Cal-Tax President Larry McCarthy issued this statement on the tax-cut package negotiated by the governor and legislative leaders and overwhelmingly approved by the Legislature on Saturday, September 13:
"This action sends an important signal that the Legislature is willing to reduce tax burden and make California more competitive. Taxpayers should be delighted by the bipartisan support for tax relief and conformity to federal laws. The lack of partisanship exceeded our expectations.
"While the business community continues to support a reduction in the bank and corporation tax rate, it also recognizes the need for relief for those who pay the personal income tax. Relief for taxpayers with dependents is important, as is full conformity with federal reductions in capital gains taxation in the sale of principal residences. Cal-Tax is pleased that the governor and Legislature agreed to full and permanent capital gains conformity, which we advocated to benefit taxpayers while also paving the way for local government property tax revenue increases as more homes are sold and reassessed to market value under Proposition 13.
"Another victory for taxpayers was the final agreement that deleted a provision calling for a rate increase for Subchapter S corporations to offset tax savings they may enjoy from conforming to federal law.
"More than $1 billion in tax relief over the next three years also means that government will not expand to absorb the additional revenues from the state's prospering economy, tempering demand for tax increases during future economic downturns.
"While Cal-Tax compliments the governor and legislative leaders for their nonpartisan action, the same cannot be said for the process. Tax relief can and should be considered in noticed policy committee public hearings where interested parties are allowed to comment on and advocate various proposals.
"Taxpayers hope that this bipartisan spirit of cooperation carries over into future sessions of the Legislature to help reduce the tax burden and improve the state's climate for creating jobs."
- Mr. McCarthy is president of Cal-Tax.
Contact: Ron Roach (916) 441-0490 or rwroach@caltax.org