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Surge in California Tax Measures Seen for 2012

Tuesday, 12 Jul 2011 08:02 PM

 

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* Campaigns aim to put tax measures to voters

* Measures for income tax hike, against online sales tax

* 'One tax measure begets another' - analyst

By Jim Christie

SAN FRANCISCO (Reuters) - Californians will vote on raising one tax and rolling back another if teachers and Amazon.com Inc have their way, and others would have them pass judgment on more tax matters next year.

Analysts said Tuesday they expect a flurry of plans for ballot measures on taxes in the most populous U.S. state.

"2012 is shaping up as a potentially enormous year in terms of ballot fights," said Bill Whalen, a Hoover Institution fellow and former aide to former California Governor Pete Wilson. "You could have a very crowded ballot."

Dan Schnur, director of the Unruh Institute of Politics at the University of Southern California, also expects campaigns for and against taxes to multiply in coming months.

"The thing about tax initiatives is that they spawn," Schnur said. "One tax measure begets another."

Some want high-income households to pay more in taxes.

Aiming to boost revenue for the state government and to reduce the risk of cuts to education spending in future years, the California Federation of Teachers, for instance, is considering a campaign to put a measure to voters next year that would raise taxes on the state's wealthy.

"We're fairly confident that we'll be able to build a coalition that will ask the richest Californians to return to higher tax rates," said Fred Glass, a spokesman for the union, which represents 120,000 education employees across the state.

By contrast, Amazon Friday took the first steps toward putting a measure on the ballot that would repeal a recently enacted sales-tax law -- one of the few pieces of legislation to raise revenue that survived the statehouse struggle to craft a budget package.

TAXING ONLINE SALES

Governor Jerry Brown had hoped to extend temporary tax increases that expired last month. But his plan for lawmakers to approve them and for voters to ratify them stalled during the months-long battle with lawmakers over plans to balance the state's books.

Democrats who control the legislature favored keeping the hikes. Republicans ruled them out, blocking a special election on the matter this year that Brown had been urging.

Lawmakers last month finally closed the state budget's roughly $10 billion deficit, largely with a combination of spending cuts, deferred payments and optimistic assumptions about revenue.

While tax extensions faltered, the legislature provided for some tax revenue -- to the consternation of online retailers in tie-ups with California-based websites.

Taxes must now be collected on sales initiated through the websites for online retailers in other states, like Seattle-based Amazon and Salt Lake City-headquartered Overstock.com Inc.

Online retailers fired back by severing ties to their so-called affiliates in California, and Amazon intends a ballot fight over the recently enacted law taxing online sales.

Amazon filed papers Friday with the state's attorney general to launch a measure urging voters to repeal the law.

"Amazon is betting that its probably millions of California customers won't want to pay sales tax," said Steve Maviglio, a public affairs consultant in Sacramento, California.

Supporters of the law, which include brick-and-mortar retailers, intend a stiff defense.

"We intend to join with California businesses -- large and small -- to fight this Tax Evasion Referendum tooth-and-nail," State Senator Loni Hancock said in a statement. (Reporting by Jim Christie; Editing by Dan Grebler)

© 2014 Thomson/Reuters. All rights reserved.

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