CA Lawmakers Proposed $236 Billion+ in New Taxes Despite Record Revenue

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Despite taking in record state tax revenue over the past year, California lawmakers proposed more than $236.4 billion in new taxes and fees in 2021, finds the annual “Tax and Fee Report” just released by the California Tax Foundation.

Over the past twelve months, lawmakers proposed 74 different tax and fee measures that would cost Californians $1 million or more.  Shockingly, the $236 billion cumulative total represents the impact of just 31 of the measures.  CalTax says that taxpayer costs can’t be quantified for the 43 other tax and fee proposals.

Among the most expensive proposed tax hikes were:

  • An estimated $200 billion+ tax bill that would be required to pay for a California single-payer health care scheme (AB 1400);
  • A $22.3 billion “wealth tax” on current and former California residents – including collectibles, retirement plans, and farms (AB 310 and ACA 8); and
  • A $6.8 billion increase in the top state income tax bracket, which would push California’s top rate to a nation-leading still higher to 16.8 percent (AB 1253).

It’s ridiculous, of course, that Sacramento progressives continue to push massive tax increases at a time when the state is taking in more money that even they would know how to spend.

And even money is on the way – at least $39.4 billion from the federal infrastructure bill and tax revenue from Californians paying their tax bills exceeding expectations.

Consider that the nonpartisan Legislative Analyst’s office (LAO) recently reported that “California income tax withholding collections in November were 32.9 percent above November 2020 and collections to date in fiscal year 2021-22 are 22.7 percent above 2020-21.”  Earlier in November, the LAO projected a $31 billion budget surplus in 2022-23.

And the state could take in even more if the so-called “Build Back Better” plan navigates an unlikely path and is approved by Congress.

The CalTax report underscores why California continues to have an exodus of jobs and opportunities to other states – lawmakers continue to embrace bad public policy choices that drive up the cost of living.

As PRI’s Kerry Jackson and Wayne Winegarden documented in their recent “California Migrating,” study, California has a 13.7 percent median household income premium versus the rest of the U.S.  But when you factor in the state-local tax burden and mortgage costs, the state’s advantage turns into a 19.6 percent net income deficit compared to the rest of the U.S.

If the lawmakers proposing these taxes get their way and drive costs of living even higher with new and higher taxes, we’re likely to see more of what Jackson and Winegarden documented in their study – Californians of all income groups, and increasingly upper income Californians not as sensitive to tax hikes but fed up with being the target of progressive legislators, leaving the state.

Tim Anaya is the Pacific Research Institute’s senior director of communications and the Sacramento office.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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