Thanks to Michael for alerting us to the fact that the Governor's tax reform commission has just released draft language of its proposals. These include a reduction of the top rate of the state income tax and the complete phase-out of the corporate income tax, to be replaced by a "net business receipts tax." Sac Bee coverage notes that the new income tax would be less progressive than the current one, offering incomes above $75,000 a 30% tax reduction. Corporate taxation also seems slated to fall, although the California Budget Project has calculated that the share of corporate income paid as California taxes is currently half of what it was in 1981 (see slide 8).
The Commission is chaired by former UC Regent Gerald Parsky, a major figure in California's Republican party, and includes among its members Berkeley Law Dean Chris Edley. Dean Edley has signed a separate endorsement of the replacement of the corporate income tax in the context of the other tax changes.
My preliminary search has not yielded any projections of the revenue implications of the new proposals. Until I see these, I will assume that these changes will reduce the state of California's gross revenues. This would obviously increase the state budget deficit and put additional limits on revenue recovery for higher education, among other sectors.
I can't help seeing these tax proposals in the context of constantly declining public revenues for higher education nationally, which for various reasons has disproportionate hurt undergraduate education (see the review of the Delta Project work lying behind Jane Wellman's presentation to the UC Commission on the Future). In her UCOF testimony (overview here), Wellman estimated viable cost reductions at 3% a year, with much effort. This means that this year's 20% cut would take 6 years to make up, under the unlikely scenario of no further cuts and decent growth.
Any further loss in state revenue would be piling one disaster for higher ed on top of another. Figures please.
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