California has long been known as a state where Democrat taxation schemes rule the land, where local businesses (except those properly politically connected, of course) can expect to pay more than anywhere else in the country and where individuals can enjoy immense poverty and high rates of taxation. However, no one could have foreseen that in a fit of anger over President Donald Trump’s tax reform bill, the state would demand that its citizens provide them with a token sacrifice from their federal windfall.
However, that’s exactly what a proposed Assembly Constitutional Amendment in the state of California would do. Proposed by Kevin McCarty and Phil Ting, Democrats from Sacramento and San Francisco respectively, the bill would create an arbitrary tax surcharge on businesses that make more than $1 million annually, requiring that they pay half the value of their federal tax cut to the state in the form of tribute, in hopes that it would “blunt the impact” of the corporate tax cut. The money would ostensibly go to programs that help middle-class and lower-class families.
According to Phil Ting, “Trump’s tax reform plan was nothing more than a middle-class tax increase.” Ting went on to proclaim that “it is unconscionable to force working families to pay the price for tax breaks and loopholes benefiting corporations and wealthy individuals. This bill will help blunt the impact of the federal tax plan on everyday Californians by protecting funding for education, affordable health care, and other core priorities.”
It’s hard to find evidence that the tax reform plan was a “middle-class tax increase.” In fact, as the tax reform bill is written, it doesn’t increase taxes on anyone except those who live in states with ridiculous state and local taxes, who will have to pay more because the SALT (state and local tax) deduction is now limited to $10,000 annually. The tax reform bill has already made lives better for workers, who are benefiting from changing the rates of corporate taxation in the United States from 35 to 21 percent.
Of course, some can’t stand the idea of businesses and citizens with more money in their pockets, and tax-happy California’s politicians are certainly offended by the idea, as their statements have shown. After the tax reform bill passed, State Senate President Pro Tem Kevin De Leon decided to introduce legislation that would have allowed California citizens to manipulate the new federal law. In essence, the legislation would allow California citizens to donate to a state-run ‘charity’ that the government used for funding in lieu of paying taxes, thus dodging the SALT deduction limits. It also would be absolutely illegal and unconstitutional, but that has never stopped California before.
Luckily for California businesses, who are likely happy to finally have something to offset the tremendous tax policies and other anti-business practices in the state, a California Constitutional Amendment would require a 2/3rd majority vote to pass. Though California Democrats did hold such a majority before, they lost their supermajority when two Assembly Democrats (both from Los Angeles County) had to resign, as well as one resigning due to health issues.
In other words, Democrats would not be likely to be able to actually pass this atrocious Constitutional Amendment, however much they want to be able to take money from the mouths of the few businesses that continue to operate in their state.
Many states have been forced to examine their taxation policies and their spending when confronted with the limit to the SALT deduction. Before, the SALT deduction, which was essentially limitless, allowed people from states with higher taxation levels to write their state and local taxes off, deducting them from their federal taxes. In essence, this allowed states like New Jersey and California to keep more tax money while depriving the federal government of tax revenue it claimed it was due.
However, the state of California decided to go in the complete opposite direction, hoping to fund its ‘entitlement’ programs. This is a strange plan for the state, seeing as they have the highest poverty level and the most impoverished citizens in the United States. For an intelligent observer, this would lead them to believe that California needs to take LESS money from its citizenry, not more and that perhaps their idea that government can solve all problems by adding bureaucracy to them is not the most intelligent one.
But, instead, California would rather seize money to spend on ineffective programs while moving toward a centrally planned economy and lighting cash on fire for things like their ‘bullet train’ project, which is almost bankrupt and has yet to complete construction on a full leg of the planned path. If California’s government was capable of intelligent reflection, it likely wouldn’t be in this situation, but their knee-jerk reaction to any issue tends to be more taxation.