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Billionaires want to put big tax hike on the ballot

Deep-pocket group says $10-billion levy would benefit schools, local governments.

November 20, 2011|Anthony York
  • The Think Long Committee includes, from left, investor Nicolas Berggruen, philanthropist Eli Broad and Google Chairman Eric Schmidt.
The Think Long Committee includes, from left, investor Nicolas Berggruen,… (Reuters, AP )

SACRAMENTO — Joining the battle over California taxes, a group of billionaires and political insiders say they will place a $10-billion tax increase on the November 2012 ballot.

The Think Long Committee, which includes Google Chairman Eric Schmidt, former governors Gray Davis and Arnold Schwarzenegger and Los Angeles philanthropist Eli Broad, says its proposal would provide $5 billion more for public schools every year and billions for public universities and local governments.

Although the group has prepared a report outlining its proposals, it has not taken the preliminary steps needed to place the ideas before voters. Members have not filed any potential initiatives with the state attorney general's office or created a campaign committee to finance such an effort. A spokesman for Think Long said those moves would come in the next couple of weeks.

The group's plan is based on a reshuffling of California's tax system. It would lower the state's personal income and sales tax rates and create a new levy of more than 5% on services that are not currently taxed, such as legal work or accounting.

For The Record
Los Angeles Times Tuesday, November 22, 2011 Home Edition Main News Part A Page 4 News Desk 2 inches; 105 words Type of Material: Correction
Tax issues: An article in the Nov. 20 California section about a committee of influential Californians called Think Long reported that former Gov. Arnold Schwarzenegger is a member of the group. Although a tax proposal by Think Long listed Schwarzenegger as a member, a spokesman for the group later said the former governor has never been a member. Additionally, the article said the California Federation of Teachers would push a proposal being crafted by labor groups to ask voters to raise income tax rates on high earners and increase the state sales tax. The union says it would only propose raising taxes on top earners.
For The Record
Los Angeles Times Sunday, November 27, 2011 Home Edition Main News Part A Page 4 News Desk 2 inches; 106 words Type of Material: Correction
Tax issues: An article in the Nov. 20 California section about a committee of influential Californians called Think Long reported that former Gov. Arnold Schwarzenegger is a member of the group. Although a tax proposal by Think Long listed Schwarzenegger as a member, a spokesman for the group later said the former governor has never been a member. Additionally, the article said that the California Federation of Teachers would push a proposal being crafted by labor groups to ask voters to raise income tax rates on high earners and increase the state sales tax. The union says it would only propose raising taxes on top earners.

Think Long spokesman Nathan Gardels said members want to "maintain California's progressive tax system." Under their proposal, families earning up to $45,000 a year would pay no state income tax, while those making up to $95,000 annually would pay 2%. This would lower some taxpayers' obligations significantly.

The group also wants to double the current exemption for homeowners and renters on their state income tax and eliminate most other California income tax credits.

Taxpayer organizations have opposed similar ideas in the past. David Kline, a spokesman for the California Taxpayers Assn., said he could not comment without knowing the details of Think Long's plan, but he said that generally speaking, "we have some major issues with a tax on services and the impact that would have on businesses and consumers."

Gardels said the panel would proceed with its initiative plan despite potential opposition. Its wealthy members -- who include three billionaires in Broad, Schmidt and committee founder Nicolas Berggruen -- will pay for the expensive and arduous process of collecting enough signatures to qualify a proposal for the ballot, the spokesman said.

Berggruen has said publicly that he would commit $20 million of his personal wealth to getting a measure passed.

"The problem with most initiatives is funding," said Gardels. "That's not a problem this group will have."

Gov. Jerry Brown, who tried unsuccessfully to get higher sales, income and vehicle taxes on the ballot this year, has "had some conversations" with Think Long, said the governor's spokeswoman Elizabeth Ashford. But she said Brown had no immediate plans to endorse the group's proposal.

Labor unions, meanwhile, are preparing their own ballot proposal. It would raise income tax rates on high earners and increase the state sales tax to patch the $13-billion budget deficit that the nonpartisan Legislative Analyst's Office has projected for the next fiscal year. A shortfall this year may trigger automatic cuts that could shave up to a week off the school year in some districts.

Josh Pechthalt, president of the California Federation of Teachers, said his group would push the labor proposal because the pending budget cuts underscore "a need for a revenue measure to be put on the budget for 2012."

All of this comes as Brown prepares his budget for the 2012-13 fiscal year.

The governor must unveil the spending blueprint by Jan. 10. Democratic leaders in the Legislature say they will stand firm against any more reductions in state services.

"Over the last three years, we've done quite enough damage on the cut side, thank you," said Senate leader Darrell Steinberg (D-Sacramento). "In the short run, I do not see making more cuts."

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anthony.york@latimes.com

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