Capitol Alert

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The public employee-union backed marchers arrived at the Capitol this week after 48 days on the road from Bakersfield, and Thursday presented lawmakers with their state budget recommendations -- $40 billion in tax increases and loophole closures they said will avoid service cuts and balance the budget for years to come.

Among the solutions, and the estimated annual revenue boost:

• A 10 percent tax increase on alcohol ($1.4 billion)

• A $1.50 per pack increase in the tobacco tax (1.3 billion)

• A requirement that 3 percent of payments to independent contractors paid more than $600 a year be withheld. ($2 billion one time; $250 million annually thereafter)

• An expansion of the sales tax to services, but reduce the rate by 2 cents on the dollar. ($18.8 billion)

• Ratcheting up the top income tax brackets to 10 percent on income over $250,000 and 11 percent on income over $500,000. ($4 billion)

• Restoring the vehicle license fee to 2 percent -- the level that existed before Gov. Arnold Schwarzenegger lowered it upon taking office in 2003. ($2 billion)

• Establishing an oil severance tax fee. ($1 billion)

• Repealing income tax reductions offered to multinational corporations. ($3 billion)

"This is just the beginning," Irene Gonzalez, a Los Angeles probation officer and executive board member for AFSCME Local 685, said in a statement. "We are going to keep this historic coalition together and continue to agitate for progressive change. The majority of California voters support public services and want to restore the promise of quality public services and education, rebuild a government that serves all Californians, and create a fair tax system to fund our state's future."

But prospects for such a tax package appear grim. Republicans say they will hold firm against any tax increases, as has Schwarzenegger. As for the future, all three leading gubernatorial candidates are unlikely to stand for a tax increase. Republicans Meg Whitman and Steve Poizner have ruled them out, and Democrat Jerry Brown said he would not approve a tax increase unless voters signed off.

The impressive menu of tax increases also drew a predictably negative response from the California Taxpayers' Association. "Heaping another $40 billion in taxes on Californians is not a solution, it is a recipe for deepening the recession, forcing more employers to close their businesses and throwing even more Californians out of work," said Cal-Tax spokesman David Kline.


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