From: mike@gordian.com (Michael A. Thomas)
Subject: Re: Prop 167, table 1 from voters pamphlet
Organization: Gordian; Costa Mesa, CA
Date: Fri, 16 Oct 1992 19:22:56 GMT


  Prop 167 has to be singular *worst* proposition on the November
ballot, and the worst one from a taxation standpoint that I 
recall in a *long* time.
 
> Sales Tax Rate
> 
> Current: Current statewide rate is 6% until July 1993, then will drop 
> by 1/2% to 5.5%
> 
> Proposed: Reduces statewide rate to 5.75% on January 1 1993 and to 5.25%
> on July 1, 1993.

  A whole 1/4% give back on the Sales Tax -- whoopy. Given what the
rest of the proposition taxes away, not worth it IMHO.

> 
> Sales Tax Exemptions
> 
> Current: Sales tax applies to sales of candy, snack food, bottled water,
> newspapers, and periodicals.
> 
> Proposed: Exempts these items from sales tax.

  A good idea, but Prop 163 (junk food tax repeal initiative) does the
same thing. Vote for 163 instead.

> 
> Personal Income Tax Rates
> 
> Current: Temporary 10% and 11% income tax rates for upper-income
> taxpayers (rates expire in 1996)
> 
> Proposed: 1. Lowers income level at which the 11% rate applies and makes
> both the 10% and 11% rates permanent. 2. Creates new 12% rate.

  Yeah. Taxes the rich and redefines what rich is. How typical. 
How transparent.

> 
> Alternative Minimum Tax on Personal Income
> 
> Current: Taxpayers who claim many tax deductions and exemptions must
> pay a minimum tax of 8.5% of specified income.
> 
> Proposed: Raises the minimum rate to 9.3% for high income taxpayers.
> 
> Renters Credit
> 
> Current: Income tax credit provided to low and moderate income renters.
> 
> Proposed: Extends this credit to all renters.

  Which of course was the way it was 2 years ago before the legislature
and Wilson signed that despicable budget agreement into law. This should
be repealed just like the junk food tax with no strings attached.

> Corporate Franchise (income) Tax Rate
> 
> Current: Most corporations are subject to a tax on their net income
> of 9.3%.
> 
> Proposed: Raises the tax rate to 10.3%

  This will provide ample reason for businesses to stay in state or
incorporate here... NOT!

> 
> Alternative Minimum Tax on Business Income
> 
> Current: Corporations that claim many tax deductions and exemptions must
> pay a minimum tax of 7% of specified income.
> 
> Proposed: Raises the minimum tax rate to 7.7%

  Similar to above.

> "In lieu" Tax for Banks and Financial Corporations
> 
> Current: Banks and financial corporations are exempt from local business 
> taxes and personal property taxes, and instead pay "in-lieu" income taxes
> to the state.
> 
> Proposed: Makes banks and financial corporations subject to local business
> and property taxes. Eliminates "in-lieu" income taxes.

  No real opinion on this other than I have the creeping suspicion that
banks will end up paying more in taxes.
 
> Tax on Certain Small Corporations (Subchapter S Corporations)
> 
> Current: Certain, generally smaller, corporations have special
> rules regarding the accounting of profits and losses for tax
> purposes. These rules usually lower taxes owed to the state.
> 
> Proposed: Limits which corporations can take advantage of the these
> special rules to those corporations with gross income of less than
> $10 million per year.

  S corporations along with C corporations will now be soaked. The
voters pamphlet "For" argument contends that the corporation to be
soaked are only "Multinational Corporations" (rebuttal to Argument
against prop 167, pg 63), but this is hogwash. All corporations
will be affected.
 
> Deductibility of Loan Loss Reserves for Banks
> 
> Current: Banks and other financial corporations can deduct from their
> income any funds that they set aside as reserves to pay for losses 
> from bad loans.
> 
> Proposed: Limits deductions to actual losses from bad loans.

  Although I have no interest or particular care for banks, this
has to be the singular most stooopid provision of the entire
propostion. The message that this provision sends to the banks
load and clear is "Don't put away reserves for bad loans". Given
the precarious state of California real estate (which is mostly
where bank loans go) this is LUNACY! Banks need to be shoring 
themselves up, not putting their head in the sand. This one provision
has the possibility of being the one thing that leads to the collapse
of banking in California.

> Deductibility of Drilling Costs
> 
> Current: Companies can deduct from their income most expenses 
> associated with exploration for oil and natural gas in the year 
> the expenses occurred.
> 
> Proposed: Requires businesses to deduct these expenses over a
> longer period of time.

  What business needs is shorter depretiation (or just general
rollover on investments) not longer! The investment tax credit
was wonderful while it lasted. This is not the answer, even if
you hate the oil industry.

> Deductibility of Executive Salaries
> 
> Current: Corporations can deduct from their income the compensation
> they pay to their employees.
> 
> Proposed: Limits the amount of compensation paid to executives
> that businesses can deduct for tax purposes. Limits apply to 
> businesses with more than 1000 employees.

  The Bureau of Executive Salaries, just what we need.
 
> Interstate and International Businesses
> 
> Current: To determine income taxes, companies doing business
> in other states or countries must determine what portion of 
> their income is due to business activity in California using
> specific rules that considers how much property, payroll, and 
> sales a company has inside and outside of the state.
> 
> Proposed: Changes the rules regarding this determination by
> (1) requiring the consideration of income earned only in
> the United States and (2) increasing the significance of a
> company's California sales relative to the rest of the country.

  That's right. Let's clamp down on businesses doing business
here even more. Gawd, how stupid to they think business owners
are? Can't they see that higher taxes in state == looking for
a move out of state?

> Property Taxes (Change in Ownership)
> 
> Current: Real estate property owned by business is generally
> reassessed when more than 50% of the interest in the business
> is obtained by a single purchaser.
> 
> Proposed: Requires county tax assessors to reassess property
> whenever 50% of the interest in a business is sold, and to
> presume this occurs once in every three-year period, unless
> it is proven not to have been sold.

  Guilty until proven innocent, how nice. Does this apply if
a publicly traded company rolls over its shareholders by 50%?
I suspect I know the answer to that.

> Insurance Companies
> 
> Current: Most insurance companies pay tax at a rate of 2.35%
> on the amount of premiums from insurance policies sold.
> 
> Proposed: Raises the tax rate to 2.46%.
> 
> Oil Severance Tax
> 
> Current: The state imposes a fee for the regulation of companies
> extracting oil from California based on the amount of produced.
> The rate of this tax varies from year to year and is currently set
> at 2.5 cents per barrel (about 0.2% of the value of the oil)
> 
> Proposed: Establishes a tax on oil that is extracted in California.
> Tax would be 3% of the value of oil extracted and would apply only
> to companies extracting more than 1.2 million gallons a month.

  Even more reason for oil companies to pave over their holdings 
with MiniMalls. Yeah.

  Who are the people who dreamt this proposition up? Where is my
tar and feathers? 
-- 

		Michael Thomas	(mike@gordian.com)
	"I don't think Bambi Eyes will get you that flame thrower..."  
		-- Hobbes to Calvin
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