THE “HOMELESS BILLIONAIRE” AND HIS PLAN TO SAVE CALIFORNIA
German billionaire Nicolas Berggruen has a plan to make America’s “Golden State” sparkle again: cut income and sales taxes, but broaden the revenue base by taxing services at 5%. Now he just has to convince California's voters and political leaders.
Nicolas Berggruen is a German billionaire who owns, among other thing, the successful Karstadt distribution company. He’s also a visionary. Berggruen's ultimate goal? To write – together with experts from the world over – the perfect constitution.
But that doesn’t stop him from working in the meantime on more practical jobs – like saving California from its crippling deficit. In 2010 Berggruen, nicknamed the “homeless billionaire” (because he lives in hotels and does not own a home) – assembled a committee of experts tasked with renewing and profoundly reforming the U.S. state’s economic policies.
Berggruen’s Think Long Committee for California, which includes former U.S. Secretaries of State George Schultz and Condoleezza Rice among others, recently published its recommendations. The suggestions focus primarily on reshaping California’s fiscal system. The main idea is to drastically lower all current taxes while at the same time broadening the overall tax base.
Taxing “discretionary” services
The Committee recommends applying just two income tax rates: 2% for people with annual salaries of between $45,000 and $95,000; and 7.5% for anyone earning above $95,000 per year. People with annual incomes of less than $45,000 would face no state income tax under the group’s plan. The tax rate for companies would be cut back to 7%. The sales tax rate for goods would also be trimmed, from 5% to 4.5%. In order to broaden the overall tax base and “make the state more competitive,” the Committee recommends taxing all services at 5%
“This combination of cutting the personal income tax and broadening the tax base will help stabilize the boom and bust cycle of the budget while generating $10 billion in new revenues annually to start paying down the state’s ‘wall of debt’,” the report reads.
Berggruen and his associates also recommend creating a citizen council in charge of overseeing public accountability. With an eye on the November 2012 California elections, the group plans to launch a p.r. machine in favor of its “Blueprint to Renew California.”