Budget & Finance

Calif. Teachers, Gov. Brown Reach Accord on Taxes

By Andrew Ujifusa — March 16, 2012 1 min read
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The California Federation of Teachers announced March 15 that it had reached a tentative deal with Gov. Jerry Brown on a progressive tax proposal that boosts the top income tax for those making more than $1 million a year, while reducing the Democratic governor’s proposed state sales tax hike.

The teachers’ union, an affiliate of the American Federation of Teachers, announced that the joint initiative would generate $9 billion in new funding for the next fiscal year, and $2 billion more than the previous tax proposal from Brown.

“The new measure will bring in more money for schools and services, and a greater contribution from the wealthiest Californians,” said California Federation of Teachers President Joshua Pechthalt in a statement. He is also a co-chairman of the Millionaire Tax campaign pushing a tax hike on high earners.

Under the terms of the deal, the top income tax in the state would increase by 3 percent on joint filers making over $1 million dollars annually. That would take the marginal tax rate for millionaires from 10.3 percent to 13.3 percent.

Taxation levels would also increase by 2 percent for joint filers making over $600,000 and by 1 percent for joint filers making over $500,000. For those categories, the marginal tax rate would jump from 9.3 percent to 11.3 percent and 10.3 percent, respectively.

The new income tax rates would prevail through 2018, while the sales tax hike would end after 2016.

In addition, a half-cent sales tax increase proposed by Gov. Brown would be reduced to a quarter-cent increase. The state teachers’ union argued that reducing Brown’s proposed sales tax boost by half would ease the new financial burden on working families.

The teachers’ union and Gov. Brown had been pushing separate ballot initiatives on potential tax increases to put to the voters in November. California is facing $9.2 billion budget deficit next year.

A version of this news article first appeared in the State EdWatch blog.