This is welcome news from Capitol Alert:
Senate Democrats today plan to roll out a $4.9 billion package of tax hikes on cars, alcohol, income and corporate profits.
According to a budget committee analysis, the Democratic 2010-11 plan includes:
— Suspending corporate tax breaks scheduled to begin Jan. 1 (worth $2.05 billion)
— Extending a 0.25 percent income tax surcharge that is scheduled to end Dec. 31. (worth $1 billion)
— Extending a $217 per dependent reduction in the state’s dependent income tax credit, also scheduled to end Dec. 31 (worth $430 million)
— Raising the vehicle-license fee on cars 0.35 percent starting July 1 of this year (worth $1.2 billion)
— Increasing the state’s alcohol tax by an inflation-adjusted amount; this rate currently remains at 1991 levels (worth $210 million)
Democrats see the tax hikes as a way to avoid safety net cuts proposed by Gov. Arnold Schwarzenegger to bridge a $19.1 billion deficit in 2010-11. The Republican governor and GOP legislators already have said they refuse to consider new taxes.
So it’s clear that Senate President Pro Tem Darrell Steinberg has been paying attention to what went on in Oregon and Arizona, and is not afraid to buck the completely inaccurate conventional wisdom that the public doesn’t support new taxes – they DO support those taxes, including to prevent health and human services cuts, as proved by last week’s PPIC poll.
We can discuss whether these are indeed the best kind of tax increases to embrace. But we as progressives should keep that debate in context. The most important question is whether we have new revenues or not. Once you answer “yes” it’s much easier to decide what the revenues are.
The Senate proposal includes eliminating a new corporate tax break, restoring the taxes to 2008 levels, and extending a current income tax surcharge. It also includes a VLF increase and new alcohol taxes.
Some may claim that those latter taxes are “regressive” and would hurt the poor. That is not true, and we progressives must strongly reject such thinking. Spending cuts are the regressive solution. Every form of taxation is more progressive than a spending cut. Income taxes and corporate taxes are more progressive than a VLF increase, but a VLF increase is FAR more progressive than cutting CalWORKS spending or Medi-Cal spending.
Here’s why. Whereas a VLF increase will bite, it’s easier for a struggling family to manage that cost than it is to deal with losing their health coverage entirely. Or, as the New York Times showed today, cuts to child care such as those Arnold proposed would make it nearly impossible for many working families to get a job – whereas if they had child care and could get a job, a higher VLF is affordable.
Overall, the Senate Democrats deserve a standing ovation for realizing that California needs prosperity, not austerity, and that new revenues must be part of the picture. We can expect Republicans to fight this tooth and nail, but that’s only because they realize that if this proposal – or something like it – became part of the final budget deal, it would prove that Californians will support other progressive revenue solutions to save our public services and provide prosperity to all.