“How High Will California’s Taxes Go Before There’s No One Left To Tax?” asks Reason. Indeed, with the addition of the universal health care plan being proposed by Governor Gavin Newsom, those taxes may end up giving a boost to the exodus of Californians already underway.
It’s mind-boggling. The creativity of California Democratic politicians in fashioning ever more devilish ways to separate the citizen from his hard-earned money is bringing yelps in pain from taxpayers but expressions of admiration from the socialists.
The universal health care plan would cover everyone — presumably only human beings, but it’s California, after all. We can expect them to cover the health care for dogs, cats, and other animal friends as well someday soon.
And yes, that means it will cover illegal aliens as well.
A proposed constitutional amendment, ACA 11, would accomplish the unlikely goal of making the taxes that California currently demands from its residents look restrained. Not only would the proposed $163 billion in new tax revenue nearly double last year’s total revenue for the tax-happy state, but California would structure these new taxes in such a way as to be even more harmful than doubled tax liabilities already imply.
The bill would raise the additional revenue through three taxes: a 2.3 percent gross receipts tax on business revenues (with an exemption for the first $2 million in profits), a 1.25 percent payroll tax on businesses with 50 or more employees (with an increased rate for wages paid to employees making over $49,900), and 0.5 percent to 2.5 percent increases to the personal income tax rate depending on income.
A “gross receipts tax” on business? This makes no allowances for the differences in industries. A “gross receipts tax” on $1 million in gross receipts from a restaurant is vastly different than $1 million in gross receipts from a home builder. It’s loony.
That rise in the gross receipts tax would mean California’s would be three times higher than any other state. A low-margin business like a small grocery store or a dollar store would lose money the minute they opened their doors.
Growth in California’s population base has basically ground to a halt, but the state’s Democrats either don’t see the problem of high taxes hampering growth or don’t care.
At the same time, the “tech flight” phenomenon of innovative companies fleeing California for lower-tax climates is very real: One analysis found that 265 companies moved their headquarters out of California in just the period between January 2018 and July 2021. It’s hard to imagine that that trend wouldn’t go into overdrive should ACA 11 succeed.
But California has long refused to acknowledge that there are consequences to squeezing its citizens for every dollar it can get. In fact, another recent proposal to institute a 0.4 percent wealth tax would have attempted to subject taxpayers to the tax on a sliding scale for 10 years after they had left the state—a requirement that would almost surely be unconstitutional.
The state’s Democrats haven’t yet figured out how to tax someone who’s dead, but given the need they’re creating, it can only be a matter of time.