California · Energy

Calif. drivers are big loser in leaked tax relief compromise proposal

Update: Gov. Gavin Newsom’s office confirmed the details of the leaked compromise deal.

One additional element of the deal is a suspension of the state sales tax on diesel.

Original: Most California taxpayers would get hundreds of dollars in cash to help as a form of tax relief under a tentative budget compromise being negotiated by legislative leaders and Gov. Gavin Newsom.

The plan would return a portion of California’s record-setting $97 billion budget surplus to taxpayers — but the money would only go to people who made below a certain income level.

Newsom and legislative leaders were still negotiating the state budget on Friday, with talks scheduled to extend into the weekend. While both sides had agreed to a framework for rebates, the overall numbers could change as other parts of the budget are finalized. But in general, the less money people make in a year, the more money they would get from the state.

The current proposal would return about $9.5 billion to taxpayers. Single people who make less than $75,000 per year and couples who make less than $150,000 per year would get $350 per taxpayer, plus an extra $350 for each dependent. That means a married couple earning $100,000 per year with one child would get $1,050.

Single people who make less than $125,000 per year and couples who make less than $250,000 per year would get $250 each plus their dependents. Single people making less than $250,000 per year and couples making less than $500,000 per year would get $200 each plus their dependents.

Newsom and Democratic leaders have refused to suspend the gas tax, arguing it would not guarantee a big enough price drop to benefit drivers. They also said it would cost construction jobs as the tax pays for highway maintenance throughout the state.

Instead, they pledged months ago to use the state’s budget surplus to send money directly to taxpayers. But so far, nothing has happened because Newsom and legislative leaders have not been able to agree how to do it. Newsom had proposed sending the money to registered vehicle owners, while lawmakers wanted to send the money to tax filers.

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Staff reports from The San Joaquin Valley Sun staff.