![]() ![]() Florida and Texas levy no individual income tax. In contrast, Florida, Texas, Arizona, and North Carolina have seen torrid population growth and inbound moves. California lost 262,000 residents in 2021, more than any other state besides New York. Second is the rise of remote work, allowing more workers to live where they choose.Ĭensus migration data show that Americans are moving out of such high-tax states as California, New York, and Illinois and into low-tax jurisdictions. Though Democrats hope to reverse this change, Californians, for now, must pay full freight for their state’s spending programs. First is the federal cap on state and local tax deductions imposed by the 2017 Tax Cuts and Jobs Act. Two recent changes make state tax competitiveness more important than ever. The state’s tax competitiveness, which the Tax Foundation currently ranks 48th, would move from bad to even worse-and drive away the taxpayers the program depends upon. So suppose the state does manage to enact this gargantuan tax-and-spend program. The California Assembly passed the healthcare spending portion of this package out of committee on January 20, and has until January 31 to pass the bill before the entire Assembly. Inevitably, some low-profit businesses, such as retailers and grocers, would pay more taxes than high-margin, high-profit businesses.Ĭalifornians should be skeptical that a government that has fostered homelessness, out-of-control housing costs, rising crime, and energy shortages can deliver universal, high-quality health care. Rather than taxing business profits (which California already does), a gross-receipts tax raises revenue from both profitable and unprofitable businesses. Gross-receipts taxes hit production cycles multiple times, bringing in tremendous revenues with low rates. The real money grab is the proposed 2.3 percent excise tax on business gross receipts beyond $2 million, which would generate $108.1 billion in new taxes annually. The result would be a preposterous income tax code, with 18 rate brackets ranging from 2.25 percent to 18.05 percent. Income surtaxes would begin at $149,509 in earnings and generate another $23.4 billion with progressive rates. The new proposal would add to that burden, generating $31.5 billion through a pair of payroll taxes: one on firms with 50 employees, and the other on employees earning $49,900 or more. Setting aside California’s governance weaknesses, the proposal is a poor fit for the new era of interstate tax competition.Ĭalifornia’s current top marginal tax rate is 13.3 percent, the highest in the U.S. The package would nearly double California’s tax burden to fund CalCare, a universal health-care program. 11 to raise annual taxes by $163 billion per year. ![]() ![]() Apparently believing that the 2020 tax referendum failed for a lack of boldness, assembly members Ash Kalra and Alex Lee have proposed Assembly Constitutional Amendment No. One might think that this good fortune would negate the need to raise taxes, but some California lawmakers see things differently. Since then, tax revenues have surged at the fastest rate in four decades, giving the state a $31 billion budget surplus. In November 2020, California voters rejected a $10 billion business-tax hike, showing understandable concern about tax increases during an economic downturn. ![]()
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