California Republican Legislators Hike Taxes

Republican legislators, usually steadfast against tax hikes, wobbled on this one because the 2.35% tax on health insurers’ gross revenues will replace a 5.5% tax that will expire in October.

You would have thought that the fact that 59% to 66% of California’ suninsured kids are already eligible for SCHIP or Medicaid, but not enrolled (p. 14), might have prompted legislators to push “restart” when they had an opportunity to let the current tax die.

No sirree, California Republicans figured they got a pass by levying a tax just over half as big as the one that’s expiring. Well, the fact is that they are also responsible for a future federal tax hike as well, because President Obama’s so-called “stimulus” bill dramatically jacked up federal matching payments to states which increase government dependence for health care. The match used to be 50%, but now it’s gone up to 62%.

That is, for every 38 cents of its own residents’ tax dollars it spends on government-controlled access to medical services, California gets to haul down 62 cents from taxpayers in the 49 other states, as a colleague and I anticipated when the president signed the stimulus.

How patriotic!

This blog post originally appeared on State Policy Network.

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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