Coalition Urges Plan to ‘Tax the Very Rich’ : Budget: Groups hope to close loopholes and end some exemptions. They would boost the top rate to 11% for those earning more than $100,000 a year.

Groups representing the poor, homeless and children unveiled a “tax the very rich” program Tuesday that they said would solve many of California’s fiscal woes.

By scaling down tax subsidies for corporations and imposing a higher tax rate on top income earners, they said, state programs about to fall under the budget ax could be spared while additional money would flow into the state treasury.

Admitting that they face a “tough fight” in the Legislature, organizations such as League of Women Voters, Latino Issues Forum, Western Center on Law and Poverty, and Congress of California Seniors joined to propose the program. They estimated it would raise $6 billion to $10 billion annually. The new money would come from closing loopholes, ending tax exemptions and boosting the top income tax rate to 11% from 9.3% for individuals earning more than $100,000 annually.

Lenny Goldberg of the California Tax Reform Assn., which is heading the drive, said $300 million could be gained by reducing from 80% to 50% the tax deduction allowed for business lunches. That alone, he said, would eliminate the need for a threatened cut of 9% in the grants received by more than 2 million Californians in the Aid to Families With Dependent Children welfare program.

The various proposals were offered as an alternative to the tax plan proposed by Republican Gov. Pete Wilson. With the state facing a revenue shortage of $7 billion to $10 billion, Wilson has proposed a $1.7-billion tax increase package along with about $5 billion in program cuts.

Wilson wants to raise motor vehicle license fees, boost taxes on liquor, beer, wine, candy, snack food, newspapers and magazines, and broaden income tax withholding requirements for contractors and others.

Democratic legislators have criticized the governor’s plan for not going far enough to raise taxes. Wilson insists that broader tax increases would further dampen the economy.

James J. Lee, deputy press secretary for Wilson, said of the plan unveiled Tuesday: “We are disappointed that (the tax advocates) think the only way to solve the budget problem is to raise more taxes--basically to take more income out of the private sector and put it into the public sector.”

The California Taxpayers Assn., which represents corporate California, voiced opposition to the plan. Larry McCarthy, the association’s president, said the proposed “massive increase in taxes” would “damage the state’s business climate.”

Goldberg and others said they believe the public would rather close loopholes and end special exemptions than cut $2 billion in public school aid and further trim health, welfare and other human service programs--all parts of the governor’s spending reduction plan.

“Over $6 billion can be raised by closing loopholes and taxing the very wealthy,” Goldberg said.

Goldberg released federal tax tables put together by Citizens for Tax Justice, a Washington-based public interest lobbying group, showing that from 1977 to 1990, changes in federal tax laws allowed after-tax incomes for people making more than $549,000 a year to grow appreciably faster than those of other income groups. Most of the federal tax law changes were subsequently adopted in California.

Trudy Schaeffer, representing the League of Women Voters, said: “The (state’s) revenue base has been eroded by loopholes, exemptions and undertaxation.”

Defending the “soak the rich” tone of the announcement, Howard Owens of the Congress of California Seniors said: “The question before us is how much longer we are going to let the rich soak the rest of us.”

Along with reducing allowances for business lunches and raising the top personal income tax rate, the tax advocates are proposing to require the reassessment of property whenever corporations or partnerships change ownership through stock transfers. Goldberg, using figures supplied by state tax agencies, said $1 billion could be raised by requiring reassessments.

Another proposal among the list of 19 recommended changes would put an end to a provision of the tax law that allows businesses to carry losses from one year to the next, which allows them to reduce their tax liability in profitable years. Allowing businesses to carry forward tax losses is costing the state $525 million, Goldberg said, using an analysis provided by the Assembly Revenue and Taxation Committee.

Goldberg noted that several lawmakers had introduced bills similar to the tax proposals recommended by his group. He said he was confident that there were enough legislators in the Assembly and Senate to carry bills containing other elements of the plan.