SACRAMENTO — Pressure for a tax cut aimed at middle-income earners built Thursday as Republican legislators lauded Gov. Pete Wilson's $1-billion tax reduction plan and Democratic leaders derided the proposal but left open the possibility of some sort of tax cut.
Even as Assembly Speaker Cruz Bustamante and Senate President Pro Tem Bill Lockyer declared that Wilson's plan had virtually no support among Democrats, they were careful not to rule out some form of tax reduction.
"I'm not opposed to a middle-class tax cut, if it really is a middle-class tax cut," said Bustamante (D-Fresno). He would be willing to present Assembly Democrats "with a more modest proposal--but this is not a modest proposal," Bustamante said.
"I don't know if it is fixable," Bustamante said. "I'll take a look at it, however, because I'm not opposed to a middle-income tax cut."
Two prominent Democrats, whose party controls both houses of the Legislature, floated alternative tax cut possibilities although no plan has yet emerged as a consensus by the party.
In an analysis of Wilson's proposal, Assembly Revenue and Taxation Committee Chairman Louis Caldera (D-Los Angeles) suggested pushing for a combination of tax credits for businesses to encourage more hiring and a tax cut aimed more directly at middle-income earners.
Caldera said in his memo that a tax cut could be targeted at the middle class by further adjusting various tax brackets, perhaps creating a new bracket for couples who make between $67,000 and $90,000.
"It lowers taxes for those who are most beleaguered," Caldera said of his idea. "Those are people who benefit the least from government programs, and yet are not so well off that they're enjoying all the benefits of the skyrocketing stock market."
As it is, couples who earn $67,675 a year pay state income taxes at the same rate--9.3% of their taxable income--as people who make $1 million a year.
Lockyer raised the possibility of reviving proposals for an earned income tax credit, by which workers making $28,000 or less would get a tax rebate. The federal government already grants an earned income tax credit to convince people to get off welfare.
Assemblyman Antonio Villaraigosa (D-Los Angeles), the Assembly majority leader, has a proposal to create a state earned income tax credit that would cost California $924 million. A version by Sen. Hilda Solis (D-El Monte) would cost $570 million a year.
