California could cover its annual budget deficits by plucking "low-hanging fruit" of tax changes that would increase state revenues by $21.1 billion a year, the California Tax Reform Association declared today.
The liberal organization's reference is a play on Gov. Arnold Schwarzenegger's recent comment that the state has exhausted the "low-hanging fruit" of spending cuts and bookkeeping gimmicks while still facing stubborn budget deficits.
The Legislature's budget analyst, Mac Taylor, has declared that the state faces annual deficits of about $20 billion even if it closes a $20-plus shortfall in the remainder of this fiscal year and all of the next. The tax reform group says the state's finances could be fixed by eliminating some tax loopholes and raising selective taxes, avoiding general tax increases.
It said that "loopholes, untaxed windfalls, tax breaks with no benefits, taxes on the very rich and sin taxes, the taxes with little or no impact on economic recovery," have not been tapped and lists 10 tax changes that would raise, it says, $21.1 billion a year.
The largest, scored at $4 billion, would be to reinstate an 11 percent tax on incomes of the top 1 percent of income taxpayers. Others include imposing an oil severance tax, increasing liquor and cigarette taxes and closing new corporate tax loopholes.
The full Tax Reform Association paper is available here.
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