Governor Stumps to Rally Support for Tax Cut Plan : Finance: GOP leaders back proposal designed to stimulate economy. Critics say state cannot afford to lose revenues.

Gov. Pete Wilson appeared at a campaign-style event Thursday to boost interest in his proposed income tax cut, gathering a cross-section of the state’s housing industry to illustrate that his idea would benefit everyone from struggling young couples to millionaire developers.

In a living room setting on the seventh floor of the Kaufman & Broad Co. high-rise in West Los Angeles, Wilson sat on a couch and listened to home buyers, lenders, contractors and executives describe how his proposed 15% income tax cut would help their lives and businesses.

An Orange County schoolteacher, who estimated that she would save an average of about $300 a year on Wilson’s plan, said the money could pay for improvements around the house. A drywaller predicted he could add about 10 workers. And home sellers said the idea of a tax cut would encourage a growing consumer confidence.

“It is very clear that the decisions we make in Sacramento affect people in their daily lives,” the governor told his audience. “What we will be able to do is create jobs and allow people to realize that dream of being a home buyer.”

Wilson went on the road to tout his tax cut plans just as the idea has come under increasing scrutiny and criticism in Sacramento.

Opponents question the wisdom of an estimated $7-billion reduction in state revenues at a time when state government is still $2 billion in debt. Others complain the tax cut will be financed by reductions in education and social programs.

The battle lines for the upcoming showdown on taxes also became clearer Thursday with the news that the Legislature’s two Republican leaders--Assemblyman Jim Brulte of Rancho Cucamonga and state Sen. Ken Maddy of Fresno--will sponsor the tax cut legislation.

The announcement indicates a consensus of support for the governor’s plans among Republican lawmakers and it portends a sharply partisan battle over the issue. GOP officials said some Republican lawmakers favor even bigger tax cuts than the governor has proposed and they are confident that a minority of Democrats will support their plan.

Wilson wants to phase in a 15% income tax cut for individuals and businesses over three years, beginning next year. The governor’s economic advisers said the reduction is possible because the state’s improving economy is expected to generate more than $28 billion in added tax revenue by the end of the decade.

Wilson, however, has not argued that his tax cut proposal is a way to return surplus money to taxpayers. Instead, he contends the tax cut is needed to keep the economy growing and that more short-term budget difficulties are necessary to secure long-term fiscal health.

The tax cut proposal is the cornerstone of a broader plan the governor has outlined to make California more attractive to business. In addition to the tax cut, Wilson has proposed a constitutional amendment making it more difficult for government to impose costly regulations on business and he has called for tort reform to reduce what he calls “lawsuit abuse.”

Wilson told his audience Thursday that California must contend with other states to keep its jobs. California has one of the nation’s highest tax burdens, and more than 30 other states are already planning tax cuts in 1995, Wilson contended.

“We are in competition,” the governor said. “We have to have growing revenues and the only way we will do that is if we keep them from stealing our jobs.”

Wilson responded to two pointed questions during the forum, one about the impact on education and another about criticism that his plan would give wealthy taxpayers the largest savings.

On education, the governor said his budget is committed to higher funding for public schools over the next four years, although he acknowledged that the increase is less than it would be without the tax cut. And he defended the savings for wealthy taxpayers by suggesting that their savings would probably go into investments that create more jobs.