California Democrats propose billions in tax hikes

California

Democrats on Tuesday proposed billions in tax increases on businesses and high earners to help bridge California's budget shortfall.

The proposed hikes include rolling back the dependent child income tax credit expanded in the 1990s, creating two higher income tax brackets for the state's biggest earners and increasing corporate taxes.

Business would lose its net operating loss deduction, bringing the state another $1.1 billion, according to the Senate plan. And the plan would restore the franchise tax rate for businesses from 8.8 percent to 9.3 percent

Gov. Arnold Schwarzenegger and state lawmakers have yet to strike a compromise on how to close a $15.2 billion budget shortfall in the $101 billion general fund. The entire budget proposed by the governor is $144 billion, including bond and special funds.

Lawmakers missed a June 15 constitutional deadline for passing a balanced spending plan for the fiscal year that began July 1.

[yet they'll all be returned to office]

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