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THE STATE / THE RECALL CAMPAIGN / DISPATCHES | PETER
CAMEJO

He unveils a plan to hike taxes on state's richest, cut levies for others.

August 29, 2003|Lee Romney | Times Staff Writer

Green Party candidate Peter Camejo on Thursday unveiled his plan for a "fair tax" that would solve the budget crisis by raising taxes on the state's richest while offering tax relief to low- to moderate-income Californians.

With the "substantial surplus" that Camejo says would result from the redistribution of the tax burden, California could invest in solar power and make the struggling renewable-energy industry large enough to be competitive, he said.

"A fair tax means the rich have to at least pay the same rate as the average person," Camejo said. "I cannot get either the Republicans or Democrats to agree with that."

Camejo, who heads a money management firm that specializes in socially responsible investing and who won 5% of the vote when he ran for governor last fall, also said corporations were not paying their fair share.

He said the percentage of the tax burden they carry has shrunk from 14% to 7% in the last two decades.

On the subject of individual taxpayers, Camejo based his proposal in part on a chart released in January by the California Budget Project and the Washington, D.C.-based Institute on Taxation and Economic Policy.

That chart maps the distribution of the state and local tax burden by income group, and shows that Californians in the lowest 20% income group spend 11.3% of their family income on taxes, while the top 1% income group spends only 7.2% of its income on local and state taxes.

But California Budget Project Executive Director Jean Ross said the chart reflects a more complex set of factors than a tax "rate," making the kind of reform Camejo proposes more problematic than he suggests.

For example, everybody pays the same sales tax, but a lower-income family spends more of its income. As a result, a larger share of that family's income goes to sales tax than a wealthier family's.

How much income families dedicate to mortgages or retirement funds also factors in. Ross, whose group is neutral on the candidates, said that although people look at the chart and say " 'This isn't right,' " California's tax system is one of -- if not the most -- progressive in the country.... As bad as we might be, most states are worse."

Like Bustamante, who also proposes hiking taxes on the wealthy, Camejo probably would face resistance among legislators to raising taxes. Senate Budget Committee Vice Chairman Richard Ackerman (R-Irvine) last week was quick to call Bustamante's proposed $8-billion tax increase "unrealistic," and hostility is expected to be equally strong against Camejo's tax-the-rich proposal.

The structural problem that anyone who is or wants to be governor faces is the two-thirds vote requirement for passing a budget or increasing taxes, Ross said. "To the extent you want to bring in additional revenues, that is a challenge."

Camejo praised Bustamante for many of his positions, including a proposed increase in corporate taxes. But he differed from the lieutenant governor in his sharp disdain for Gov. Gray Davis, whom he campaigned to unseat last year.

By spending at an unsustainable rate while helping to cut taxes for wealthy Californians, Camejo said, the Davis administration displayed a level of incompetence that was "truly remarkable."

Camejo's solar power plan is based on a draft report completed last year by Oakland-based Clean Edge, a clean-technology company. The firm was commissioned to complete the study by the Washington-based Co-Op America Foundation -- which supports creation of a competitive solar power market.

Clean Edge co-founder Joel Makower said the report -- which calls for an unprecedented ramp-up of production through increased construction of photovoltaic modules -- was well received by the Davis administration after the energy crisis.

But budget problems derailed it because there was no funding for such an investment.

On an unrelated issue, Camejo on Thursday backtracked on a pledge to urge his supporters to vote for independent candidate Arianna Huffington if it appeared in the final days of the race that she had a better shot at victory.

Camejo now says that, though he respects her views, he would never urge Greens to vote anything but Green.

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