Stateline Story

Tax Talk Grows Louder in California, New York

  • December 01, 2011
  • By John Gramlich
California Governor Jerry Brown spent most of the legislative session this year trying to get state lawmakers to approve higher income, sales and vehicle taxes to close a sprawling budget shortfall.

With his tax increase proposal going nowhere in the legislature, Brown now is expected to go directly to the voters by backing a "multibillion-dollar" ballot initiative in November 2012 that would temporarily raise the sales tax as well as taxes on high-income earners, the Los Angeles Times reports today (December 1) .

"Brown's plan, developed in a series of closed-door meetings between his senior staff, labor leaders and representatives of Democratic legislative leaders, would add an extra 1 percent tax on individual income above $250,000 a year," the paper reports. "Individuals making between $300,000 and $500,000 would be taxed an additional 1.5 percent for that income. And those making more than $500,000 would see an additional 2 percent hike." Combined with the proposed increase in the sales tax, the measure "could raise about $7 billion," the Times notes.

Brown, a Democrat, has been calling for higher taxes since taking office in January. But he is not the only big-state governor who is looking at significant changes to his state's tax code in the near future. Fellow-Democrat Andrew Cuomo of New York is also considering putting a tax overhaul on the agenda when his legislature reconvenes in January, The Wall Street Journal first reported Wednesday .

According to news accounts, the plan could include higher personal income taxes for wealthy residents, even as it lowers rates for others. If true, the proposal would mark a major political shift for Cuomo, who has long opposed a so-called "millionaire's tax" and, as Stateline has reported , was the only Democrat among this year's new governors to rule out higher taxes when he took office.

On Wednesday, Cuomo said he is considering a range of options. "Some people on the tax code say you should increase taxes; some people say you should decrease taxes," he said, according to the New York Post . "We're open to all the best thinking."

California and New York are in a tougher fiscal position than most states. According to a report released today by the National Conference of State Legislatures, the two states are among just four — along with Missouri and Washington — facing shortfalls in their current budgets.