SACRAMENTO — A plan by Senate Democrats to raise taxes on wealthy Californians to help close a $23.6-billion budget gap failed in the Senate Tuesday, amid Republican opposition.
The $4.8-billion plan centered on a proposal by Senate Leader John Burton (D-San Francisco) to raise $2.7 billion by increasing the highest individual tax brackets from the current 9.3% by adding 10% and 11% brackets. The measure failed to get the single Republican vote needed to gain the required two-thirds approval in the Senate and to send it on to the Assembly for consideration.
When combined with revenues from a variety of other tax proposals, the money would have funded an expansion of a health insurance program to cover poor parents, bolstered fire protection, continued a popular tax break enjoyed by motorists and paid for a juvenile crime prevention program, among other proposals.
Democratic leaders acknowledged that the plan would not solve California's fiscal problems, but warned that the reduction in state services that would be needed without an increase in taxes would be too large.
"When I look at what is not going to get funded ... I'll pay my 300 bucks," said the Senate Budget Committee chairman, Steve Peace (D-El Cajon).
For single filers, the 10% rate would have kicked in on incomes of more than $130,000. The 11% rate would have applied to income of more than $260,000. For joint filers, the 10% rate would have taken effect at more than $260,000 and 11% at more than $520,000.
A married filer with taxable income of $400,000 could have expected to pay $980 in increased taxes from the 10% rate. Because state taxes can be deducted on federal tax returns, the net increase would be $601, Democrats said.
"This is not really going to send anyone to the poorhouse," Burton said. He proceeded to tick off a list of programs dear to Republicans that would be funded if the tax hike were approved, including money to help small-county sheriffs and a program favored by environmentalists and farmers that rewards landowners for keeping parcels undeveloped.
Republicans, however, objected to the tax hikes and called for more spending cuts to balance the budget. Sen. Tom McClintock (R-Thousand Oaks) said his Democratic counterparts appeared to be missing the larger picture.
"This budget crisis is not the fault of the taxpayers for not paying enough taxes," McClintock said. McClintock took issue with what he described as the state's spending the largest portion of people's earnings and delivering less with it.
