Tax Talk Grows Louder in California, New York

Tax Talk Grows Louder in California, New York

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.

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