For Immediate Release -- July 1, 1996

Contact: Ron Roach (916) 441-0490

Cal-Tax takes positions on six ballot measures

SACRAMENTO -- The California Taxpayers' Association (Cal-Tax) opposes five initiatives proposed for the November 5 general election ballot, including measures to increase income taxes and hinder government's efforts to increase efficiency.

Directors of the 70-year-old association, at their June board meeting, also decided to support an initiative designed to require local governments to consult voters before raising taxes.

The board will consider positions on other November ballot propositions later this year. At this time, these positions were adopted:

• Oppose the proposal to increase income taxes by about $900 million a year by reimposing the 10% and 11% personal income tax brackets.

Cal-Tax directors determined that this initiative would be detrimental to California's business climate and economy.

"Retroactively imposing even higher taxes on small business and those taxpayers who have the capacity to invest in California will have the effect of chasing jobs and opportunities out of the state," said Cal-Tax President Larry McCarthy.

This initiative will also make changes to the property tax allocation formula that will undercut development and increase the cost of housing, McCarthy said.

This initiative is a so-called "tax-the-rich" scheme of the California Tax Reform Association, a group that lobbies for higher taxes and larger government. It is funded mainly by public employee unions. Retroactive to January 1, 1996, it would increase income taxes for those taxpayers, including small, unincorporated businesses, with incomes over $100,000 (10%) and $200,000 (11%).

California's 9.3% top income tax bracket is already among the highest in the nation, and the highly progressive nature of California's income tax system means working Californians often pay a greater percentage of their incomes in taxes than similarly situated wage-earners in other parts of the country.

Those in the top 10% in income pay 66% of the total personal income tax in California.

"It is ironic that this initiative has been proposed at a time when revenues are increasing because of an economic recovery that should be fueled with tax relief -- not dampened with higher taxes," McCarthy said.

• Oppose an initiative, sponsored by the union of engineers employed by the state, that is designed to thwart competitive service delivery. (Note: Proponents failed to file enough signatures for a random sample to meet the secretary of state's deadline for the November 1996 ballot. However, the measure would appear to have enough signatures to qualify for the subsequent statewide ballot, and proponents said they would go to court to seek certification for this fall's ballot.)

The measure would require that all public sector design work in California be run through an elaborate screening process. These roadblocks to contracting out would result in delays, added costs, and the creation of huge state bureaucracy, said Rebecca K. Taylor, Cal-Tax senior vice president.

This is Cal-Tax's position on competitive service delivery: "If the public sector can perform a function at a cost and quality that are equal to or less than the private sector, it can have that job. However, the requirement in this initiative that all public sector design work in California be run through a state Controller's Office screen is absurd."

• Support an initiative, sponsored by the Howard Jarvis Taxpayers Association, that would make local government taxes subject to voter approval.

"This initiative responds to two critical local tax problems: It will extend Proposition 62 to charter cities and it will require all cities to consult voters before raising taxes. The initiative will also limit inappropriate use of benefit assessments by local agencies," McCarthy said.

• Oppose an initiative that would prohibit limits on attorney fees and extend liability in California securities law beyond federal law. It would congest state courts and create additional jeopardy for businesses operating in California. As a result, California would be less competitive for jobs and investments.

Congress has passed legislation, enacted over President Clinton's veto, to limit such litigation in the federal courts. William Lerach, a San Diego-based trial lawyer, has brought lawsuits against growth companies whose stocks are often volatile. If Lerach's initiative passes, securities lawyers around the country would choose California courts for a flood of lawsuits.

• Oppose an initiative that would increase California employer costs for health care and make the state less competitive for jobs and investment. This initiative, sponsored by the California Nurses Association, would impose fees and taxes on hospitals and for-profit health maintenance organizations (HMOs). Health care businesses also would have to justify increases in premiums, co-payments and deductibles.
• Oppose another initiative that would affect the health care industry. Sponsored by the Service Employees International Union, this measure would impose a series of regulations on HMOs, including inflexible tenure requirements for workers, that would increase the costs of health care.

These rival initiatives are promoted by two unions seeking to organize health workers. There is concern that the costs associated by these initiatives would undercut legitimate efforts by the health care industry to manage costs.