SPECIAL REPORT / ELECTION PREVIEW : DECISION ’94 / A Voter’s Guide to State and Local Elections : Propositions : PROP. 175

What it is: This measure would reinstate the state’s income tax credit for renters and make it permanent. Beginning Jan. 1, 1995, the proposal would guarantee a renters tax reduction of $60 for individuals and $120 for married couples. The credit was first allowed in 1973 as a counterpart to the homeowners exemption, which is $7,000 on the assessed value of owner-occupied homes. But with the state facing mounting financial woes, the renters credit was first limited to poor and moderate-income renters and then last year eliminated for 1993 and 1994, saving about $840 million. As part of that deal, however, the present proposal was placed on the ballot.

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Arguments for: By wiping out the credit, legislators in effect raised the annual taxes paid by renters by as much as $120. This could be done because renters don’t employ powerful lobbyists and the credit does not enjoy the same constitutional protection as the homeowners exemption. Reinstating the credit as a constitutional amendment would restore the tax break and treat renters and homeowners in a similar fashion.

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Arguments against: The tax credit is an inappropriate “giveaway” that should not be granted constitutional protection. It would give renters a tax break of up to $120, a bigger break than the homeowners $7,000 exemption, which nets an average tax saving of only $74.

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Who supports it: State Sen. David A. Roberti (D-Van Nuys), Legal Aid Foundation of Los Angeles, Western Center on Law and Poverty and California Rural Legal Services.

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Who opposes it: Calif. Taxpayers Assn. and Assemblyman Paul Horcher (R-Diamond Bar).