California: If at first you don’t succeed, tax, tax again!

Californian progressives are looking to implement the nation’s first single-payer health care system. To pay for it, they want to double their state’s tax burden, which is the third worst in the nation (beaten only by New York and New Jersey). 

California Assemblyman Ash Kalra has proposed an amendment to California’s state constitution introducing several taxes to pay for this new system. According to the California Globe, “If enacted, it would impose an excise tax, payroll taxes, and a personal income tax to fund comprehensive, universal single-payer health care coverage, as well as a health care cost control system.” According to the Tax Foundation, the amendment would “increase taxes by $12,250 per household, roughly doubling the state’s already high tax collections.”  

Among the taxes is a payroll tax on employers with over 50 employees. These tax hikes would stunt the growth of small businesses by providing a hard taxing wall that most would avoid. The law also imposes several surtaxes for personal income with a top rate of 2.5%. When combined with the current 13.3% top income tax rate and the 2.25 payroll tax, you are left with a combined maximum marginal rate of 18.05%, more than seven percentage points higher than the state with the next-highest rates (Hawaii, 11 percent) according to the Tax Foundation. 

Finally, the amendment enacts a 2.3% Gross Receipt Tax on businesses. Gross Receipt taxes charge on a company’s gross sales, without deductions for a firm’s business expenses. These tend to harm businesses with low-profit margins and are generally seen as inefficient and damaging to the economy. Only a few states use them instead of a corporate income tax. California takes this flawed taxing model and makes it even worse.  

Instead of imposing a GRT to replace the income tax, this new amendment imposes it on top of the income tax. As a result, California is burning the candle at both ends, leaving the businesses trapped in the middle. Not only that but California’s 2.3% Gross Receipts Tax is “a rate more than three times that of the country’s highest current pure GRT,” according to the Tax Foundation. 

California progressives need a 2/3 supermajority in both houses to approve to pass this amendment. However, once the taxes have been approved, a simple majority can, and most likely will, raise them. However, before they can do that, they need to clear one last hurdle. For a constitutional amendment to become law, California requires the public to vote on it as a ballot measure. And the people of California are getting tired of high taxes.  

According to a report by the non-partisan California Policy Lab, “Entrances to California from other states have dropped 38% since March of last year, while the number of residents leaving to other states has increased 12%.” Californians are tired of the state’s overregulation and sky-high taxes and are leaving in higher and higher numbers. Do lawmakers think they will agree to raise taxes even more?  

If Californians approve this amendment, life for Californian taxpayers will become even more untenable. Californians taxes will be doubled while their healthcare is placed in the hands of the same ineffective bureaucrats who can barely run the state. But it doesn’t have to be this way. The people have a choice. We hope they choose rightly.