TAXATION. INCOME.

TAXATION. INCOME. INITIATIVE CONSTITUTIONAL AMENDMENT. Adds Section 26.5 to Article XIII of the Constitution to provide that taxes on or measured by income which are imposed under the Personal Income Tax Law or successor law shall not exceed 50 percent of those rates in effect for the 1978 taxable year. Requires the Legislature to provide a system for adjusting personal income tax brackets to reflect annual changes in the California Consumer Price Index or successor index. Adds subdivision(s) to Section 3 of Article XIII to provide that business inventories are exempt from property taxation. Fiscal impact on state or local governments: Reduction of state income tax revenues by estimated $4.9 billion in fiscal year 1980-81, $4.2 billion in 1981-82, and by unknown but increasing amounts thereafter. By operation of existing statutes, estimated reduction of $3 billion in state aid to local school districts and state payments to cities, counties or special districts commencing in 1980-81. Indeterminable but substantial reduction in other state expenditures in 1980-81 and thereafter