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Tax Cuts On Lawmaker´s Minds

On the one hand California Democratic lawmakers are saying the huge state budget deficit cannot be handled without tax increases. But the Los Angeles Times reports that on the other hand individual Democratic and Republican lawmakers are pushing at least 80 bills to provide tax breaks to industries, small business and individuals.

The California government deficit is estimated to be as much as $35 billion for this fiscal year and next year. At the same time tax breaks for drug companies, manufacturing and high-tech companies and start-up businesses are proposed. The LA Times reports Democrats are sponsoring about 30 of the tax break bills and Republicans have offered 50. One GOP lawmakers proposed abolishing the state income tax but that idea has little chance of even being considered.

One bill by Democratic Assemblyman Mark Ridley-Thomas of Los Angeles would exempt a National Football League team from corporate profit taxes for five years if it relocates in a redevelopment area.

Democratic Assemblyman Marco Firebaugh of Los Angeles has a bill to exempt start-up businesses from corporate taxes for three years or until they gross one-half million dollars or more.

Only one of the tax break bills has been approved in any California Legislature committee. It would exempt disabled veterans from some of their property taxes.

Among tax increases put forward by Democratic legislators are new or expanded levies on gun cartridges, booze, diapers and car registration. Democratic Governor Gray Davis has proposed $8 billion in higher tax rates for wealthy Californians. The governor also has called for a boost of more than one dollar per pack in the cigarette tax and a one percent rise in the sales tax.

But Davis also is pushing the biggest of the proposed tax breaks to extend the tax credit for manufacturing firms that buy new equipment. That provision cutting California tax revenue by about $400 million is to expire this year.