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Modified Jerry Brown tax proposal would hit wealthy harder

March 14, 2012 | 10:40 am

Photo: Gov. Jerry Brown speaks at a luncheon in Fresno. Photo Credit: Eric Paul Zamora / Fresno BeeBowing to pressure from liberal activists, Gov. Jerry Brown is making last-minute adjustments to his tax proposal so it will hit high-income families harder, according to multiple sources familiar with negotiations.

For weeks, the governor futilely tried to convince proponents of a higher tax on millionaires to back down in favor of his own tax proposal that he wants to put before voters in November. But, faced with the danger that the two efforts could cancel each other out at the polls, Brown and the main proponents of the millionaires tax have cut a tentative deal.

Brown will cut his proposed half-cent sales tax increase in half, sources close to the deal said. That would lessen the effect of his plan on the poor and middle class. Additionally, he would seek even higher rate increases on top earners than he had initially planned.

The union behind the millionaires tax, the California Federation of Teachers, was canvassing its members before formally agreeing to the deal. Brown's allies in Sacramento argued that the governor was only making modest changes in order to clear the field.

It does not address a third tax hike proposal from civil rights attorney Molly Munger, which has so far polled lower than the millionaires tax.

The move is a striking one for a governor who has tried to stake out a centrist course in California's budget battles. For months he has rejected overtures from the CFT to change his proposal and make it more populist. He carefully crafted his tax measure last fall, amid top secrecy, to win support from both business and organized labor.

It was unclear, sources said, whether business groups will continue to back the governor now that he is seeking more money from the wealthy and less from the general population.

Brown's new proposal will raise rates on those earning more than $250,000 by one percentage point, the same as in his initial plan, the sources said. But now rates would climb steeper on richer filers -- by two points on those making more than $300,000 and by three points on those earning more than $500,000.

And those income taxes would run for seven years, rather than expire after five, as Brown had initially proposed. The sales tax increase would last four years.

Time is running out for Brown to place the measure on the ballot. His political aides have previously said that petitions to trigger an election in November would need to be submitted by early May.

RELATED:

Jerry Brown seeks changes to tax plan

Teachers union pushed pollster to drop Brown tax rival

Jerry Brown steps up effort to squelch competing tax hikes

-- Anthony York in Sacramento

Photo: Gov. Jerry Brown speaks at a luncheon in Fresno. Photo Credit: Eric Paul Zamora / Fresno Bee

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