HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.
![handle is hein.taxfoundation/ffdcexz0001 and id is 1 raw text is: FONAINFiscal Fact
August 1, 2012
No. 324
Governor Brown's Tax Proposal and the Folly
of California's Income Tax
By
David Block & Scott Drenkard
Introduction
Governor Jerry Brown signed a new California budget on June 27 that depends on voters to approve $15.7
billion in new taxes in order to meet expected expenditures for fiscal year 2012-2013. The tax increases,
which will be sent to California voters in November for their consideration, will appear on the ballot as
Proposition 30.1 The package of tax increases raises the California sales tax rate by 0.25 percent to 7.5
percent for 4 years and raises income taxes on those making above $250,000 for 7 years. The income tax
increase is retroactive and would apply to all income earned after January 1, 2012.2
The new revenues from the tax increases are estimated to total $8.5 billion, with $2.9 billion dedicated to
new funding for schools, and the remaining $5.6 billion devoted to the state's general fund. Roughly $8.1
billion of budget cuts, along with $2.5 billion in other measures, such as restructuring CalWORKS and
Medi-Cal, join with the proposed new revenues to close California's remaining budget deficit.
While Governor Brown contends that the income tax increase is necessary to prevent cuts to popular
government services, the historical record shows that California's budget has grown steadily in recent years.
Additionally, the plan's heavier reliance on high income earners will only further exascerbate California's
troubles with revenue volatility, impacting the state's ability to fund future government programs.
Gov. Jerry Brown ' Tax Initiative Tops Full Ballot, CBS NEWS, July 10, 2012,
ht~:/ww~ .bucwsor/83] 5U245 162-5-469~7gvjryhor~a nralctp-ulUio!
2 California Department of Finance, Enacted Budget Summary, Governor's Budget 2012-2013 (June 28, 2012),
htp://-,,w .ebud get.ca.gv/Eiacte d/BudgetSumtn.arv/BSS /BSS.httrrl.](ViewImageLocal?handle=hein.taxfoundation/ffdcexz0001&div=1&collection=&method=preview&ext=.png&size=3)