Why are unions and many Democrats opposed?
As mentioned, labor groups fear that employers will cut wages and salaries to deal with the tax burden. Public employee unions dislike the commission’s call for a spending cap and rainy-day fund. It also remains unpalatable for Democrats to approve a plan that dramatically cuts income taxes on the upper-middle class and wealthy. Under the proposal, the top 3 percent receives half of the $15 billion cut in income taxes. Any other problems? UCLA tax law professor Kirk Stark and eight other tax experts suggest the plan could prove unconstitutional as it applies to out-of-state firms, including Internet retailers. Commissioners said Tuesday they believe those firms would provide roughly $6 billion in new revenues. At the very least, the new tax would be challenged in court for years. Chairman Gerald Parsky said he believes the state would prevail, in part because the new tax is not a sales tax. But Stark warned that it is a “total crapshoot” and that the state could owe significant refunds
