CalChamber Opposes “Virtually Permanent” Prop 30 Tax

With the California Chamber of Commerce announcing yesterday that it will oppose the Proposition 30, income tax extension, the question arises if a campaign will come together to match the financial firepower that the teachers, medical professionals and other public employee unions bring to the table in support of the measure.

Officially, the word from the Chamber is that it is opposed to the extension but nothing has been announced about a potential campaign … yet.

Proponents of the 12-year income tax extension filed signatures recently to get the measure on the ballot.

CalChamber noted in the release announcing opposition to the initiative that it did not oppose Proposition 30 in 2012. The measure was supposed to be temporary to deal with a financial crisis.

However, CalChamber declared that the extension would make the tax “virtually permanent, even when the state’s budget is balanced.”

The Chamber’s announcement comes on the heels of word from the California Business Roundtable (CBRT) that the decision to organize a campaign in opposition to the Prop 30 extension will depend on actions taken by the legislature on business issues.

Rob Lapsley, President of the California Business Roundtable (CBRT)

CBRT president, Rob Lapsley, told the Sacramento Business Journal that the Roundtable will watch if the legislature tackles health care and education reforms along with specific bills of interest to the business community such as the requirement to give employees a seven days notice before changing work shifts.

Lapsley emphasized that the Roundtable’s decision would also rest on how the Prop 30 extension may impact the state’s economic health.

One issue the CalChamber raised in opposition to the extension was the problem of revenue volatility tied to higher income taxes. The Chamber feared significant reduced revenue to the state during future recessions.

Keeping the higher income tax rates for income over $250,000 could also hurt small businesses that pay taxes through the business owners’ income. In a recent BizFed poll in Los Angeles County, a key finding was that “personal income taxes have the most impact on small business (of 100 employees or less).”

Will concern from the business community over the Prop 30 extension effort gel into a campaign to stop the initiative that will be backed by millions of dollars in union support?

About the Author: Joel Fox is Editor of Fox & Hounds and President of the Small Business Action Committee. This article originally appeared in Fox & Hounds and appears here with permission.