Gov. Wants 10% Rebate, Capped at $95 : Legislature Could Choose Refund or Credit on ’87 Taxes

Gov. George Deukmejian said today that California taxpayers will get back up to $95 per person or $190 per couple under a tax proposal he will send to the Legislature.

At a news conference in Los Angeles, the Republican governor spelled out for the first time some of the details of the tax rebate or credit proposal which he unveiled two weeks ago to distribute $700 million in anticipated surplus state revenues.

As described by Deukmejian, each taxpayer would be eligible for rebates or credits equaling 10% of his or her 1987 state income taxes, up to ceilings of $95 per individual or $190 per couple.

He said he would leave it up to the Legislature to decide if the money should be returned as credits on 1987 tax returns, which are to be filed early next year, or as rebate checks.

The rebate plan has come under fire from state schools chief Bill Honig and others who maintain that California schools need the money Deukmejian has earmarked for rebates.

But Deukmejian repeated his contentions that the spending-limit initiative approved by voters in 1979, the so-called “Gann Limit” proposed by tax activist Paul Gann, requires that the funds be returned to taxpayers rather than shifted to schools to bring the state back under its expenditure limit.

“The issue here is are we going to follow the law,” Deukmejian said. “If some people want to take their rebate and turn it over to the government, for whatever purpose, that’s their privilege.”

In addition to the opposition to rebates already voiced by school supporters, Deukmejian’s proposal to give the money back on a percentage basis, rather than a flat rate that gives the same amount to low and high income taxpayers, is certain to draw criticism from many Democrats.

Before Deukmejian announced the details of his proposal, Democrats circulated an analysis which said an across-the-board rebate would give every taxpayer about $50, while a percentage rebate would give the average middle-income taxpayer only about $25 and give most of the $700 million to wealthy taxpayers.

It was not immediately known how much the $95 and $190 caps proposed by Deukmejian would change those estimates.