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Treasurer says Bush Plan Would Tax State Finances

President Bush wants to exempt corporate dividends from taxation, creating a new category of tax-free investment. California-s State Treasurer, Phil Angelides, says that means competition for tax-free municipal bonds, which the state sells to pay for schools, highways, clean water and other public services, states and local governments. To encourage investors to buy them, the interest they earn is tax free. Angelides says that Bush-s plan could end up costing American taxpayers $155 billion, California taxpayers $17 billion. We hear from Angelides, and a Republican spokesman who counters that the President-s plan would infuse $30 bill into the economy, creating jobs in the private sector and boosting California-s recovery. Newsmaker: With No Bailout, County May Close More Hospitals In November, Los Angeles County voters agreed to increase the property tax to make sure that trauma centers and emergency rooms stay open. After the measure passed by a margin of more than 70%, local officials thought they had a deal with Washington to resolve the County-s massive health crisis. Now, LA County Supervisor Zev Yaroslavsky says they-re back to square one. Reporter-s Notebook: Californians Cross Border to Avoid Sales Tax The sales tax in California is 7.25%, even higher in places like LA County. To make up the state-s massive budget deficit, Governor Davis wants to raise it a penny more. That increase could be great for business -- in Oregon. Wyatt Buchanan, who reports for the San Francisco Chronicle, says northern county residents are already crossing the border to shop in a state with no sales tax and mandatory full-service gas stations.