a plan,” he added.

He claimed that his proposlas "should retire the deficit, restore the State’s fiscal integrity, fairly share the responsibility for retiring the State’s debt and balancing the budget, and protect funding for critical services and investments,” concluding:

“At the very least, serious discussions and deliberations on this subject must begin now given the rapidity of action that may be required after March 2nd to meet the State’s fiscal obligations.”

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