GOP's Faulconer pitches tax cut plan for California

Republican Kevin Faulconer wants to eliminate state income taxes for households making up to $100,000 as part of a proposal to make California more affordable for the middle class

California Recall (Copyright 2021 The Associated Press. All rights reserved.)

Republican candidate for governor Kevin Faulconer wants to eliminate California's state income tax for individuals making up to $50,000 and households up to $100,000 as part of a proposal to make the state more affordable for families and the middle class.

“Too often when we hear about tax relief, they're cuts for investors, for the Wall Street crowd, for the 1%," Faulconer said Wednesday at a campaign event announcing the plan. “This is for young people just starting out, this is for parents who are paying for diapers or college, this is for folks working long days to put food on the table.

Faulconer is running in the expected recall election against Democratic Gov. Gavin Newsom who is generating daily news with a statewide tour touting his $100 billion pandemic recovery plan made possible by a record surplus of nearly $76 billion.

Faulconer, a former two-term San Diego mayor, also attempted to regain the GOP spotlight from two of his main Republican opponents, John Cox and Caitlyn Jenner who have garnered more recent attention.

A governor has limited power to reduce taxes unilaterally, so Faulconer would need approval from the state Legislature to enact his plan. If he wins the recall, he would take office with Democratic supermajorities in the Assembly and Senate. Faulconer, who worked with a Democrat-majority City Council in San Diego, said he'd seek to win legislative support by first getting public buy-in.

“It’s just too expensive to live in California, period," he told the Associated Press ahead of his announcement. “I’m a big believer in going out and winning the argument publicly and then we will win the vote."

Under Faulconer's plan, there would be a 0% marginal income tax rate on the first $50,000 in income for individuals and $100,000 for households. That means people making those amounts or less wouldn't pay state income tax, while those making up to $1 million would see a low effective tax rate.

He announced the plan in Downey, Calif., a small city southeast of Los Angeles with a median income of just more than $75,000, roughly the same as the median income statewide. He estimated the plan would save individuals nearly $2,000 and families nearly $4,000 annually and said his plan would benefit 99% of taxpayers.

Faulconer estimated his proposed cuts would reduce state revenues by about $15 billion annually and pointed to the state's expected $76 billion surplus this year as evidence the state can afford it. Asked what would happen if the economy tumbled, and if he would slash programs to support a continuing, deep tax cut, Faulconer said such a drastic move wouldn’t necessary.

“As mayor, having to balance many budgets, it’s about priorities. It’s about spending dollars on what’s important, on services that Californians actually need and expect and deserve," he said.

He further said Sacramento has a “spending problem" but declined to give any specific details on what views as excess or what he would cut.

California's budget relies heavily on personal income tax from the wealthiest Californians — those making more than $1 million annually — and their taxes would not change under Faulconer's plan.

Republicans regularly complain that California's high taxes make the state unaffordable for people and are causing the rich to flee. They point to high-profile examples of companies such as Oracle and Hewlett Packard moving their headquarters out of California.

Newsom, meanwhile, proposed on Monday giving tax rebates of up to $1,100 to more than 11 million low- and middle-income tax payers. Taxpayers making between $30,000 and $75,000 would get a one-time $600 rebate. Those making up to $75,000 with children would get an extra $500.

The governor's campaign did not immediately comment on Faulconer's proposal.

A recent study by the Public Policy Institute of California found the state is losing lower and middle-income people and those without college degrees, while it's gaining higher-income people with degrees.

Faulconer also pledged not to raise taxes if he wins. But a governor also lacks that power. He could veto legislation raising taxes, but the Legislature could override him with two-thirds votes in both chambers.

He would also exempt veterans' income from military retirement from being taxed.

Faulconer has the most political experience of any Republican in the race, and he's looking to craft himself as a credible alternative to Newsom compared to his rivals. Cox, who lost to Newsom in a landslide in 2018, last week campaigned alongside a bear as he branded himself the “beast" and Newsom a “pretty boy" who fails to make tough decisions. Cox will release his own tax cut plan soon, said spokesman Anthony Ramirez.

Jenner, meanwhile, did not appear well-versed in California's policy issues during her first television interviews last week. Her campaign did not immediately comment on Faulconer's proposal.

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Ronayne reported from Sacramento, Calif.