Tax Hike 

Should the Speaker of the Assembly being looking for budget cuts or tax hikes?  Before we answer this, Californians should probably research our current tax rate and how it compares to other states.  For more info, click here.

Assembly Speaker Fabian Núñez, citing the state’s projected $14 billion deficit, on Thursday for the first time raised the prospects of tax hikes, including increasing the state’s vehicle license fee.

“I think a tax on Internet purchases, obviously, ought to be on the table,” Núñez told reporters at a Capitol briefing.

“Any tax credits to major corporations that are overseas and milking California, but not paying taxes here, we’ve got to look at those tax loopholes,” Núñez said.

By closing loopholes, Núñez said, the state can “generate billions of dollars.” The speaker said he’s discussed with the governor the possibility of increasing the vehicle license fee.

But H.D. Palmer, spokesman for Schwarzenegger’s Department of Finance, said the governor will not include tax increases in his January budget proposal.

“Our focus is on looking at the expenditure side and, to the greatest extent, to spread that as broadly as possible across state government,” Palmer said.

On his first day in office in 2003, Schwarzenegger rolled back the vehicle license fee to about one-third its historic level.

Núñez said the state cannot fix its structural budget imbalance only by cutting services.

“The fact of the matter is we’ve been cutting our way out of this budget mess for the last four years,” Núñez said. “I think it’s time we show a little bit of creativity.”

Schwarzenegger’s budget officials are estimating a state budget deficit next year of $14 billion, significantly larger than the $9.8 billion gap previously forecast by a state budget analyst.