Farallon's Steyer Pushes Calif. Tax Plan

Nov 23 2011 | 7:31am ET

Hedge fund manager Thomas Steyer is jumping back into the most direct democracy in the United States.

Groups have been rushing to propose tax hikes be put to California voters in the state’s well-used (some might say overused) proposition system, putting policy decisions directly into the hands of Californians (those who show up to the polls, anyway). The system was most controversially used to ban same-sex marriage in the state, and most tax hike proposals put to voters have (predictably) failed.

But with the largest state in the union facing a severe budget crisis, groups, including one backed by alternative investments honcho Nicolas Berggruen to impose $10 billion in new sales taxes, have been rushing to get on the ballot.

Steyer, who heads Farallon Capital Management, has offered a more modest revenue-raising proposal. The longtime supporter of Democratic causes is backing a change in California tax law—rejected earlier this year by the state’s legislature—to charge out-of-state companies some $1.1 billion in higher taxes annually. Steyer’s proposal would close what opponents call a loophole allowing out-of-state companies to pay lower taxes than those based in California.

The Steyer plan would put half of the new money raised towards increasing energy efficiency in state and commercial buildings and clean energy job training. Another $200 million would go to schools, with the rest going to California’s general fund to help close its yawning deficit.

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