State Income Tax Revision Seen by Deukmejian

As President Reagan signed the new federal tax code into law, Gov. George Deukmejian on Wednesday predicted that California will follow suit by enacting a major revision of its own income tax.

Deukmejian, campaigning for reelection and clearly confident of victory, said he expects to propose legislation next January to reduce the number of state tax rates from 11 to two. He also said the new top rate will “certainly” be lower than the current maximum 11%.

The governor declined to speculate further on the shape of his anticipated “flat tax” proposal--the types of deductions that would be eliminated, for example--pointing out that his advisers are still analyzing the new federal law.

“I think we need to try to have as much conformity as possible” with the new federal act, he said, answering questions during taping of a KCBS-TV “Newsmakers” interview to be shown Sunday.

But the Republican governor added: “We don’t necessarily want to totally tie ourselves to the federal government, considering all of the fiscal problems they have. . . . We have to assure that our tax structure is such that it serves the needs of California. I think we probably will be going toward having just two tax rates, similar to what they have at the federal level.”

Deukmejian’s campaign opponent, Los Angeles Mayor Tom Bradley, said last week that if he is elected governor he will try to make California’s income tax conform with the new federal code. He spoke generally of a state tax return that would duplicate the federal return, except for the actual tax rates.

The bill Reagan signed Wednesday will ultimately reduce the top rate for individuals from 50% to 28%, although high-income taxpayers will face a hidden rate of 33%. Most taxpayers will pay the bottom rate, 15%.

California’s income tax rates now range from 1% to 11%. The governor, answering reporters’ questions after the TV taping, would say only that the new top state rate “would be less than 11, certainly.”

Deukmejian also reiterated Wednesday during an earlier press conference that he has no intention of raising taxes during a second term--an indication that any major tax overhaul would have to be “revenue neutral,” as the new federal act is supposed to be. “I don’t see any need at this time at all for any tax increase in the future,” he told reporters at the Los Angeles Convention Center, where he addressed a meeting of the League of California Cities.

The governor later spoke in Valencia to a combined luncheon meeting of the Santa Clarita Valley and Canyon chambers of commerce. He drew his loudest applause when he pledged never to build a state prison in the Valencia area, as Bradley had proposed earlier.

During the television interview, Deukmejian found himself in the awkward political position of denouncing two ballot propositions that he opposes but the voters strongly favor, according to all the polls.

He said Proposition 65, the anti-toxics measure that Bradley backs aggressively, would be “extremely burdensome on farmers and businesses” and would “result in some loss of job opportunities.” The governor also said, “It’s going to be a paradise for lawyers” because of all the court challenges it would generate.

Defending his own record on toxics cleanup, which Bradley constantly attacks, Deukmejian said: “You cannot just immediately go and clean out an area where for years and years companies were given permission to dump toxic or hazardous material and just pick it up and take it somewhere. No. 1, there’s no place to take it because no one else wants it in their area.” He also said “it takes a long time” to study the nature of the toxic material and devise cleanup plans.

But if Proposition 65 passes, as expected, Deukmejian pledged “absolutely” to implement it as quickly as possible. “Any law that is on the books will be enforced by our Administration,” he said, in an indirect response to a new Bradley charge that the Republican governor would not fully implement the initiative.

Deukmejian also criticized popular Proposition 63, which would decree English to be the official state language. “It’s totally unnecessary,” said the governor, whose parents were Armenian immigrants who could not speak English when they first arrived in this country.

“All of the newcomers that come to our state, our country, are very anxious to learn English. They do learn English as quickly as they can,” he continued. “(Proposition 63) isn’t going to achieve anything. And yet it is looked upon by a lot of the new arrivals, a lot of people in different ethnic communities, as sort of a slap at them. And I think one of the great things about our state and our nation is the way we respect the diversity we have. So why do we need to have something like this that is somewhat divisive? I’d rather we were doing things to pull people together.”