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Jerry Brown trying for last-minute bipartisan tax deal

September 5, 2011 | 10:20 pm

Gov. Jerry Brown is pondering changes in the corporate tax swap plan he introduced last month in hopes of reaching a bipartisan accord before the Legislature adjourns for the year.

Although no final deal has been reached, the outline of a possible agreement began to emerge Monday. Like Brown's original plan, it involves changing a 2009 law so that corporations could no longer choose which formula to use when calculating their state tax liability.

But instead of Brown's original plan, which used the estimated $1.1 billion the change is expected to generate on new tax credits for businesses that hire California workers or buy new equipment, the new proposal would include more sweeping changes to the state's business taxes.

Among the concepts being pushed by Republicans are tax cuts for corporations that pay personal income tax instead of corporate tax. The plan also includes reductions in the corporate tax rate for smaller businesses.

The state Board of Equalization would have some discretion to set the tax rates so that the amount in new tax credits is equal to the amount of revenue that the other changes are expected to generate.

Multiple legislative sources confirmed the bipartisan negotiations, but would not allow their names to be used for fear of damaging the fragile talks. Administration sources refused to confirm the details of the proposal.

It was unclear whether there was enough backing from Republicans or Democrats to get the revised proposal through the Legislature. Democrats have not yet signed off on the deal, and it was unclear whether an agreement could be reached before Friday, when the Legislature is scheduled to adjourn for the year.

Democrats acknowledge the talks are ongoing, but say they have not seen the final details of a proposal. They also acknowledge some reluctance to the deal from labor groups who want the money to go to state programs instead of toward new tax cuts for businesses.

--Anthony York in Sacramento

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