SACRAMENTO — Californians, pampered and protected from large tax increases by the lingering effects of the Proposition 13 "tax revolt," will wake up Monday to a harsh reality faced by earlier generations of taxpayers: a series of whopping tax increases.
As part of the plan put together by Gov. Pete Wilson and the Legislature to erase a projected $14.3-billion deficit, the 6% basic statewide sales tax rate--unchanged since 1974 except for a temporary earthquake assessment--will rise by 1.25 cents on each dollar. For the first time, the higher levy also will be charged on a variety of previously untaxed items--candy, snack foods, newspapers, periodicals, bottled water and the fuel used by aircraft and ships.
The sales tax is only one of a broad array of new or higher taxes that will be hitting Californians in the pocketbook over the next few months. Also taking effect Monday will be higher levies on beer, wine and hard liquor, and soon to come will be higher motor vehicle license fees.
Republican critics of the plan say that the approved tax package, which totals $5 billion, will take $1,000 a year from the budget for a family of four. In addition, $2.3 billion in other tax increases remain under discussion, including higher income taxes on the top wage earners.
In the wake of the anti-tax sentiment touched off by approval of Proposition 13 in 1978, so massive a tax increase might have been considered a political impossibility. But even though the current generation of political officeholders decided to ignore the risks of voter rebellion, few seem willing to pronounce the "tax revolt" dead.
"It would be wrong to conclude that the tax revolt has come to an end," said Assemblyman Phillip Isenberg (D-Sacramento), who supported the tax increase.
Some are even predicting a resurgence of anti-tax activism once California taxpayers realize the price they are paying.
Assemblyman Tom McClintock (R-Thousand Oaks), a staunch anti-tax conservative, said: "This is not the end of the tax revolt, this is the prelude to the greatest tax revolt this state's ever seen."
The sales tax increase, by far the costliest of the measures, will affect people differently depending on where they live.
Because voters in some urban counties have raised taxes above the basic rate, the sales tax will be even higher in those regions, jumping to 8.25 cents per $1 in Los Angeles, San Diego, San Francisco, Santa Clara and Alameda counties.
The new rate will be 7.75 cents in Orange, San Bernardino, Riverside and Sacramento counties, while most other counties will levy the basic 7.25-cent rate.
The higher taxes on beer, wine and hard liquor are considered modest, amounting to the equivalent of about a penny a drink.
The new fees on motor vehicle licenses, which take effect Aug. 1, will add, on the average, about $60 to the fees on each car, truck, bus and motorcycle. Unlike previous vehicle fee increases, which were aimed at new cars, this one will even touch the oldest vehicles as well by stretching out the depreciation schedule under which license fees are supposed to decline and by raising the minimum fees.
In addition to all that are hundreds of millions of dollars that will be raised by increases in a variety of fees--led by a 20% tuition increase for students in the University of California and the California State University systems.
Meanwhile, the Republican governor is asking the Democratic-controlled Legislature to complete the task of closing the budget gap with another $2.3 billion in tax increases. One likely outcome is an increase in the top personal income tax rate for individuals making $100,000 a year and couples earning $200,000, along with new limits on deductions and exemptions.
The $7.3-billion Wilson-backed tax plan is the largest in dollar terms in California history. But when viewed in relation to the $14.3-billion deficit and the proposed $43-billion general state operations budget, it is not a record, nor is it much out of line with tax increases faced by earlier generations.
Moreover, history has shown that large tax increases of this kind have occurred on a cyclic basis regardless of who was in power.
There has been a longstanding tradition in California for two-term governors, like former Gov. George Deukmejian, to leave a state beset by financial problems, forcing their successors to bite the bullet and pass the tax increases their predecessors wanted to avoid.
David M. Doerr, a tax consultant with the business-oriented California Taxpayers Assn. who put in 25 years as the Assembly's top tax adviser, calls it "the curse of the eighth year."
"Every eight years we get a new governor and every eight years we need a tax increase," Doerr said.
Although there are exceptions to the rule, Doerr is right on target.
When Deukmejian took office in 1983, he inherited a projected $1.5-billion deficit from ex-Gov. Edmund G. (Jerry) Brown Jr. and was forced to accept a tax increase.