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Who's Right on Capital Gains Taxes: Meg, Jerry ... or Gavin?



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    SAN FRANCISCO - MAY 18: San Francisco mayor Gavin Newsom comments on a drill where trained U.S. Navy seals apprehended suspected terrorist divers during the Golden Guardian statewide port security exercise May 18, 2010 in San Francisco, California. The Golden Guardian Statewide Exercise Series was started by California Governor Arnold Schwarzenegger in 2004 and has become an annual statewide exercise series where law enforcement, emergency services and government agencies coordinate and hold drills to prepare for natural disasters and terrorist attacks. Golden Guardian is the largest statewide exercise program of its kind in the country. (Photo by Justin Sullivan/Getty Images)

    Dan Morain of the Sacramento Bee takes a smart look at a central policy argument in this week's gubernatorial debate: Will eliminating the capital gains tax as Meg Whitman proposes help California's economy, or is it a giveaway to the rich, as Jerry Brown argues?

    There's plenty of evidence for Brown's argument. But what if the capital gains tax could be restructured to make more sense, and encourage investment in California?

    Morain himself suggests that there's a middle ground between eliminating the tax and keeping it as it is. "Federal tax law," he writes, "offers a sliding scale, imposing a higher rate if the gains were short-term, and a lower rate if the gains were earned over more years, a step intended to reward long-term investment over short-term speculation."

    Even more promising is a proposal from Gavin Newsom, the San Francisco mayor running for lieutenant governor, to cut the tax in a way that favors businesses that invest in California.

    Once again, if you want new thinking about California and not relentless attacks, you have to look outside the governor's race.