CALIFORNIA ELECTIONS / PROPOSITION 167 : ‘Tax the Rich’ Backers Hope to Tap Voters’ Anger

Proponents of a “tax the rich” initiative said Wednesday that they hope to harness what they perceive as widespread anger over the new state budget into their drive to boost corporate taxes, raise the income tax rates on the richest Californians and lower the sales tax rate while raising billions for new government spending.

“The results of the budget battle in Sacramento make it absolutely clear that the friends of children in California must be the voters,” said Los Angeles Board of Education member Jeff Horton, angry over a budget deal that slashed spending on schools and human service programs.

Horton and other supporters of the tax initiative, Proposition 167, kicked off what promises to be a bruising political fight over state tax policies between grass-roots community groups and some of California’s largest corporations.

Corporate opponents of the measure, operating as Californians for Jobs, Not More Taxes, have already launched what is expected to be a multimillion-dollar media campaign to defeat the initiative. In radio commercials being broadcast throughout the state, the opponents argue that the proposal would cost jobs and hurt businesses.

Proposition 167 is a complex measure that would roll back some of the tax increases approved by Gov. Pete Wilson and the Legislature last year while raising businesses’ income taxes 20% and boosting businesses’ property taxes 10% to 20%, according to the state legislative analyst’s office.

Among other things, the measure would reduce the sales tax by one-quarter of a cent and eliminate the sales tax levy placed on previously exempt candy, snack food, bottled water, newspapers and periodicals. A new top state tax bracket of 12% would be created for people with joint incomes of $500,000 or single taxpayers with incomes of $250,000 or more.

The legislative analyst’s office estimates that there would be a net revenue gain to the state of $1.1 billion to $2.1 billion by the budget year of 1993-94.

Sponsors of the measure gave a preview of what their campaign will be like at Belmont High School on Wednesday, where drafters of the initiative were joined by representatives of PTAs, churches and other community groups to kick off their campaign.

“Proposition 167 is a direct response to the awful budget mess,” said Lenny Goldberg, the chief proponent of the measure. “We have given billions of dollars away to corporations in the last five to 10 years. Loophole after loophole has been opened. Closing special-interest loopholes will put everybody back on a fair basis.”

The initiative was introduced after Wilson drafted a rival ballot measure aimed at slashing benefits to welfare recipients.

“The governor is saying that the budget problem is a welfare problem. We are saying the budget problem is a special-interest tax problem,” Goldberg said.

The Rev. Kathy Cooper-Ledesma, pastor of St. Luke’s United Methodist Church and a spokeswoman for the California Council of Churches, said: “The services to the poor are being slashed while the wealthy in the state continue to benefit from an unjust tax structure that serves their interest.”

Sponsors of the measure said they were caught off guard when opponents of Proposition 167 began broadcasting radio ads in mid-August. Steve Hopcraft, the campaign manager for Proposition 167, predicted that on the basis of the early appearance of radio ads, opponents of the measure could spend $30 million to defeat it.

“They are going to spend and spend and spend to protect their privileges and perks and subsidies,” he said.

The California Chamber of Commerce, the California Taxpayers Assn., and the California Manufacturers Assn., lobbying groups that represent the state’s largest corporations, are leading the effort to defeat the measure.

Scott Macdonald, spokesman for the No on 167 campaign, refused to disclose how much the opponents of the campaign plan to spend by November.

He said opponents decided to take to the airwaves early to beat the expected avalanche of political ads sponsored by candidates for the presidency, two U.S. Senate seats, other initiatives and many state and local offices.

Macdonald said a number of job losses are almost guaranteed if Proposition 167 passes. “When you impose huge tax increases like these on businesses, they have to make up for the loss of money by passing the costs on to consumers, find a cheaper place to do business, outside of California obviously, or cut jobs,” he said.