Senate President Pro Tem Darrell Steinberg celebrated a deal Wednesday between Gov. Jerry Brown and the California Federation of Teachers to place a compromise tax initiative on the November ballot.
"We were headed for a real collision course," said Steinberg, meeting with reporters in his office. "If this were a game, this would all be pretty interesting, the machinations. But this is not a game."
The new deal, which Brown is expected to announce shortly, would raise the statewide sales tax by a quarter-cent rather than half-cent per every dollar of purchase. It would retain the governor's three higher tax brackets starting at one percentage point more for single filers making at least $250,000.
But under the new deal, the last two tax brackets would increase at a steeper pace. Single earners would pay two percentage points more on income between $300,000 and $500,000 (income amounts doubled for joint filers), whereas the governor originally proposed a 1.5 percentage point increase.
Singles earning at least $500,000 and couples earning at least $1 million would see their top bracket increase by 3 percentage points rather than the two percentage points Brown originally wanted.
The income tax hike on the rich would also last longer than Brown's proposal, going for seven years instead of five, starting retroactively on Jan. 1, 2012. The sales tax hike would still start Jan. 1, 2013 and expire at the end of 2016.
Steinberg estimated that the new plan would generate about $2 billion more through June 2013, or nearly $9 billion total. But those figures are based on more optimistic Department of Finance projections. The nonpartisan Legislative Analyst's Office believes Finance's forecast is too rosy when it comes to wealthy earners whose tax rates would be higher under the new compromise.
PHOTO CREDIT: Senate President Pro Tem Darrell Steinberg, March 14, 2012. Photo taken by Kevin Yamamura.