Brown Offers Trade-Off on Tax, Apartheid Measures

Assembly Speaker Willie Brown (D-San Francisco) said Wednesday that he can assure passage of now-deadlocked legislation to repeal the state unitary tax if Gov. George Deukmejian will agree to sign a bill protesting South Africa’s racial discrimination policies.

Brown told reporters that the question of enacting legislation to protest apartheid in South Africa was “the only” issue standing in the way of a unitary tax repeal bill, now bottled up in the Assembly Ways and Means Committee after a potentially fatal setback Tuesday night.

“The votes are there for a unitary solution,” Brown said. But he conditioned casting of those votes on enactment of an anti-apartheid bill by Assemblywoman Maxine Waters (D-Los Angeles). The bill would prohibit state pension fund investments in companies that do business with South Africa, and would condemn the white-minority government’s official discrimination against blacks in South Africa. A Deukmejian spokesman, press secretary Larry Thomas, declined comment. He said Brown’s remarks were made to reporters, not directly to the governor. “I don’t think it’s an item to negotiate over the airwaves,” he said.

Deukmejian has refused in the past to bargain one bill against another and has fought efforts to link bills, claiming that they tie his hands constitutionally. And last June the governor vetoed a similar anti-apartheid protest when Waters got it inserted into the state budget.

The heavily lobbied unitary tax bill would give multinational corporations a tax break of $258 million, and is backed by Deukmejian and a bipartisan coalition of legislators who believe that changing the unitary tax system would spur new investment and business expansion in California.

The bill, by Sen. Alfred E. Alquist (D-San Jose), was passed by the Senate and approved by the Assembly Revenue and Taxation Committee. But it ran into problems when Waters amended it in the Ways and Means Committee to make the tax relief conditional on corporations agreeing to make no new investments in South Africa.

Republicans, who had been strong supporters of the bill, backed off. They contended that the measure is an attempt to embarrass the Reagan Administration and has no place in the state unitary tax bill.

A standoff developed when Assemblyman John Vasconcellos (D-Santa Clara), chairman of the ways and means panel, unsuccessfully proposed a series of amendments giving additional tax benefits to U.S.-based multinational corporations, which have been opposing the measure because they claim that it favors foreign-based companies. Vasconcellos’ amendments were defeated.

With Republicans upset at the anti-apartheid amendment and Vasconcellos opposed to the bill because of what he regarded as its unfairness to U.S. firms, there were not even enough votes to bring up the measure for a vote Tuesday night.

Prefers Waters Bill

Brown, who wants the Legislature to pass a strong anti-apartheid statement, said he prefers the Waters bill awaiting a vote in the Senate because it is broader than the more narrowly focused amendment Waters had added to the unitary tax repeal measure.

“The Alquist (unitary tax) bill, in my opinion, has a serious amount of difficulty moving as long as the South Africa amendment is there and I, of course, would not lift one finger to take it out,” Brown said.

But Brown said that if the Waters bill in the Senate is signed into law by Deukmejian, “I am certain the South Africa question, as it relates to unitary, will disappear.”

Alquist, chairman of the Assembly Budget Committee, said in an interview that he hopes that approval of the Waters bill by his committee will lead Waters to drop her amendment from his measure. “It’s in a separate bill. I would think she would be satisfied with that,” Alquist said. Waters refused to say whether she would drop the amendment.

Alquist, meanwhile, may try to bypass Vasconcellos’ Ways and Means Committee. He was considering amending his bill into an Assembly bill now on the Senate floor. By that means the bill could be sent back for a vote by the full lower house without consideration by the committee. This move, however, would require Brown’s support.

The Alquist measure would not actually repeal the unitary tax system. It would allow corporations to choose whether to be taxed under the unitary formula, which incorporates a company’s worldwide assets in assessing a tax, or opt for a system based solely on income generated by a company within the United States.